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Mattel - Mattel, Inc. Key Executive Life Insurance Plan (for Robert A. Eckert)
EXHIBIT 10.109
MATTEL, INC.
KEY EXECUTIVE LIFE INSURANCE PLAN 1. Purpose
The purpose of the Mattel, Inc. Key Executive Life Insurance Plan (the " Plan" ) is to create a plan under which Mattel, Inc. (" Mattel" ) can assist certain of its Executives in acquiring life insurance coverage. 2. Definitions
For purposes of this Plan, the following terms have the meanings set forth below:
Section 2.01 Agreement means the Agreement executed by a Participant implementing the terms of this Plan.
Section 2.02 Alternative Death Benefit Amount means, with respect to a Participant, an amount that, after subtracting any Mattel federal, state, and local income tax savings resulting from the deductibility of the payment for corporate tax purposes, is equal to the Participant' s Coverage Amount. The Alternative Death Benefit Amount shall be determined at the time the payment is to be made, based on Mattel' s federal, state and local income tax rate (calculated at the highest marginal tax rate then applicable to Mattel, net of any federal deduction for state and local taxes) at the time of the payment, and shall be determined by Mattel.
Section 2.03 Assignee means that person or entity to whom the Participant has assigned his or her interest in the Policy by designating such Assignee on forms provided by Mattel.
Section 2.04 Basic Coverage Amount means the insurance death benefit amount specified as such in the Participant' s Agreement.
Section 2.05 Change in Control means a Change in Control of Mattel, as such term is defined in the Mattel, Inc. Deferred Compensation Benefit Plans Trust Agreement executed on July 17, 1996 and amended thereafter.
Section 2.06 Committee means the Compensation/Options Committee of the Board of Directors of Mattel.
Section 2.07 Effective Date means June 1, 1997. Section 2.08 Executive means an employee of Mattel who the Plan Administrator determines is eligible to participate in the Plan.
Section 2.09 Insurer means, with respect to a Participant' s Policy, the insurance company issuing the Policy on the Participant' s life pursuant to the provisions of the Plan.
Section 2.10 Optional Coverage Amount means the insurance death benefit amount specified as such in the Participant' s Agreement.
Section 2.11 Participant means an eligible Executive who elects to participate in the Plan.
Section 2.12 Permanent Policy means a Participant' s Policy that is projected to have Policy cash values at least equal to the Participant' s Coverage Amount when the Participant reaches age 95 and a Policy death benefit equal to at least 125% of the sum of the Participant' s Basic and Optional Coverage Amounts at all times prior to the Maturity Date, considering premiums paid prior to the time the determination is made, as well as future projected premiums. The determination shall be made by Mattel based on projections provided by the Insurer or its agent. Projections shall be based on then current mortality charges and a gross crediting rate on policy cash values of 5%.
Section 2.13 Plan Administrator means the Committee.
Section 2.14 Policy means the life insurance coverage acquired on the life of the Participant by the owner of the Policy.
Section 2.15 Policy Surrender Value means, with respect to a Participant' s Policy, the actual cash surrender value of the Policy, net of any applicable surrender charges, that would be available upon a complete surrender of the Policy.
Section 2.16 Premium means, with respect to a Participant' s Policy, the amount paid to the Insurer with respect to a Participant' s Policy. Section 2.17 Vested Executive means an Executive who is either: (i) age 55 or older and who has five or more Years of Service; or (ii) vested in benefits payable under the Mattel, Inc. Supplemental Executive Retirement Plan.
Section 2.18 Years of Service shall have the definition specified in the Mattel, Inc. Supplemental Executive Retirement Plan.
3. Eligibility and Coverage Amount
The eligibility of an Executive, as well as the applicable Basic and Optional Coverage Amount, will be determined by the Plan Administrator.
If, during the insurance application and underwriting process, it is determined that the Executive' s health is such that the cost of the insurance would be prohibitive, the Plan Administrator, in its sole discretion, may determine that the Executive will not be eligible to participate in the Plan, provide a reduced Basic and/or Optional Coverage Amount, or take any other action it deems appropriate.
4. Type of Coverage A Participant will be provided with life insurance coverage on the Participant' s life equal to the Basic Coverage Amount. A Participant will be able to choose additional coverage equal to the Participant' s Optional Coverage Amount.
5. Payment of Premiums Section 5.01 Mattel Payments . Subject to Sections 7.01, 7.02, 12.01 and 12.02, Mattel shall pay all Policy Premiums necessary to maintain the Policy death benefit at a level at least equal to the Participant' s Basic Coverage Amount and, if elected, Optional Coverage Amount.
Section 5.02 Pre-Retirement Participant Payments . Any Participant electing Optional Coverage shall be required to contribute towards the cost of such coverage by paying an amount equal to the one year term cost for the coverage, determined based on the Participant' s age at the beginning of the Policy year, the Insurer' s published one year term rates in effect at the beginning of the Policy year, and the Participant' s Optional Coverage Amount under the Plan. The amount shall be determined pursuant to the guidelines set forth in Revenue Ruling 66-110 and Revenue Ruling 67154, and shall be conclusively determined by the Plan Administrator.
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Section 5.03 Post-Retirement Participant Payments . If a Participant terminating employment qualifies as a Vested Executive, then the Participant can elect, at that time, to maintain his/her Optional Coverage Amount by paying to Mattel each year an amount equal to the Insurer' s mortality charges then applicable to the Participant' s Optional Coverage Amount. The amount shall be conclusively determined by the Plan Administrator.
6. Policy Ownership
Section 6.01 Ownership . Mattel shall be the owner of a Participant' s Policy and shall be entitled to exercise the rights of ownership, except that the following rights shall be exercisable by the Participant (or Assignee): (i) the right to designate the beneficiary or beneficiaries to receive payment of the portion of the death benefit under the Participant' s Policy equal to the Basic Coverage Amount and, if elected, Optional Coverage Amount; and (ii) the right to assign any part or all of the Participant' s rights under the Policy to any person, entity or trust by the execution of a written instrument prescribed by Mattel that is delivered to Mattel. Also, except as provided in Section 7, Mattel shall not borrow from, hypothecate, surrender in whole or in part, cancel, or in any other manner encumber a Participant' s Policy without the prior written consent of the Participant (or Assignee).
Section 6.02 Possession of Policy . Mattel shall keep possession of the Policy. Mattel agrees to make the Policy available to the Participant (or Assignee) or to the Insurer at such times as, and on such terms as, Mattel determines for the sole purposes of endorsing or filing any change of beneficiary or assignment on the Policy.
7. Termination Events Section 7.01 Termination Events . Except as provided in Section 7.02, Mattel' s obligation to pay Premiums with respect to a Participant' s Policy shall terminate:
a. Automatically upon the death of the Participant. b. Upon the written action of the Plan Administrator if the Participant terminates employment with Mattel (or any subsidiary or affiliate of Mattel) prior to being a Vested Executive.
c. Upon the mutual agreement of Mattel and the Participant (or Assignee).
Section 7.02 Irrevocable Obligation . Notwithstanding any other provision of the Plan, (i) Mattel' s obligation to pay Policy Premiums for a Participant who meets the requirements for a Vested Executive shall be irrevocable while such person is employed by Mattel and shall remain irrevocable thereafter; and (ii) Mattel' s obligation to pay Policy Premiums for a Participant who obtains an irrevocable right pursuant to the provisions of Section 9 hereof relating to Change in Control thereafter shall be irrevocable.
Section 7.03 Allocation of Death Benefit . In the event of a termination due to the death of the Participant, the death benefit under the Participant' s Policy shall be divided as follows:
a. The beneficiary or beneficiaries of the Participant (or Assignee) shall be entitled to receive an amount equal to the Basic Coverage Amount and, if elected, Optional Coverage Amount.
b. Mattel shall be entitled to receive the excess of the death benefit.
Mattel agrees to execute an endorsement to the Policy issued to it by the Insurer providing for the division of the death benefit in accordance with the provisions of this Section.
Notwithstanding the provisions of this Section, if the Policy death benefit becomes payable while there is an Alternative Death Benefit Election in effect for the Participant pursuant to Section 8, then the entire Policy death benefit shall be paid to Mattel.
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Section 7.04 Disposition of Policy . If a Participant' s Agreement terminates under Section 7.01(b) or (c), the Participant (or Assignee) may acquire the Participant' s Policy from Mattel by paying Mattel an amount equal to the Policy Surrender Value (or any lesser amount determined by the Plan Administrator). In order to exercise this right, the person entitled to exercise the right shall notify Mattel, in writing, of the intention to exercise the option to purchase the policy within sixty (60) days following the event of termination. If Mattel is so notified, Mattel shall, within thirty (30) days after being notified, provide a written notice to the Participant (or Assignee) indicating the payment amount required. Within thirty (30) days after receiving such notice from Mattel, the Participant (or Assignee) shall make the required payment to Mattel. If the payment is not made within the required time, the right to acquire the Policy shall terminate. If the required payment is received on a timely basis, Mattel shall submit to the Insurer, within thirty (30) business days after receiving the payment, the forms required to transfer the Policy ownership to the Participant (or Assignee). If the Participant (or Assignee) does not exer...
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