SPLIT DOLLAR AGREEMENT
THIS AGREEMENT made and entered into this ____________ day of
____________, 19_____, by and among ▇▇▇▇▇▇▇ Purina Company, a Missouri
corporation, with its principal offices and place of business in the State of
Missouri (the "Corporation"), [________________________ (the "Employee"), and
_____________________________________________, Trustee of the _____________
Irrevocable Insurance Trust U/I/T dated ____________], 19_____ (the "Owner")],
or [__________________ (the "Employee" and "Owner")].
WITNESSETH THAT:
WHEREAS, the Employee is employed by the Corporation;
WHEREAS, the Employee wishes to provide life insurance protection for his
family in the event of his death and the death of his spouse or other named
insured designated by the Employee (the "Second Insured") under a policy of
life insurance insuring his life and the life of the Second Insured (the
"Policy"), which is described in Exhibit A attached hereto and by this
reference made a part hereof, and which is being issued by Security Equity
Life Insurance Company (the "Insurer");
WHEREAS, the Corporation is willing to pay a portion of the premiums due
on the Policy as an additional employment benefit for the Employee on the
terms and conditions hereinafter set forth; and
WHEREAS, the Insurer has determined that the Employee and the Second
Insured satisfy its insurability criteria; and
WHEREAS, the Owner is the owner of the Policy and, as such, possesses all
incidents of ownership in and to the Policy; and
WHEREAS, the Corporation wishes to have certain rights in and to the
Policy collaterally assigned to it by the Owner, in order to secure the
repayment of the amounts which it will advance toward the premiums on the
Policy;
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties hereto agree as follows:
1. Purchase Of Policy. The Owner has purchased or will
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contemporaneously purchase the Policy from the Insurer in the total face
-
amount of One Million Dollars ($1,000,000). The parties hereto agree that the
Policy shall be subject to the terms and conditions of this Agreement and of
the collateral assignment (the "Assignment"), as described in paragraph 5
hereof, filed with the Insurer relating to the Policy.
2. Ownership Of Policy. The Owner shall be the sole and absolute
-------------------
owner of the Policy and may exercise all ownership rights granted to the owner
thereof by the terms of the Policy, except as otherwise provided herein or in
the Assignment.
3. Policy Dividends. Any dividend declared on the Policy shall be
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applied to increase the cash value of the Policy. The parties hereto agree
that the dividend election provisions of the Policy shall conform to the
provisions hereof.
4. Payment Of Premiums.
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a. Thirty (30) days prior to the due date of each Policy
premium, the Insurer shall notify the Owner of the exact amount of its
required payment of such Policy Premium, as determined in accordance with the
premium schedule provided by the Insurer set forth on Exhibit B, Survivor Life
Insurance Plan Projection, attached hereto and by reference made a part hereof
(the "Premium Schedule"). In no event shall the amount due from the Owner
result in the violation of the rules set forth in Section 7702 of the Internal
Revenue Code of 1986, as amended (the "Code"). The Owner shall pay such
required contribution to the Insurer on or before the premium due date, or
within the grace period provided therein. If the Owner fails to make such
timely payment, the Corporation, in its sole discretion, may elect to make the
Owner's portion of the premium payment which payment shall be recovered by the
Corporation as provided herein.
b. On or before the due date of each Policy premium, or within
the grace period provided therein, the Corporation shall pay to the Insurer
that portion of the premium due in accordance with the Premium Schedule.
5. Collateral Assignment Of Policy. To secure the repayment to the
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Corporation of the total amount of the premiums on the Policy paid by it
hereunder, the Owner shall execute and deliver to the Insurer the Assignment
pursuant to which the Owner shall grant to the Corporation the limited rights
in and to the Policy specified therein. The Assignment shall not be
terminated, altered, or amended by the Owner without the written consent of
the Corporation, which consent shall not be unreasonably withheld. The
parties hereto agree to take all action necessary to cause the Assignment to
conform to the provisions of this Agreement. All rights in and to the Policy
not granted to the Corporation by the Assignment or this Agreement, including
but not limited to the right to designate and change the beneficiary of that
portion of the Policy proceeds to which the Owner is entitled hereunder, shall
be retained by the Owner subject to the provisions hereof, including,
specifically, the provisions of the last sentence of Paragraph 6 below. The
Assignment is intended only to grant to the Corporation a security interest in
the Policy and this security interest shall not be interpreted in any way to
include any incidents of ownership, except as provided in this Agreement or
the Assignment.
6. Collection Of Death Benefits. In the event of the death of the
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survivor of the Employee and the Second Insured prior to the termination of
this Agreement in accordance with paragraph 7 hereof, the Corporation shall
have the unqualified right to receive a portion of the death benefits provided
under the Policy equal to the total amount of premiums paid by it hereunder
(the "Corporation's Premium Payment"). The balance of the death benefits
provided under the Policy, if any, shall be paid directly to the
beneficiary(ies) designated by the Owner, in the manner and in the amount
provided in the beneficiary designation provision of the Policy. In no event
shall the amount payable to the Corporation hereunder exceed the Policy
proceeds payable at the death of the survivor of the Employee and his Second
Insured. No amount shall be paid from such death benefits to the
beneficiary(ies) designated by the Owner until the full amount due the
Corporation hereunder has been paid. The parties hereto agree that the
beneficiary designation provision of the Policy shall conform to the
provisions hereof, and the Owner shall perform each and every act necessary to
establish the Corporation as a beneficiary of the Policy to the extent of the
Corporation's Premium Payment.
7. Termination Of Agreement.
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a. Events Of Termination. This Agreement shall terminate
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[except for the provisions of subparagraphs 8(a) and 8(b) hereof] without
notice upon the first to occur of any of the following events: (1) the
bankruptcy, receivership, or dissolution of the Corporation; (2) the
termination of the Employee's employment with the Corporation or one of its
wholly-owned subsidiaries or affiliates, for whatever reason, including,
without limitation, the sale or other divestiture of any subsidiary of the
Corporation, or the assets of any business unit, by which the Employee is
employed; (3) the retirement of the Employee on or after the attainment of age
55; (4) the death of the Employee; (5) the failure of the Owner to timely pay
to the Insurer the Employee's portion of the premium, if any, due hereunder,
unless the Corporation elects to make such payment on behalf of the Employee;
(6) the date on which the cash value of the Policy equals or exceeds the sum
of (i) the Corporation's Premium Payment, and (ii) the amount needed to fund
the cost of insurance as determined by the Insurer to maintain the Policy in
force during the lives of the Employee and Second Insured (the "Policy
Rollout"); (7) the expiration of fifteen (15) Policy years from the effective
date of the Policy, or a greater number of Policy years as the parties hereto
may mutually agree; or (8) the modification of the tax laws, or in the IRS
interpretation of such laws, which adversely impact the tax effectiveness of
the Agreement for the Corporation, the Owner, or the Employee.
b. Exception To Termination; Cessation Of Corporation's
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Premiums. Notwithstanding the foregoing, the Corporation in its sole
discretion may elect not to terminate the Agreement upon the termination of
the Employee's employment, for whatever reason, or retirement of the Employee,
in accordance with subparagraphs 7(a)(2) or (3), and, in such event, the
repayment of the Corporation's Premium Payment in accordance with paragraph 8
shall not occur until the occurrence of any other event listed in subparagraph
7(a); however, the Corporation's obligations set forth in paragraph 4 hereof,
including the obligation to pay any premiums with respect to the Policy as set
forth in the Premium Schedule, shall cease upon the termination of the
Employee's employment, for whatever reason, or retirement of the Employee.
c. Termination By Owner Or Employee. Either the Owner or the
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Employee may terminate this Agreement, while no premium under the Policy is
overdue, by written notice to the other parties hereto. Such termination
shall be effective as of the date of mailing of the notice in accordance with
the provisions of paragraph 15 hereof.
8. Repayment Of The Corporation Upon Termination Of The Agreement.
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a. Release Of Assignment. Within thirty (30) days after the
---------------------
date of the termination of this Agreement in accordance with paragraph 7
hereof, the Owner shall obtain the release of the Assignment of the Policy to
the Corporation. The Owner may exercise all ownership rights granted to the
Owner thereof by the terms of the Policy. Such release shall be given upon
the Corporation's receipt of the Corporation's Premium Payment by (i) a
withdrawal of the cash value of the Policy equal to the Corporation's Premium
Payment; provided, however, if the cash value of the Policy is less than the
Corporation's Premium Payment, the provisions of subparagraphs 8(b) or 8(c)
hereof shall apply; or (ii) a payment by the Owner or the Employee, in
immediately available U.S. funds, to the Corporation in the amount of the
Corporation's Premium Payment. Upon release of the Assignment of the Policy,
neither the Corporation nor its respective successors or assigns shall have
any further interest or rights in and to the Policy, either under the terms
thereof or under this Agreement.
b. Reimbursement/Forfeiture. If the Agreement terminates for
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any reason other than the involuntary termination of the Employee's employment
or Policy Rollout, in accordance with subparagraph 7a, hereof, and the cash
value of the Policy is less than the amount of the Corporation's Premium
Payment due the Corporation in accordance with subparagraph 8a hereof, the
Owner or the Employee shall pay to the Corporation, within 30 days thereafter,
in immediately available U.S. funds, such difference in amount, and the
Corporation shall release the Assignment of the Policy as set forth in
subparagraph 8a hereof. If the Owner or the Employee fail to timely pay the
Corporation such amount, the Owner promptly shall execute any and all
instruments required to vest ownership of the Policy in the Corporation.
Neither the Owner nor any Policy beneficiary designated by the Owner prior to
the termination of the Agreement shall thereafter have any further interest in
the Policy, and the Owner and the Corporation will be deemed to have satisfied
all of their respective obligations hereunder.
c. Involuntary Termination. In the event the Agreement
------------------------
terminates as a result of the involuntary termination of the Employee's
employment, and the cash value of the Policy is less than the amount of the
Corporation's Premium Payment due the Corporation in accordance with paragraph
8(a) hereof, the Corporation shall be entitled to an amount equal to the
product resulting when the cash value of the Policy is multiplied by a
fraction, the numerator of which is the Corporation's Premium Payment, and the
denominator of which is the aggregate amount of premiums paid by the
Corporation and by the Owner.
d. Death Of Employee. In the event the Agreement terminates
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upon the death of the Employee prior to the Second Insured, the Corporation
may in its sole discretion, pay to the Second Insured, or to the Owner of the
Policy, an amount needed to fund the cost of insurance as determined by the
Insurer until Policy Rollout.
9. Change Of Control
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a. Assignment To Trustee. In the event of a "Change of
-----------------------
Control", as defined in subparagraph c herein, prior to the termination of
this Agreement in accordance with paragraph 8 hereof, the Trust Agreement,
dated as of September 15, 1994 between the Corporation and Wachovia Bank of
North Carolina, N.A., shall become the assignee of the Assignment, and the
terms of the Assignment shall so conform to this provision.
b. Sale Of Business. Notwithstanding the provisions of
------------------
Paragraph 7 hereof, in the event the Employee ceases to be employed by the
Corporation or one of its subsidiaries or affiliates due to a sale or other
disposition of a subsidiary or other business unit of the Corporation by which
the Employee is employed, the Corporation may elect not to terminate this
Agreement, but may assign this Agreement, in its sole discretion, to the
acquiror of the subsidiary or other business unit, and the Employee hereby
consents to such assignment. In such event, the Corporation shall be relieved
of all of its obligations hereunder.
c. Definitions. For purposes of this Agreement, a "Change of
-----------
Control" shall be deemed to occur upon the acquisition by any person, entity,
or group, within the meaning of Sections 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934 (the "Exchange Act"), of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty
percent (50%) or more of the then outstanding shares of common stock of the
Corporation, other than acquisitions by the Corporation or any of its
Affiliates or any employee benefit plan of the Corporation or any of its
Affiliates; or any entity holding common stock of the Corporation for or
pursuant to the terms of any such plan; or the cessation of the Continuing
Directors to constitute, for any reasons, at least a majority of the Board of
Directors of the Corporation.
As used herein, "Affiliate" shall mean, with respect to a
specified person, group, or entity, a person that directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the person specified. "Continuing Directors" shall mean
any member of the Board of Directors of the Corporation, as of September 26,
1996, while such person is a member of the Board of Directors, and any
successor of a Continuing Director, while such successor is a member of the
Board of Directors, who is recommended or elected to succeed the Continuing
Director by at least two-thirds (2/3) of the Continuing Directors then in
office.
10. Discharge Of Insurer. The Insurer shall be fully discharged from
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its obligations under the Policy by payment of the Policy death benefit to the
beneficiary(ies) named in the Policy, subject to the terms and conditions of
the Policy. In no event shall the Insurer be considered a party to this
Agreement, or any modification or amendment hereof. No provision of this
Agreement, nor of any modification or amendment hereof, shall in any way be
construed as enlarging, changing, varying, or in any way affecting the
obligations of the Insurer as expressly provided in the Policy, except insofar
as the provisions hereof are made a part of the Policy by the Assignment.
11. Named Fiduciary And Claims Procedure
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a. Prior to a Change of Control, the Corporation is hereby
designated as the named fiduciary under this Agreement; after a Change of
Control, the trustee of the Trust Agreement described in subparagraph 9(a) is
designated as such named fiduciary. The named fiduciary shall have authority
to control and manage the operation and administration of this Agreement, and
it shall be responsible for establishing and carrying out a funding policy and
method consistent with the objectives of this Agreement.
b. The named fiduciary shall make all determinations concerning
rights to benefits under this Agreement. Any decision by the named fiduciary
denying a claim by the Owner or a beneficiary shall be stated in writing and
delivered or mailed to the Owner or such beneficiary. Such decision shall set
forth the specific reasons for the denial, written to the best of the named
fiduciary's ability in a manner calculated to be understood by the Owner or
beneficiary. In addition, the named fiduciary shall afford a reasonable
opportunity to the Owner or such beneficiary for a full and fair review of the
decision denying such claim.
12. Limitations On Corporation's And Owner's Rights In Policy.
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a. Except as otherwise provided herein, the Owner shall not
sell, assign, transfer, borrow against, surrender, or cancel the Policy,
change the beneficiary designation provision thereof with respect to the
proceeds due the Corporation as provided hereunder, nor terminate any dividend
election or death benefit option thereof without, in any such case, the
express written consent of the Corporation. The Owner and the Employee may
not transfer or assign any of their respective rights or obligations under
this Agreement, except by express written consent of the Corporation.
b. The Corporation may not transfer or assign any of its
interest in the Policy or its rights or obligations under this Agreement to
any person or entity other than the Owner or the Insurer except by express
written consent of the Owner, or as provided under this Agreement; provided,
however, the Corporation may so transfer or assign such interest, rights, or
obligations to any successor by reason of merger, consolidation, or other
corporate reorganization provided that such successor in interest agrees in
writing to be bound by the terms and provisions of this Agreement.
c. In no event shall the Corporation, the Owner, or the Employee
undertake any action with respect to the Policy which would result in the
Policy becoming a Modified Endowment Contract, as defined in Code Section
7702A.
13. Amendment. This Agreement may not be amended, altered, or
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modified, except by a written instrument signed by the parties hereto, or
their respective successors or assigns, and may not be otherwise terminated
except as provided herein.
14. Binding Agreement. This Agreement shall be binding upon and
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inure to the benefit of the Corporation and its successors and assigns and the
Employee, the Owner, and their respective successors, assigns, heirs, personal
representatives, administrators, and beneficiaries.
15. Notice. Any notice, consent, or demand required or permitted to
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be given under the provisions of this Agreement shall be in writing, and shall
be signed by the party giving or making the same. If such notice, consent, or
demand is mailed to a party hereto, it shall be sent by United States
certified mail, postage prepaid, addressed to such party's last known address
as shown on the records of the Corporation. The date of such mailing shall be
deemed the date of notice, consent, or demand.
16. Gender/Number. Any reference to masculine or singular, herein,
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shall imply the feminine or plural, as appropriate.
17. Governing Law. This Agreement, and the rights of the parties
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hereunder, shall be governed by and construed in accordance with the laws of
the State of Missouri.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of
the date and year first above written.
▇▇▇▇▇▇▇ PURINA COMPANY
By: ____________________________
▇. ▇. ▇▇▇▇▇▇
Vice President, Administration
"Corporation"
ATTEST:
________________________
Secretary
____________________________
"Employee"
____________________________
"Owner"
H:\RCW\WINWORD\PRCW101B.DOC
EXHIBIT A
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The following life insurance policy is subject to the attached Split
Dollar Agreement:
Insurer _____SECURITY EQUITY_________________
First Insured _______________________________________
Second Insured _______________________________________
Policy Number _______________________________________
Face Amount _____$1,000,000_________________________
Date of Issue _______________________________________
Page 2
WHEREAS, the Owner is the owner of the Policy and, as such, possesses all
incidents of ownership in and to the Policy; and
WHEREAS, the Corporation wishes to have certain rights in and to the
Policy collaterally assigned to it by the Owner, in order to secure the
repayment of the amounts which it will advance toward the premiums on the
Policy;
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties hereto agree as follows:
1. Purchase Of Policy. The Owner has purchased or will
--------------------
contemporaneously purchase the Policy from the Insurer in the total face
-
amount of Ten Million Dollars ($10,000,000). The parties hereto agree that
the Policy shall be subject to the terms and conditions of this Agreement and
of the collateral assignment (the "Assignment"), as described in paragraph 5
hereof, filed with the Insurer relating to the Policy.
2. Ownership Of Policy. The Owner shall be the sole and absolute
-------------------
owner of the Policy and may exercise all ownership rights granted to the owner
thereof by the terms of the Policy, except as otherwise provided herein or in
the Assignment.
3. Policy Dividends. Any dividend declared on the Policy shall be
----------------
applied to increase the cash value of the Policy. The parties hereto agree
that the dividend election provisions of the Policy shall conform to the
provisions hereof.
EXHIBIT A
---------
The following life insurance policy is subject to the attached Split
Dollar Agreement:
Insurer _____SECURITY EQUITY_________________
First Insured _______________________________________
Second Insured _______________________________________
Policy Number _______________________________________
Face Amount _____$10,000,000________________________
Date of Issue _______________________________________
ex10xvix.doc
