Document:

EX-10.4

 

Exhibit 10.4

COLLATERAL ASSIGNMENT

SPLIT DOLLAR INSURANCE AGREEMENT

          This Split Dollar Agreement (the “Agreement”) is established and effective between ARGO-TECH
CORPORATION, organized and existing under the laws of the State of Delaware (the “Company”), and
Paul R. Keen, a key employee and executive of the Company (the “Participant”), as of the 1st day of
January, 1996.

W I T N E S S E T H:

          WHEREAS, the Participant has been employed by the Company since August 27, 1987, in the
capacity of Vice President, General Counsel and Secretary and by reason thereof has acquired
experience and knowledge of considerable value to the Company; and,

          WHEREAS, the Company wishes to continue this employment relationship and, as an inducement
thereto, is willing to assist the Participant in the payment of premiums on a life insurance policy
(the “Policy”) issued by Pacific Mutual Life Insurance Company (the “Insurer”) as an additional
benefit to the Participant as its employee; and,

          WHEREAS, the Participant is willing to purchase and own a life insurance policy on the
Participant’s life; and,

          WHEREAS, the Participant shall freely undertake such reasonable steps necessary to institute
this Agreement, including the assigning to the Company of an interest in the Policy as provided
herein.

          NOW THEREFORE, the Company and the Participant mutually agree that:

ARTICLE I

PURPOSE

          This Agreement is intended to qualify as a “split dollar” arrangement as described in Revenue
Ruling 64-328, C.B. 1964-2. This Agreement, together with any other similar

 

 

agreement between the Company and an employee of the Company, is established for the purpose
of providing life insurance protection and is intended to be an employee welfare benefit plan which
covers fewer than 100 participants within the meaning of the Employee Retirement Income Security
Act of 1974 (“ERISA”).

ARTICLE II

POLICY

          The Participant shall purchase the Policy on his life (the “Insured”) from the Insurer in an
amount equal to three times the Participant’s Total Cash Compensation with respect to the Company’s
immediately preceding fiscal year, as identified in Exhibit “A” attached hereto and made a part
hereof.

ARTICLE III

POLICY INTERESTS

     3.1 The Participant shall be the owner of the Policy and shall assign to the Company an
interest as determined in Paragraph 3.3 (the “Company’s Policy Interest”).

     3.2 For the purposes of this Agreement, the term “Cash Value” shall mean the cash surrender
value of the Policy as defined in the Insurer’s policy form (the “Insurer’s Policy/Contract”) as
identified in Exhibit “B” attached hereto and made a part hereof.

     3.3 For purposes of this Agreement, the Company’s Policy Interest shall be the lesser of an
amount of Cash Value proportionate to the Company’s premium payments, or an amount of Cash Value
equal to cumulative premium payments by the Company.

     3.4 The existence of the Company’s Policy Interest shall be evidenced by filing with the
Insurer an assignment in a form accepted and required by the Insurer (the “Assignment”),
substantially in the form in Exhibit “C” attached hereto and made a part hereof. The Participant

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shall execute such Assignment and take such other action necessary or desirable to perfect
and/or maintain such assignment as may be reasonably requested by the Company.

     3.5 The Participant’s Policy Interest shall be the Cash Value and death benefit in excess of
the Company’s Policy Interest.

ARTICLE IV

INCIDENTS OF OWNERSHIP

     4.1 Except as specified below and/or in the Assignment, the Participant shall have full
incidents of ownership over the Participant’s Policy Interest, as provided in the Insurer’s
Policy/Contract. Anything in this Agreement and/or the Assignment to the contrary notwithstanding,
neither the Company nor the Participant shall obtain any loan on the Policy or surrender the Policy
or effect any withdrawal from the Policy during the term of this Agreement.

     4.2 The Company shall have the incidents of ownership over its Policy Interest as provided in
the Assignment, including the right to name the beneficiary and to receive a portion of the death
benefit equal to its Policy Interest, so long as those incidents of ownership are not in
contradiction to, or in addition to, the incidents of ownership provided in the Insurer’s
Policy/Contract.

     4.3 Neither the Company nor the Participant shall take any action that would jeopardize the
interests of the other party under this Agreement.

ARTICLE V

PAYMENT OF PREMIUMS

     5.1 The Company and the Participant agree to remit to the Insurer the entire annual premium
due on the Policy in a timely manner at the beginning of each policy year occurring during the term
of this Agreement and before the expiration of the grace period.

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	 	5.2 Each such annual premium on the Policy shall be paid as follows:

	 	(a)	 	The Participant shall pay a portion of each premium equal to
the current term rate for the insured’s age multiplied by the excess of
the current death benefit over the Company’s Policy Interest. The
Company shall pay to the Participant as a “Bonus Payment” an amount
equal to Participant’s portion of the premium due from the Participant.
Such Bonus Payment shall be in addition to any other “bonus” or
“incentive payment” payable to the Participant. Such Bonus Payment
shall be subject to any tax or other withholding required by law or
authorized by the Participant. For purposes of this subparagraph, the
“current term rate” shall mean the lesser of the insurer’s annual term
insurance rate or the rates specified in Revenue Rulings 64-328, C.B.
1964-2, 11 and 66-110, C.B. 1966-1, 12.
	 
	 	(b)	 	The Company shall pay a portion of the premium in excess of the
portion of the premium paid by the Participant but in no event less
than that amount necessary to keep the Policy in force as determined by
the Insurer or greater than an amount which, when combined with the
Participant’s portion of the premium, will not exceed the total premium
allowable under the Policy pursuant to subparagraph (c) of this
Article.
	 
	 	(c)	 	Subparagraphs (a) and (b) combined of Paragraph 5.2, together
with Article VI, shall not result in a total premium equal to an amount
that would make the Policy a Modified Endowment Contract pursuant to
Section 7702A of the Internal Revenue Code of 1986, as amended, or that
would cause this Policy to fail the definition of life insurance
pursuant to Section 7702 of the Internal Revenue Code of 1986, as
amended.

ARTICLE VI

ADDITIONAL POLICY BENEFITS AND RIDERS

               Subject to subparagraph (c) of Paragraph 5.2, the Participant may add any other rider to the
Policy for his own benefit. Upon written request by the Company, the Participant shall add any
rider to the Policy for the benefit of the Company. Any additional premium for any rider which is
added to the Policy shall be paid by the party entitled to receive the benefits resulting from such
rider, the provisions of subparagraphs (a) and (b) of Paragraph 5.2 to the contrary
notwithstanding.

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ARTICLE VII

NO ASSIGNMENT

          Neither of the parties to this Agreement may assign their rights, interest and/or obligations
under this Agreement. Any attempt by either party to assign its rights, interest and/or
obligations under this Agreement shall be void ab initio.

ARTICLE VIII

AMENDMENT

          This Agreement may be amended only by mutual agreement of the Participant and the Company by a
written instrument signed by the Participant and the Company.

ARTICLE IX

MERGER AND REORGANIZATION OF COMPANY

          The Company will not merge, consolidate or reorganize its business activities with any other
company or organization unless and until the other company or organization agrees to assume all
obligations of the Company under this Agreement.

ARTICLE X

TERMINATION

     10.1 This Agreement shall terminate upon the earliest to occur of: (i) the date specified in a
written instrument signed by the Participant and the Company; (ii) the date specified by the
Participant in a written notice delivered to the Company, which date shall be not less than 30 days
following the delivery of such notice to the Company; (iii) the date on which the Participant’s
employment with the Company terminates for any reason other than the Participant’s death; or (iv)
the date of the Participant’s death.

     (a) In the event of termination of this Agreement as provided in
clauses (i), (ii), or (iii) of this Paragraph 10.1, above, the

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	 	 	 	Participant shall pay the Company within 60 days of the date of
termination an amount equal to the Company’s Policy Interest. If
the Participant pays the Company as provided in the immediately
preceding sentence, the Company shall take all steps necessary to
release the Assignment such that the Company’s Policy Interest comes
under the full control of the Participant, and the Company shall
thereafter no longer have any rights, interest, and/or obligations,
whatsoever, under the Policy.
	 
	 	(b)	 	If the Participant fails to pay the Company within 60 days of
the date of termination of this Agreement pursuant to the provisions of
subparagraph 10.1(a), above, the Participant shall have no further
rights or ownership interests in the Policy, but the Participant shall
execute any and all instruments that may be required to vest ownership
of said Policy in the Company; and thereupon the Company shall refund
to the Participant that part of any payment made by the Participant
under Article V for the premium payment period in which termination
occurred representing the unexpired portion of that period.
	 
	 	(c)	 	In the event of termination of this Agreement as provided in
clause (iv) of this Paragraph 10.1 above, or in the event this
Agreement has terminated as provided in clauses (i), (ii), or (iii) of
this Paragraph 10.1 above and 60 days from the date of termination have
not elapsed and the Participant has not paid the Company pursuant to
the provisions of subparagraph 10.1(a) above but within such 60 day
period Participant dies, the Company shall be entitled to receive an
amount of the death benefit of the Policy equal to the Company’s Policy
Interest, and the remainder (if any) of the death benefit of the Policy
(the Participant’s Policy Interest) shall be paid to the beneficiary
thereof in accordance with the Policy and the Assignment.
	 
	 	(d)	 	Any payments under the Policy to the Company in connection with
the rights or ownership interests assigned to the Company in the
Assignment referred to in Paragraph 3.4 herein shall first be made from
the Cash Value. The Participant shall have no rights or ownership
interests in the Cash Value except to the extent the Cash Value thereof
exceeds the total Company’s Policy Interest.

       10.2 In all matters regarding this Agreement after the death of the Participant, the
Participant shall be represented solely by the executor or administrator or other personal
representative of the Participant’s estate.

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ARTICLE XI

ERISA PROVISIONS

     11.1 The following provisions are intended to meet the requirements of Part 4 of Title I of
ERISA to the extent applicable to this Agreement:

	 	(a)	 	The named fiduciary and Plan Administrator: The Argo-Tech
Corporation Benefits Committee.
	 
	 	(b)	 	The funding policy is that all premiums on the Policy be
remitted to the Insurer when due.
	 
	 	(c)	 	Direct payment by the Insurer is the basis of payment of
benefits, with those benefits in turn being based on the payment of
premiums as provided herein.

     11.2 The following provisions are intended to meet the requirements of Part 5 of Title I of
ERISA to the extent applicable to this Agreement:

	 	(a)	 	If for any reason a claim for benefits under the Plan is denied
by the Company, the Plan Administrator shall deliver to the claimant a
written explanation setting forth the specific reasons for the denial,
pertinent references to the Plan section on which the denial is based,
such other data as may be pertinent and information on the procedures
to be followed by the claimant in obtaining a review of his claim, all
written in a manner calculated to be understood by the claimant. For
this purpose:

	 	(i)	 	the claimant’s claim shall be deemed filed when
presented orally or in writing to the Plan Administrator; and
	 
	 	(ii)	 	the Plan Administrator’s explanation shall be in
writing delivered to the claimant within 90 days of the date the
claim is filed.

	 	(b)	 	The claimant shall have 60 days following his receipt of the
denial of the claim to file with the Plan Administrator a written
request for review of the denial. For such review, the claimant or his
representative may submit pertinent documents and written issues and
comments.
	 
	 	(c)	 	The Plan Administrator shall decide the issue on review and
furnish the claimant with a copy within 60 days following his receipt
of the claimant’s request for review of his claims. The decision on
review shall be in writing and shall include specific

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	 	 	 	reasons for the decision written in a manner calculated to be
understood by the claimant, as well as specific references to the
pertinent plan provisions on which the decision is based. If a copy
of the decision is not furnished to the claimant within such 60
days, the claim shall be deemed denied on review.

     11.3 The following provisions are intended, when taken in conjunction with Paragraph 11.4 and
the other terms and provisions of this Agreement, including the Assignment and the
computer-prepared illustration, to meet the requirements of a summary plan description for the
benefit of the Participant and the beneficiaries pursuant to Part I of Title I of ERISA to the
extent applicable.

	 	(a)	 	The plan is a single employer plan sponsored by Argo-Tech
Corporation.
	 
	 	(b)	 	The Company’s employer identification number (“EIN”) assigned
by the Internal Revenue Service is 06 1100916 and the Plan number
assigned by the Company is 010.
	 
	 	(c)	 	The Plan Administrator is The Argo-Tech Benefits Committee, c/o
Argo-Tech Corporation, 23555 Euclid Avenue, Cleveland, Ohio 44117
(216/692-5259). The Plan Administrator shall also be the agent for the
service of process at the above address.
	 
	 	(d)	 	The end of the Plan year for purposes of keeping Plan records
is December 31st of each year.
	 
	 	(e)	 	In order to be eligible to participate in the plan, an employee
must be selected by the Company.

     11.4 The following is intended to meet the “Statement of ERISA Rights” requirement of Part I
of Title I of ERISA to the extent applicable.

As a participant in this plan you are entitled to certain rights and protection under ERISA.
ERISA provides that all plan participants shall be entitled to:

	 	(a)	 	Examine, without charge, at the Plan Administrator’s office all
plan documents, including insurance contracts.
	 
	 	(b)	 	Obtain copies of all plan documents and other plan information
upon written request to the Plan Administrator. The Plan Administrator
may make a reasonable charge for the copies.

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	 	(c)	 	In addition to creating rights for plan participants, ERISA
imposes duties upon the people who are responsible for the operation of
this employee benefit plan. The people who operate your plan are
called “fiduciaries” of the plan, and have a duty to do so prudently
and in the interest of you and other plan participants and
beneficiaries. No one, including your employer or any other person,
may fire you or otherwise discriminate against you in any way to
prevent you from obtaining your benefits or exercising your rights
under ERISA.
	 
	 	(d)	 	You are entitled to receive a written explanation for the
denial of your claims and you have the right to have the plan review
and reconsider your claim. If you do not receive the material
requested within 30 days of the request, you may file suit in Federal
Court. The court may require the Plan Administrator to pay you up to
$100 a day until you receive the requested materials.
	 
	 	(e)	 	If you are improperly denied a claim for benefits you may file
suit in Federal Court. If it should happen that plan fiduciaries
misuse the Plan’s money, or if you are discriminated against, you may
seek assistance from the U.S. Department of Labor or you may file suit
in Federal Court. If you are successful in your suit, the court may,
if it so decides, require the other party to pay your legal costs,
including attorney’s fees.
	 
	 	(f)	 	If you have any questions about this plan, you should contact
the Plan Administrator. If you have any questions about this statement
or about your rights under ERISA, you should contact the nearest office
of the U.S. Labor-Management Services Administration, Department of
Labor.

ARTICLE XII

NOT AN EMPLOYMENT CONTRACT

                       This Agreement is strictly a voluntary undertaking on the part of the Company and shall not be
deemed to constitute an employment contract between the Company and the Participant. No provision
of this Agreement shall affect any employment agreement entered into between the Company and the
Participant whether now or in the future. No provision of this Agreement shall be deemed to give
the Participant the right to be retained in the employ of the Company or to interfere with the
right of the Company to discharge the Participant or change the

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terms and conditions of the Participant’s employment at any time. No provision of this
Agreement shall interfere with the right of the Participant to terminate his employment with the
Company.

ARTICLE XIII

INSURER PROTECTION

     13.1 The Insurer shall be bound only by the terms and provisions of its Policy/Contract and by
the terms and provisions of the Assignment, but only if that Assignment is made in a form
acceptable and required by the Insurer and duly filed with the Insurer. Any payments made or
actions taken by the Insurer in accordance with the Policy/Contract and the Assignment shall fully
discharge it from all claims, suits and demands of all persons whatsoever. The Insurer shall in no
way be bound by or be deemed to have notice of the terms and provisions, or any other rights,
duties, obligations, or conditions of this Agreement.

     13.2 No term or provision herein shall be construed or deemed to grant any right to the
Insurer to demand payment of any premium as a third-party beneficiary or otherwise.

ARTICLE XIV

PAROL EVIDENCE AND GOVERNING LAW

              This Agreement sets forth the entire agreement of the Company and the Participant. Any and
all prior and contemporaneous agreements, to the extent inconsistent herewith, are superseded.
Where not superseded by federal law, the law of the State of Ohio shall govern this Agreement.

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ARTICLE XV

INTERPRETATION

          Words and phrases herein shall be construed as in the singular or plural as masculine,
feminine or neuter gender as appropriate. The Article titles used herein are for organizational
purposes only and shall have no determinative effect upon the rights, interests, and/or duties
created in this Agreement.

ARTICLE XVI

MISCELLANEOUS

     16.1 Enforceability. This Agreement shall inure to the benefit of and be enforceable
by the executive’s personal or legal representatives, executors, administrators, successors, heirs,
distributees and/or legatees.

     16.2 Notices. For all purposes of this Agreement, all communications including
without limitation notices, consents, requests or approvals, provided for herein shall be in
writing and shall be deemed to have been duly given when delivered or five business days after
having been mailed by United States registered or certified mail, return receipt requested, postage
prepaid, addressed to the Company (to the attention of the Secretary of the Company) at its
principal executive office and to the Participant at his principal residence, or to such other
address as any party may have furnished to the other in writing and in accordance herewith, except
that notices of change of address shall be effective only upon receipt.

     16.3 Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together will constitute one and the
same agreement.

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          IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully read this Agreement
and executed the original thereof on the 27th day of June, 1996 and that, upon execution, each has
received a confirming copy.

	 	 	 
	 

	 	ARGO-TECH CORPORATION
	 
	 	 
	/s/ Ramona Montillo

	 	By: /s/ J. Cunningham
	 

	 	 
	(Witness)

	 	Its:Vice President, Human Resources
	 
	 	 
	/s/ Carol J. Forre

	 	/s/ Paul R. Keen
	 

	 	 
	(Witness)

	 	Paul R. Keen

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EXHIBIT “A”

PART I — LIFE INSURANCE POLICY

	 	 	 
	Insurer:

	 	Pacific Mutual Insurance Company
	 
	 	 
	Face Amount:

	 	$646,074.00 
	 
	 	 
	Policy Number:

	 	1A2302129-0 
	 
	 	 
	Date of Policy:

	 	December 28, 1995

PART II — BENEFICIARY

Paul R. Keen Trust dated October 18, 1995

     This Exhibit “A” is a part of the agreement covering the Participant’s insurance entered into
between Argo-Tech Corporation and Paul R. Keen on January 1, 1996.EX-10.5

 

EXHIBIT 10.5

COLLATERAL ASSIGNMENT

SPLIT DOLLAR INSURANCE AGREEMENT

          This Split Dollar Agreement (the “Agreement”) is established and effective between ARGO-TECH
CORPORATION, organized and existing under the laws of the State of Delaware (the “Company”), and
Frances S. St Clair, a key employee and executive of the Company (the “Participant”), as of the 1st
day of January, 1996.

W I T N E S S E T H:

          WHEREAS, the Participant has been employed by the Company since March 11, 1991, in the
capacity of Vice President and Chief Financial Officer and by reason thereof has acquired
experience and knowledge of considerable value to the Company; and,

          WHEREAS, the Company wishes to continue this employment relationship and, as an inducement
thereto, is willing to assist the Participant in the payment of premiums on a life insurance policy
(the “Policy”) issued by Pacific Mutual Life Insurance Company (the “Insurer”) as an additional
benefit to the Participant as its employee; and,

          WHEREAS, the Participant is willing to purchase and own a life insurance policy on the
Participant’s life; and,

          WHEREAS, the Participant shall freely undertake such reasonable steps necessary to institute
this Agreement, including the assigning to the Company of an interest in the Policy as provided
herein.

          NOW THEREFORE, the Company and the Participant mutually agree that:

ARTICLE I

PURPOSE

          This Agreement is intended to qualify as a “split dollar” arrangement as described in Revenue
Ruling 64-328, C.B. 1964-2. This Agreement, together with any other similar

 

 

agreement between the Company and an employee of the Company, is established for the purpose
of providing life insurance protection and is intended to be an employee welfare benefit plan which
covers fewer than 100 participants within the meaning of the Employee Retirement Income Security
Act of 1974 (“ERISA”).

ARTICLE II

POLICY

          The Participant shall purchase the Policy on his life (the “Insured”) from the Insurer in an
amount equal to three times the Participant’s Total Cash Compensation with respect to the Company’s
immediately preceding fiscal year, as identified in Exhibit “A” attached hereto and made a part
hereof.

ARTICLE III

POLICY INTERESTS

     3.1   The Participant shall be the owner of the Policy and shall assign to the Company an
interest as determined in Paragraph 3.3 (the “Company’s Policy Interest”).

     3.2   For the purposes of this Agreement, the term “Cash Value” shall mean the cash surrender
value of the Policy as defined in the Insurer’s policy form (the “Insurer’s Policy/Contract”) as
identified in Exhibit “B” attached hereto and made a part hereof.

     3.3   For purposes of this Agreement, the Company’s Policy Interest shall be the lesser of an
amount of Cash Value proportionate to the Company’s premium payments, or an amount of Cash Value
equal to cumulative premium payments by the Company.

     3.4   The existence of the Company’s Policy Interest shall be evidenced by filing with the
Insurer an assignment in a form accepted and required by the Insurer (the “Assignment”),
substantially in the form in Exhibit “C” attached hereto and made a part hereof. The Participant

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shall execute such Assignment and take such other action necessary or desirable to perfect
and/or maintain such assignment as may be reasonably requested by the Company.

     3.5   The Participant’s Policy Interest shall be the Cash Value and death benefit in excess of
the Company’s Policy Interest.

ARTICLE IV

INCIDENTS OF OWNERSHIP

     4.1   Except as specified below and/or in the Assignment, the Participant shall have full
incidents of ownership over the Participant’s Policy Interest, as provided in the Insurer’s
Policy/Contract. Anything in this Agreement and/or the Assignment to the contrary notwithstanding,
neither the Company nor the Participant shall obtain any loan on the Policy or surrender the Policy
or effect any withdrawal from the Policy during the term of this Agreement.

     4.2   The Company shall have the incidents of ownership over its Policy Interest as provided in
the Assignment, including the right to name the beneficiary and to receive a portion of the death
benefit equal to its Policy Interest, so long as those incidents of ownership are not in
contradiction to, or in addition to, the incidents of ownership provided in the Insurer’s
Policy/Contract.

     4.3   Neither the Company nor the Participant shall take any action that would jeopardize the
interests of the other party under this Agreement.

ARTICLE V

PAYMENT OF PREMIUMS

     5.1   The Company and the Participant agree to remit to the Insurer the entire annual premium
due on the Policy in a timely manner at the beginning of each policy year occurring during the term
of this Agreement and before the expiration of the grace period.

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     5.2   Each such annual premium on the Policy shall be paid as follows:

	 	(a)	 	The Participant shall pay a portion of each premium equal to
the current term rate for the insured’s age multiplied by the excess of
the current death benefit over the Company’s Policy Interest. The
Company shall pay to the Participant as a “Bonus Payment” an amount
equal to Participant’s portion of the premium due from the Participant.
Such Bonus Payment shall be in addition to any other “bonus” or
“incentive payment” payable to the Participant. Such Bonus Payment
shall be subject to any tax or other withholding required by law or
authorized by the Participant. For purposes of this subparagraph, the
“current term rate” shall mean the lesser of the insurer’s annual term
insurance rate or the rates specified in Revenue Rulings 64-328, C.B.
1964-2, 11 and 66-110, C.B. 1966-1, 12.
	 
	 	(b)	 	The Company shall pay a portion of the premium in excess of the
portion of the premium paid by the Participant but in no event less
than that amount necessary to keep the Policy in force as determined by
the Insurer or greater than an amount which, when combined with the
Participant’s portion of the premium, will not exceed the total premium
allowable under the Policy pursuant to subparagraph (c) of this
Article.
	 
	 	(c)	 	Subparagraphs (a) and (b) combined of Paragraph 5.2, together
with Article VI, shall not result in a total premium equal to an amount
that would make the Policy a Modified Endowment Contract pursuant to
Section 7702A of the Internal Revenue Code of 1986, as amended, or that
would cause this Policy to fail the definition of life insurance
pursuant to Section 7702 of the Internal Revenue Code of 1986, as
amended.

ARTICLE VI

ADDITIONAL POLICY BENEFITS AND RIDERS

          Subject to subparagraph (c) of Paragraph 5.2, the Participant may add any other rider to the
Policy for his own benefit. Upon written request by the Company, the Participant shall add any
rider to the Policy for the benefit of the Company. Any additional premium for any rider which is
added to the Policy shall be paid by the party entitled to receive the benefits resulting from such
rider, the provisions of subparagraphs (a) and (b) of Paragraph 5.2 to the contrary
notwithstanding.

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ARTICLE VII

NO ASSIGNMENT

          Neither of the parties to this Agreement may assign their rights, interest and/or obligations
under this Agreement. Any attempt by either party to assign its rights, interest and/or
obligations under this Agreement shall be void ab initio.

ARTICLE VIII

AMENDMENT

          This Agreement may be amended only by mutual agreement of the Participant and the Company by a
written instrument signed by the Participant and the Company.

ARTICLE IX

MERGER AND REORGANIZATION OF COMPANY

          The Company will not merge, consolidate or reorganize its business activities with any other
company or organization unless and until the other company or organization agrees to assume all
obligations of the Company under this Agreement.

ARTICLE X

TERMINATION

    10.1  This Agreement shall terminate upon the earliest to occur of: (i) the date specified in a
written instrument signed by the Participant and the Company; (ii) the date specified by the
Participant in a written notice delivered to the Company, which date shall be not less than 30 days
following the delivery of such notice to the Company; (iii) the date on which the Participant’s
employment with the Company terminates for any reason other than the Participant’s death; or (iv)
the date of the Participant’s death.

	 	(a)	 	In the event of termination of this Agreement as provided in
clauses (i), (ii), or (iii) of this Paragraph 10.1, above, the
Participant shall pay the Company within 60 days of the date of

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	 	 	 	termination an amount equal to the Company’s Policy Interest. If
the Participant pays the Company as provided in the immediately
preceding sentence, the Company shall take all steps necessary to
release the Assignment such that the Company’s Policy Interest comes
under the full control of the Participant, and the Company shall
thereafter no longer have any rights, interest, and/or obligations,
whatsoever, under the Policy.
	 
	 	(b)	 	If the Participant fails to pay the Company within 60 days of
the date of termination of this Agreement pursuant to the provisions of
subparagraph 10.1(a), above, the Participant shall have no further
rights or ownership interests in the Policy, but the Participant shall
execute any and all instruments that may be required to vest ownership
of said Policy in the Company; and thereupon the Company shall refund
to the Participant that part of any payment made by the Participant
under Article V for the premium payment period in which termination
occurred representing the unexpired portion of that period.
	 
	 	(c)	 	In the event of termination of this Agreement as provided in
clause (iv) of this Paragraph 10.1 above, or in the event this
Agreement has terminated as provided in clauses (i), (ii), or (iii) of
this Paragraph 10.1 above and 60 days from the date of termination have
not elapsed and the Participant has not paid the Company pursuant to
the provisions of subparagraph 10.1(a) above but within such 60 day
period Participant dies, the Company shall be entitled to receive an
amount of the death benefit of the Policy equal to the Company’s Policy
Interest, and the remainder (if any) of the death benefit of the Policy
(the Participant’s Policy Interest) shall be paid to the beneficiary
thereof in accordance with the Policy and the Assignment.
	 
	 	(d)	 	Any payments under the Policy to the Company in connection with
the rights or ownership interests assigned to the Company in the
Assignment referred to in Paragraph 3.4 herein shall first be made from
the Cash Value. The Participant shall have no rights or ownership
interests in the Cash Value except to the extent the Cash Value thereof
exceeds the total Company’s Policy Interest.

     10.2  In all matters regarding this Agreement after the death of the Participant, the
Participant shall be represented solely by the executor or administrator or other personal
representative of the Participant’s estate.

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ARTICLE XI

ERISA PROVISIONS

     11.1  The following provisions are intended to meet the requirements of Part 4 of Title I of
ERISA to the extent applicable to this Agreement:

	 	(a)	 	The named fiduciary and Plan Administrator: The Argo-Tech
Corporation Benefits Committee.
	 
	 	(b)	 	The funding policy is that all premiums on the Policy be
remitted to the Insurer when due.
	 
	 	(c)	 	Direct payment by the Insurer is the basis of payment of
benefits, with those benefits in turn being based on the payment of
premiums as provided herein.

     11.2  The following provisions are intended to meet the requirements of Part 5 of Title I of
ERISA to the extent applicable to this Agreement:

	 	(a)	 	If for any reason a claim for benefits under the Plan is denied
by the Company, the Plan Administrator shall deliver to the claimant a
written explanation setting forth the specific reasons for the denial,
pertinent references to the Plan section on which the denial is based,
such other data as may be pertinent and information on the procedures
to be followed by the claimant in obtaining a review of his claim, all
written in a manner calculated to be understood by the claimant. For
this purpose:

	 	(i)	 	the claimant’s claim shall be deemed filed when
presented orally or in writing to the Plan Administrator; and
	 
	 	(ii)	 	the Plan Administrator’s explanation shall be in
writing delivered to the claimant within 90 days of the date the
claim is filed.

	 	(b)	 	The claimant shall have 60 days following his receipt of the
denial of the claim to file with the Plan Administrator a written
request for review of the denial. For such review, the claimant or his
representative may submit pertinent documents and written issues and
comments.
	 
	 	(c)	 	The Plan Administrator shall decide the issue on review and
furnish the claimant with a copy within 60 days following his receipt
of the claimant’s request for review of his claims. The decision on
review shall be in writing and shall include specific

7

 

	 	 	 	reasons for the decision written in a manner calculated to be
understood by the claimant, as well as specific references to the
pertinent plan provisions on which the decision is based. If a copy
of the decision is not furnished to the claimant within such 60
days, the claim shall be deemed denied on review.

     11.3  The following provisions are intended, when taken in conjunction with Paragraph 11.4 and
the other terms and provisions of this Agreement, including the Assignment and the
computer-prepared illustration, to meet the requirements of a summary plan description for the
benefit of the Participant and the beneficiaries pursuant to Part I of Title I of ERISA to the
extent applicable.

	 	(a)	 	The plan is a single employer plan sponsored by Argo-Tech
Corporation.
	 
	 	(b)	 	The Company’s employer identification number (“EIN”) assigned
by the Internal Revenue Service is 06 1100916 and the Plan number
assigned by the Company is 010.
	 
	 	(c)	 	The Plan Administrator is The Argo-Tech Benefits Committee, c/o
Argo-Tech Corporation, 23555 Euclid Avenue, Cleveland, Ohio 44117
(216/692-5259). The Plan Administrator shall also be the agent for the
service of process at the above address.
	 
	 	(d)	 	The end of the Plan year for purposes of keeping Plan records
is December 31st of each year.
	 
	 	(e)	 	In order to be eligible to participate in the plan, an employee
must be selected by the Company.

     11.4  The following is intended to meet the “Statement of ERISA Rights” requirement of Part I
of Title I of ERISA to the extent applicable.

As a participant in this plan you are entitled to certain rights and protection under ERISA.
ERISA provides that all plan participants shall be entitled to:

	 	(a)	 	Examine, without charge, at the Plan Administrator’s office all
plan documents, including insurance contracts.
	 
	 	(b)	 	Obtain copies of all plan documents and other plan information
upon written request to the Plan Administrator. The Plan Administrator
may make a reasonable charge for the copies.

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	 	(c)	 	In addition to creating rights for plan participants, ERISA
imposes duties upon the people who are responsible for the operation of
this employee benefit plan. The people who operate your plan are
called “fiduciaries” of the plan, and have a duty to do so prudently
and in the interest of you and other plan participants and
beneficiaries. No one, including your employer or any other person,
may fire you or otherwise discriminate against you in any way to
prevent you from obtaining your benefits or exercising your rights
under ERISA.
	 
	 	(d)	 	You are entitled to receive a written explanation for the
denial of your claims and you have the right to have the plan review
and reconsider your claim. If you do not receive the material
requested within 30 days of the request, you may file suit in Federal
Court. The court may require the Plan Administrator to pay you up to
$100 a day until you receive the requested materials.
	 
	 	(e)	 	If you are improperly denied a claim for benefits you may file
suit in Federal Court. If it should happen that plan fiduciaries
misuse the Plan’s money, or if you are discriminated against, you may
seek assistance from the U.S. Department of Labor or you may file suit
in Federal Court. If you are successful in your suit, the court may,
if it so decides, require the other party to pay your legal costs,
including attorney’s fees.
	 
	 	(f)	 	If you have any questions about this plan, you should contact
the Plan Administrator. If you have any questions about this statement
or about your rights under ERISA, you should contact the nearest office
of the U.S. Labor-Management Services Administration, Department of
Labor.

ARTICLE XII

NOT AN EMPLOYMENT CONTRACT

     This Agreement is strictly a voluntary undertaking on the part of the Company and shall not be
deemed to constitute an employment contract between the Company and the Participant. No provision
of this Agreement shall affect any employment agreement entered into between the Company and the
Participant whether now or in the future. No provision of this Agreement shall be deemed to give
the Participant the right to be retained in the employ of the Company or to interfere with the
right of the Company to discharge the Participant or change the

9

 

terms and conditions of the Participant’s employment at any time. No provision of this
Agreement shall interfere with the right of the Participant to terminate his employment with the
Company.

ARTICLE XIII

INSURER PROTECTION

     13.1  The Insurer shall be bound only by the terms and provisions of its Policy/Contract and by
the terms and provisions of the Assignment, but only if that Assignment is made in a form
acceptable and required by the Insurer and duly filed with the Insurer. Any payments made or
actions taken by the Insurer in accordance with the Policy/Contract and the Assignment shall fully
discharge it from all claims, suits and demands of all persons whatsoever. The Insurer shall in no
way be bound by or be deemed to have notice of the terms and provisions, or any other rights,
duties, obligations, or conditions of this Agreement.

     13.2  No term or provision herein shall be construed or deemed to grant any right to the
Insurer to demand payment of any premium as a third-party beneficiary or otherwise.

ARTICLE XIV

PAROL EVIDENCE AND GOVERNING LAW

     This Agreement sets forth the entire agreement of the Company and the Participant. Any and
all prior and contemporaneous agreements, to the extent inconsistent herewith, are superseded.
Where not superseded by federal law, the law of the State of Ohio shall govern this Agreement.

ARTICLE XV

INTERPRETATION

     Words and phrases herein shall be construed as in the singular or plural as masculine,
feminine or neuter gender as appropriate. The Article titles used herein are for

10

 

organizational purposes only and shall have no determinative effect upon the rights,
interests, and/or duties created in this Agreement.

ARTICLE XVI

MISCELLANEOUS

     16.1  Enforceability. This Agreement shall inure to the benefit of and be enforceable
by the executive’s personal or legal representatives, executors, administrators, successors, heirs,
distributees and/or legatees.

     16.2  Notices. For all purposes of this Agreement, all communications including
without limitation notices, consents, requests or approvals, provided for herein shall be in
writing and shall be deemed to have been duly given when delivered or five business days after
having been mailed by United States registered or certified mail, return receipt requested, postage
prepaid, addressed to the Company (to the attention of the Secretary of the Company) at its
principal executive office and to the Participant at his principal residence, or to such other
address as any party may have furnished to the other in writing and in accordance herewith, except
that notices of change of address shall be effective only upon receipt.

     16.3  Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together will constitute one and the
same agreement.

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     IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully read this Agreement
and executed the original thereof on the 27th day of June, 1996, and that, upon execution, each has
received a confirming copy.

	 	 	 	 	 
	 	 	ARGO-TECH CORPORATION
	 
	 	 	 	 
	 
	 	 	 	 
	   /s/ Carol J. Forre

	 	By:
	 	/s/ Paul R. Keen
	 

	 	 	 	 
	(Witness)

	 	Its:
	 	Vice President, General Counsel and Secretary
	 
	 	 	 	 
	 
	 	 	 	 
	   [illegible]

	 	 	 	/s/ Frances S. St. Clair
	 	 	 
	(Witness)	 	Frances S. St Clair

12

 

EXHIBIT “A”

PART I — LIFE INSURANCE POLICY

	 	 	 
	Insurer:

	 	Pacific Mutual Insurance Company
	 
	 	 
	Face Amount:

	 	$552,954.00 
	 
	 	 
	Policy Number:

	 	1A2302128-0 
	 
	 	 
	Date of Policy:

	 	December 28, 1995

PART II — BENEFICIARY

Michael R. St. Clair

     This Exhibit “A” is a part of the agreement covering the Participant’s insurance entered into
between Argo-Tech Corporation and Frances S. St Clair on January 1, 1996.

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