Exhibit 10.16
SPLIT-DOLLAR AGREEMENT
THIS AGREEMENT made and entered into this 1st day of September, 1998, by
and among Agribrands International, Inc., a corporation with principal offices
and place of business in the State of Missouri (hereinafter referred to as the
"Corporation"), Xxxxxxx X. Xxxxxxx, an individual residing in the State of
Missouri (hereinafter referred to as the "Employee"), and Fidelity Management
Trust Company, Trustee of the Xxxxxxx X. Xxxxxxx 1998 Irrevocable Insurance
Trust U/A September 1, 1998 (hereinafter referred to as the "Owner"),
WITNESSETH THAT:
WHEREAS, the Employee is employed by the Corporation; and
WHEREAS, the Employee wishes to provide life insurance protection for his
family in the event of his death, under a policy of life insurance insuring his
life (hereinafter referred to as the "Policy"), which is described in Exhibit A
attached hereto and by this reference made a part hereof, and which is being
issued by Zurich Xxxxxx Life (hereinafter referred to as the "Insurer"); and
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, 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 the Policy collaterally assigned to
it by the Owner, in order to secure the repayment of the amounts which it will
pay toward the premiums on the Policy; and
NOW, THEREFORE, in consideration of the premises and of the mutual promises
contained herein, the parties hereto agree as follows:
1. Purchase of Policy. The Owner will contemporaneously purchase the Policy
from the Insurer in the total face amount of $102,000,000. The parties hereto
agree that they will take all necessary action to cause the Insurer to issue the
Policy, and shall take any further action which may be necessary to cause the
Policy to conform to the provisions of this Agreement. The parties hereto agree
that the Policy shall be subject to the terms and conditions of this Agreement
and of the collateral assignment 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 may otherwise be provided herein.
3. Payment of Premiums.
a. Thirty (30) days prior to the due date of each Policy premium, the
Corporation shall notify the Employee and the Owner of the exact amount due from
the Employee hereunder, which shall be an amount equal to the annual cost of
current life insurance protection on the life of the Employee, measured by the
lower of the PS 58 rate, set forth in Revenue Ruling 55-747 (or the
corresponding applicable provision of any future Revenue Ruling), or the
Insurer's current published premium rate for annually renewable term insurance
for standard risks. Either the Employee or the Owner, on behalf of the Employee,
shall pay such required contribution to the Corporation prior to the premium due
date. If neither the Employee nor the Owner makes such timely payment, the
Corporation, in its sole discretion, may elect to make the Employee'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 the full amount of the
premium to the Insurer, and shall, upon request, promptly furnish the Employee
evidence of timely payment of such premium. The Corporation shall annually
furnish the Employee a statement of the amount of income reportable by the
Employee for federal and state income tax purposes, if any, as a result of the
insurance protection provided the Owner as the Policy beneficiary.
4. Collateral Assignment. To secure the repayment to the Corporation of the
amount of the premiums on the Policy paid by it hereunder, the Owner has,
contemporaneously herewith, assigned the Policy to the Corporation as
collateral, under the form used by the Insurer for such assignments. The
collateral assignment of the Policy to the Corporation hereunder shall not be
terminated, altered or amended by the Owner, without the express written consent
of the Corporation. The parties hereto agree to take all action necessary to
cause such collateral assignment to conform to the provisions of this Agreement.
5. Limitations on Owner's Rights in Policy.
a. Except as otherwise provided herein, the Owner shall not sell, assign,
transfer, borrow against, surrender or cancel the Policy, nor change the
beneficiary designation provision thereof, without, in any such case, the
express written consent of the Corporation.
b. Notwithstanding any provision hereof to the contrary, the Company shall
have the sole authority to direct the manner in which the Account established
pursuant to the terms of the Policy shall be invested among the various
investment options from time to time available pursuant to the terms of the
Policy.
Collection of Death Proceeds.
c. Upon the death of the Employee, the Corporation shall cooperate with the
Owner to take whatever action is necessary to collect the death benefit provided
under the Policy; when such benefit has been collected and paid as provided
herein, this Agreement shall thereupon terminate.
d. Upon the death of the Employee, the Corporation shall have the
unqualified right to receive a portion of such Death Benefit equal to
$100,000,000 plus the total amount of the premiums paid by it hereunder, reduced
by any outstanding indebtedness which was incurred by the Corporation and
secured by the Policy, including any interest due on such indebtedness. The
balance of the Death Benefit provided under the Policy, if any, shall be paid
directly to the Owner in the manner and in the amount or amounts 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 as a
result of the maturity of the Policy as a death claim. No amount shall be paid
from such Death Benefit to the Owner until the final amount due the Corporation
hereunder has been paid. The parties agree that the beneficiary designation
provision of the Policy shall conform to the provisions hereof.
e. Notwithstanding any provision hereof to the contrary, in the event that,
for any reason whatsoever, no death benefit is payable under the Policy upon the
death of the Employee and in lieu thereof the Insurer refunds all or any part of
the premiums paid for the Policy, the Corporation and the Owner shall have the
unqualified right to share such premiums based on their respective cumulative
contributions thereto.
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6. Termination of the Agreement During the Employee's Lifetime.
a. This Agreement shall terminate, during the Employee's lifetime, without
notice, upon the occurrence of any of the following events: (a) total cessation
of the Corporation's business; (b) bankruptcy, receivership or dissolution of
the Corporation; (c) termination of Employee's employment by the Corporation
(other than by reason of his death), or (d) failure of the Employee to timely
pay to the Corporation the Employee's portion of the premium, if any, due
hereunder, unless the Corporation elects to make such payment on behalf of the
Employee, as provided herein.
b. In addition, the Employee may terminate this Agreement, while no premium
under the Policy is overdue, by written notice to the Corporation. Such
termination shall be effective as of the date of such notice.
c. In addition, the Corporation may terminate this Agreement by written
notice to the Owner and the Employee. Such termination shall be effective as of
the date of such notice.
7. Disposition of the Policy on Termination of the Agreement During the
Employee's Lifetime.
a. For sixty (60) days after the date of the termination of this Agreement
during the Employee's lifetime, the Owner shall have the option of obtaining the
release of the collateral assignment of the Policy to the Corporation. To obtain
such release, the Owner shall repay to the Corporation the total amount of the
premium payments made hereunder, less any indebtedness secured by the Policy
which was incurred by the Corporation and remains outstanding as of the date of
such termination, including any interest due on such indebtedness. Upon receipt
of such amount, the Corporation shall release the collateral assignment of the
Policy, by the execution and delivery of an appropriate instrument of release.
b. If the Owner fails to exercise such option within such sixty (60) day
period, then, at the request of the Corporation, the Owner shall execute any
document or documents required by the Insurer to transfer the interest of the
Owner in the Policy to the Corporation. Alternatively, the Corporation may
enforce its right to be repaid the amount of the premiums on the Policy paid by
it from the surrender value of the Policy under the collateral assignment of the
Policy; provided that in the event the surrender value of the Policy exceeds the
amount due the Corporation, such excess shall be paid to the Owner. Thereafter,
neither the Owner nor the Owner's successors, assigns or beneficiaries shall
have any further interest in and to the Policy, either under the terms thereof
or under this Agreement.
8. Insurer Not a Party. The Insurer shall be fully discharged from its
obligations under the Policy by payment of the Policy Death Benefit to the
beneficiary or beneficiaries 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 other 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 collateral
assignment executed by the Owner and filed with the Insurer in connection
herewith.
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9. Named Fiduciary, Determination of Benefits, Claims Procedure and
Administration.
a. The Corporation is hereby designated as the named fiduciary under this
Agreement. 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. (1) Claim. A person who believes that he or she is being denied a
benefit to which he or she is entitled under this Agreement (hereinafter
referred to as a "Claimant") may file a written request for such benefit with
the Corporation, setting forth his or her claim. The request must be addressed
to the President of the Corporation at its then principal place of business.
(2) Claim Decision. Upon receipt of a claim, the Corporation shall advise
the Claimant that a reply will be forthcoming within ninety (90) days and shall,
in fact, deliver such reply within such period. The Corporation may, however,
extend the reply period for an additional ninety (90) days for reasonable cause.
If the claim is denied in whole or in part, the Corporation shall adopt a
written opinion, using language calculated to be understood by the Claimant,
setting forth: (a) the specific reason or reasons for such denial; (b) the
specific reference to pertinent provisions of this Agreement on which such
denial is based; (c) a description of any additional material or information
necessary for the Claimant to perfect his or her claim and an explanation why
such material or such information is necessary; (d) appropriate information as
to the steps to be taken if the Claimant wishes to submit the claim for review;
and (e) the time limits for requesting a review under subsection (3) and for
review under subsection (4) hereof.
(3) Request for Review. With sixty (60) days after the receipt by the
Claimant of the written opinion described above, the Claimant may request in
writing that the Secretary of the Corporation review the determination of the
Corporation. Such request must be addressed to the Secretary of the Corporation,
at its then principal place of business. The Claimant or his or her duly
authorized representative may, but need not, review the pertinent documents and
submit issues and comments in writing for consideration by the Corporation. If
the Claimant does not request a review of the Corporation's determination by the
Secretary of the Corporation within such sixty (60) day period, he or she shall
be barred and estopped from challenging the Corporation's determination.
(4) Review of Decision. Within sixty (60) days after the Secretary's
receipt of a request for review, he will review the Corporation's determination.
After considering all materials presented by the Claimant, the Secretary will
render a written opinion, written in a manner calculated to be understood by the
Claimant, setting forth the specific reasons for the decision and containing
specific references to the pertinent provisions of this Agreement on which the
decision is based. If special circumstances require that the sixty (60) day time
period be extended, the Secretary will so notify the Claimant and will render
the decision as soon as possible, but no later than one hundred twenty (120)
days after receipt of the request for review.
10. Amendment. This Agreement may not be amended, altered or 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.
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11. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Corporation and its successors and assigns, and the Employee, the
Owner, and their respective successors, assigns, heirs, executors,
administrators and beneficiaries.
12. Notice. Any notice, consent or demand required or permitted to 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.
13. Governing Law. This Agreement, and the rights of the parties 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, in
triplicate, as of the day and year first above written.
AGRIBRANDS INTERNATIONAL, INC.
By: __________________________________
Title:
"Corporation"
ATTEST:
--------------------------------
Secretary
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XXXXXXX X. XXXXXXX
"Employee"
Xxxxxxx X. Xxxxxxx 1998 Irrevocable
Insurance Trust U/A Sept. 1., 1998, by
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FIDELITY MANAGEMENT TRUST COMPANY
"Owner"
