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EXHIBIT 10(n)
EXECUTIVE COMPENSATION ADJUSTMENT AGREEMENT
This Executive Compensation Adjustment Agreement ("Agreement") made and
entered into between Sysco Corporation ("Sysco") and ▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Officer")
W I T N E S S E T H
WHEREAS, the Officer is currently the Chairman and Chief Executive Officer
of Sysco and his experience and knowledge of the affairs of Sysco, his
reputation and contacts in the industry are all extremely valuable to Sysco; and
WHEREAS, the Officer is currently a participant in the Sysco Corporation
Executive Deferred Compensation Plan ("EDCP") and the Sysco Corporation
Supplemental Executive Retirement Plan ("SERP"); and
WHEREAS, Sysco has adopted the Sysco Corporation Split Dollar Life
Insurance Plan ("the Split Dollar Plan") which is designed to encourage certain
employees to continue in the service of Sysco by offering such employees
assistance in providing life insurance protection for the employees' families;
and
WHEREAS, Sysco wishes to offer split dollar life insurance coverage for the
Officer's family as an alternative to part of the benefits provided under the
EDCP and the SERP; and
WHEREAS, the Officer wishes to take advantage of the split dollar life
insurance coverage offered by Sysco as an alternative to some of the Officer's
benefits provided under the EDCP and the SERP;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, Sysco and the Officer agree as follows:
1. Split Dollar Plan. Contemporaneously with the execution of this
Agreement, the Compensation and Stock Option Committee of the Sysco Board of
Directors appointed under the Split Dollar Plan will designate the Officer as a
participant in the Split Dollar Plan and Sysco and ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, co-trustees (as the Officer's designee), of the ▇▇▇▇▇▇ 1999
Family Trusts ("Trust"), created by that certain instrument dated September 30,
1999, shall execute the Split Dollar Life Insurance Agreement ("Split Dollar
Agreement") attached hereto as Exhibit A and incorporated herein for all
purposes.
2. Partial Waiver of EDCP Benefits. Subject to the conditions of paragraph
4, as a requirement for participation in the Split Dollar Plan, Officer hereby
irrevocably waives, renounces, and forfeits any and all rights to the Officer's
benefits credited to his Account in the Deferred Compensation Ledger maintained
by the EDCP plan Committee under the EDCP as of 10-14, 1999; provided, however,
this waiver, renunciation, and forfeiture does not apply to amounts which may be
credited to the Officer's said Account in the special Deferred Compensation
Ledger under the EDCP from and after said date; provided
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further any interest credited to the Officer's said Account under the EDCP will
apply only to Officer deferrals and Sysco's Company Matches (as defined in the
EDCP) from and after said date.
3. Partial Waiver of SERP Benefits. Subject to the conditions of paragraph
4, as a requirement for participation in the Split Dollar Plan, Officer hereby
irrevocably waives, renounces, and forfeits $13,487.50 of the monthly SERP
retirement benefit for the Officer in the form of an age 65, 5 year certain and
life annuity as calculated under Article 4.1 of the SERP prior to the adjustment
for vesting. After such reduction and the application of vesting, the resulting
amount will be adjusted for the form and time of payment as specified under
Article 4.2 of the SERP. In calculating the death benefit under Article 5 of the
SERP, the commuted lump sum values referenced in Article 5 will be reduced by
the commuted lump sum value of the monthly retirement benefit forfeited above.
4. Conditions on Waiver. The partial waivers, renunciations, and
forfeitures contained in paragraphs 2 and 3 are conditioned upon each of the two
insurance policies initially covered by the Split Dollar Agreement not being set
aside for material misrepresentations in its application and the death proceeds
of each such policy not being limited to premiums paid because an insured dies
by suicide. Such conditions will lapse with regard to each such policy two years
after the date of issue of such policy. Should only one of such policies fail to
meet the conditions of this paragraph, the partial waiver, renunciation and
forfeiture of EDCP and SERP benefits in paragraphs 2 and 3 shall be reduced by
67.2% if the ▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance Company policy fails to meet
said conditions or by 33.8% if the Pacific Life Insurance Company policy fails
to meet said conditions. If both of the insurance policies initially covered by
the Split Dollar Agreement fail to meet either of the conditions of this
paragraph, the partial waiver, renunciation, and forfeiture of EDCP and SERP
benefits in paragraphs 2 and 3 shall be null and void and this Agreement shall
terminate.
5. Reimbursement Bonuses. Sysco agrees to pay the following reimbursement
bonuses to the Officer or his affiliate within a reasonable time after
certification to Sysco of the amount subject to reimbursement:
a. Sysco shall bonus to the Officer or his affiliate an amount equal
to the term premium payment required of the trustee of the Trust pursuant
to section 3.3 of the Split Dollar Agreement.
b. Sysco shall bonus an amount equal to any Federal gift taxes paid by
the Officer or his affiliate because of contributions, whether direct,
indirect or deemed, to the Trust to cover the portion of the premium
required to be paid by the Trust under section 3.3 of the Split Dollar
Agreement or because of any economic benefit attributable to the cost of
current life insurance protection to
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which the Trust is entitled under the Split Dollar Agreement which
constitutes a gift to the Trust by the Officer or his affiliate. As an
administrative convenience, said premium contribution or said current life
insurance benefit will be deemed to be a gift by the Officer or his
affiliate at highest marginal Federal gift tax bracket regardless of
whether the Officer or his affiliate pay any or a lesser amount of gift
tax. The bonus will be paid to the Officer or his affiliate upon
certification to Sysco of the amount of said premium contribution or
current life insurance protection benefit for the taxable year of the
Officer or his affiliate. No bonus is required for any other gift or any
generation-skipping transfer, direct, indirect or deemed, from the Officer
or his affiliate to the Trust caused under the Split Dollar Agreement
except for gifts of said premium contribution or for said current life
insurance protection benefit to which the Trust is entitled.
c. Sysco shall bonus annually to the Officer or his affiliate a fixed
dollar amount to offset fees paid to a tax return preparer by the Officer
or his affiliate for any state or Federal gift tax or generation-skipping
transfer tax return which includes a gift or generation-skipping transfer
which results from this Agreement or the Split Dollar Agreement regardless
of whether such a return was filed and regardless of the amount of tax
return preparer fees paid by the Officer or his affiliate. The fixed dollar
amount in 2000 will be a total of $5,000. For 2001, the fixed dollar amount
will be $1,000 for each gift tax return. For each year beginning in 2002,
the fixed dollar amount for each gift tax return will be the fixed dollar
amount for the previous year increased by 5%.
d. Should a dispute with the Internal Revenue Service or a state tax
authority develop between the Officer or his affiliate concerning the
income, gift or generation-skipping transfer tax results attributable to
this Agreement, the waiver of the Officer's accrued benefit under the EDCP
or the SERP, or the Split Dollar Agreement, Sysco agrees to pay the
Officer's or his affiliate's reasonable accounting and legal fees and court
and other costs incurred in any administrative proceedings or litigation
concerning assessment or proposed assessment of additional taxes involving
their state or Federal gift tax, income tax, or generation-skipping
transfer tax returns based upon such tax results including, litigation of a
notice of tax deficiency, filing a refund claim or suing for a refund in
court which concerns said dispute of income, gift or generation-skipping
transfer tax results. Sysco shall have no liability to pay for any state or
Federal income, gift or generation-skipping transfer tax liability,
including penalties or interest thereon, unless expressly authorized
elsewhere in this Agreement. Sysco
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will pay such fees or costs directly to the provider upon being furnished
by the Officer or his affiliate with a statement or other evidence of the
fee or cost payable in a format acceptable to Sysco.
6. Federal Income Tax Bonuses. Sysco agrees to pay the following
supplemental bonuses within a reasonable time after the close of the calendar
year during which the subject reimbursement bonuses were paid:
a. Sysco shall make a supplemental bonus to the Officer or his
affiliate to cover any Federal income tax liability resulting from a
reimbursement to the Officer or his affiliate pursuant to subparagraphs a,
b and c of paragraph 5 above. The amount of the supplemental bonus shall be
the difference between (i) an amount determined by dividing the amount of
the reimbursement by one minus the highest Federal individual marginal
income tax bracket for the year of such reimbursement under subparagraphs
a, b and c of paragraph 5 above expressed as a decimal, and (ii) the amount
of said reimbursement.
b. With regard to any payment of the Officer's or his affiliate's
reasonable accounting and legal fees or court or other costs pursuant to
subparagraph d of paragraph 5 above, Sysco shall make a supplemental bonus
to the Officer or his affiliate to cover any Federal income tax liability
resulting from such payment. The parties acknowledge that the determination
of such Federal income tax liability is made complicated because of the
potential deductibility by the Officer or his affiliate of such accounting
and legal fees and court and other costs on his or her Federal income tax
return. The parties hereby agree that the supplemental bonus required by
this subparagraph shall be calculated in the following two steps:
i. The Federal income tax caused by such payment shall be
determined by the difference, if any, between (a) all Federal income
taxes payable for the year of reimbursement by the Officer or
affiliate calculated by including the subparagraph d of paragraph 5
payment in gross income reduced by the deduction allowable for the
expenditure covered by such payment, if any, (whether or not the
deduction is taken by the Officer or affiliate on the Federal income
tax return for the taxable year of the reimbursement) and (b) all
Federal income taxes payable for the year of payment by the Officer or
affiliate calculated by excluding
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the subparagraph d of paragraph 5 reimbursement from gross income
without any deduction for the expenditure covered by such
reimbursement.
ii. The amount of supplemental bonus required by this
subparagraph shall be the difference between (a) an amount determined
by dividing the Federal income tax difference determined by
subparagraph bi of paragraph 6 above by one minus the highest Federal
individual marginal income tax bracket for the year of such payment
under subparagraph d of paragraph 5 above expressed as a decimal, and
(b) the Federal income tax difference determined by subparagraph bi of
paragraph 6 above.
Should the Internal Revenue Service finally determine with regard to a
Federal income tax return for the Officer or his affiliate that any of the
assumptions pursuant to subparagraph bi(a) of paragraph 6 concerning
inclusion of the payment in gross income or the deductibility of all or
part of the expenditure covered by the payment is incorrect, the
calculations in subparagraph bi(a) of paragraph 6 above shall be adjusted
to reflect such final determination and the amount of supplemental bonus by
this subparagraph b of paragraph 6 shall be recalculated and Sysco shall
pay, without interest, to the Officer or his affiliate any increase in such
supplemental bonus caused by the recalculation and the Officer or his
affiliate shall return to Sysco that part of any supplemental bonus
received in excess of such recalculation.
c. For years during which there are no premium reimbursements by Sysco
pursuant to subparagraph a of paragraph 5 above but the Officer or his
affiliate realizes an economic benefit equal to the cost of current life
insurance protection (calculated as specified in section 3.3 of the Split
Dollar Agreement) to which the Trust is entitled under the Split Dollar
Agreement, Sysco shall bonus the Officer or his affiliate an amount to
cover Federal income tax liability resulting from the realized economic
benefit equal to the cost of current life insurance protection to which the
Trust is entitled under the Split Dollar Agreement. The amount of the bonus
shall be the difference between (i) an amount determined by dividing the
amount of said economic benefit by one minus the highest Federal individual
marginal income tax bracket for the year said economic benefit is realized
expressed as a decimal, and (ii) the amount of said economic benefit. No
bonus is required for any economic benefit realized by the Officer or his
affiliate under the Split Dollar Agreement except for the cost of current
life insurance protection to which the Trust is entitled.
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7. Ceiling on Reimbursement and Federal Income Tax Bonuses. The bonuses
specified in paragraphs 5 and 6 above, in the aggregate, shall not exceed
$3,898.202.
8. Payment of Taxes and Withholding. The Officer or his affiliate will be
required to pay his share of any Federal or state income, social security or
other taxes that are required to be paid due to the bonuses specified in
paragraphs 5 and 6 above and Sysco will withhold such taxes to the extent
required by applicable law and regulations.
9. Special Deduction Bonus. The parties do not anticipate that there will
be any additional income tax consequences to the Officer or his affiliate from
this Agreement, the waiver of his accrued benefit under the EDCP or the SERP,
and the Split Dollar Agreement other than that attributable to the benefit from
the cost of current life insurance protection to which the Trust is entitled and
the bonuses discussed in paragraphs 5 and 6. However, should additional income
be realized by the Officer or his affiliate because of this Agreement, the
waiver of his accrued benefit under the EDCP or the SERP, or the Split Dollar
Agreement and should Sysco be entitled to a Federal income tax deduction against
its gross income for such other income realized by the Officer or his affiliate,
then Sysco agrees to bonus to the Officer or his affiliate who realized such
other income pursuant to this Agreement, the waiver of the Officer's benefit
under the EDCP or the SERP or the Split Dollar Agreement an amount equal to the
difference between (i) an amount determined by dividing the amount of said
deduction by one minus the highest Federal corporate marginal income tax bracket
for the year such deduction is available to Sysco expressed as a decimal, and
(ii) the amount of said deduction.
10. Dispute Resolution. Sysco and the Officer have entered into this
Agreement in good faith and in belief that it is mutually advantageous to them.
It is with the same spirit of cooperation that they pledge to attempt to resolve
any dispute amicably without the necessity of litigation. Accordingly, they
agree that if any dispute arises between them relating to this Agreement or the
Split Dollar Agreement (a "Dispute"), they will first utilize the mediation
procedures specified in this paragraph prior to any arbitration.
a. Initiation of Mediation. The party seeking to initiate mediation
(the "Initiating Party") shall give written notice to the other party,
describing in general terms the nature of the Dispute, and the Initiating
Party's claim for relief. Sysco and the Officer or the Officer's affiliate
shall have thirty business days from the date of notice to select a
mutually agreeable mediator. In consultation with the mediator selected,
the parties shall promptly designate a mutually convenient time and place
for mediation, and unless circumstances require otherwise, such time to be
not later than forty-five days after the selection of the mediator.
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b. Conduct of Mediation. In the mediation, each party shall be
represented by one or more individuals with authority to settle the Dispute
and may be represented by counsel. In addition, each party may, with
permission of the mediator, bring such additional persons as needed to
respond to questions, contribute information, and participate in the
negotiations. The parties agree to sign a document that provides that the
mediator shall be governed by the provisions of Chapter 154 of the Texas
Civil Practice and Remedies Code or such other rules as the mediator shall
prescribe. The parties commit to participate in the proceedings in good
faith and with the intention of resolving the Dispute if at all possible.
c. Termination of Procedure. The parties agree to participate in the
mediation procedure to its conclusion. The mediation shall be terminated
(i) by the execution of a settlement agreement by the parties, (ii) by a
declaration of the mediator that mediation is terminated, or (iii) by a
written declaration by one of the parties to the effect that the mediation
process is terminated at the conclusion of one full day's mediation
session.
d. Arbitration. The parties agree to participate in good faith in the
mediation to its conclusion. If the parties are not successful in resolving
the Dispute through mediation, then the parties agree that the Dispute
shall be settled by arbitration in accordance with the provisions of the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator(s) shall be final and
may be entered in any court having jurisdiction. The parties further agree
that the award rendered by the arbitrator(s) may include an award of
attorneys' fees and costs related to the arbitration.
e. Fees of Mediation; Disqualification. The fees and expenses of the
mediator shall be shared equally by the parties. The mediator shall be
disqualified as a witness, consultant, expert or counsel by any party with
respect to the Dispute and any related matters.
f. Confidentiality. The entire mediation process is confidential, and
no stenographic, visual or audio records shall be made. All conduct,
statements, promises, offers, views and opinions, whether oral or written,
made in the course of mediation by any party, agent, employee,
representative, or other invitee and by the mediator are confidential and
shall, in addition and where appropriate, be deemed privileged. Such
conduct, statements, promises, offers, views and opinions shall not be
disclosed to anyone, not an agent, employee, expert, witness, or
representative of any of the parties.
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11. Officer's Affiliate. References to an affiliate of the Officer include
such persons and entities who are the successors of the Officer (e.g.,
administrator or executor of his estate, his assigns, or his heirs, legatees, or
devisees) or who are related to the Officer in connection with this Agreement or
the Split Dollar Agreement (e.g., the Officer's wife, the Trust, or the trustee
of the Trust and their heirs or successors).
12. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Officer and Sysco, their successors, assigns, heirs, executors,
administrators, and other beneficiaries.
13. Amendment. No amendment or variations of the terms of this Agreement
shall be valid, unless made in writing and signed by Sysco and the Officer.
14. Not Employment Contract. This Agreement is not the basic employment
contract between Sysco and the Officer nor is it evidence of any agreement or
understanding, express or implied, that Sysco will employ the Officer in any
particular position or at any particular rate of remuneration. Sysco reserves
the unqualified and unrestricted right to terminate the services of the Officer
on exactly the same basis as if this Agreement had never been entered into
although any rights or obligations of Sysco and the Officer under this Agreement
shall survive such termination of employment.
15. Governing Law. The provisions of this Agreement shall be construed and
enforced according to the laws of the State of Texas.
16. Entire Agreement. This Agreement contains the entire contract between
Sysco and the Officer and constitutes a complete integration of the
representations, covenants and promises of Sysco and the Officer.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on this
25th day of October, 1999.
SYSCO CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Officer
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The Officer's wife is fully aware, understands, and fully consents and
agrees to the provisions of this Agreement including its binding effect upon any
community property interest she may have in the EDCP and SERP benefits
irrevocably waived, renounced, and forfeited by the Officer and any economic
benefits realized under the Split Dollar Agreement. Such awareness,
understanding, consent and agreement is evidenced by signing this Agreement.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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EXHIBIT A
SYSCO CORPORATION
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
This Agreement made and entered into between Sysco Corporation, (the
"Employer") and ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Trustees of the
▇▇▇▇▇▇ 1999 Family Trusts.
W I T N E S S E T H
WHEREAS, Sysco has adopted the Sysco Corporation Split Dollar Life
Insurance Plan (the "Plan") which is designed to encourage certain employees to
continue in the service of Sysco by offering such employees assistance in
providing life insurance protection for the employees' family; and
WHEREAS, a Committee (the "Committee") has been established by the Plan
to administer the Plan and to designate employees of Sysco who are eligible to
participate in the Plan; and
WHEREAS, the Committee has selected ▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Employee") to
be a participant under the Plan because the services of the Employee, the
Employee's experience and knowledge of the affairs of Sysco, and the Employee's
reputation and contacts in the industry are extremely valuable to Sysco; and
WHEREAS, Sysco desires that the Employee remain in its service and
wishes to receive the benefit of the Employee's knowledge, experience,
reputation and contacts; and
WHEREAS, Sysco is willing to encourage the Employee's continued service
to Sysco by joining with the Trustee for the mutual benefit of the parties
hereto in an investment of life insurance on the joint lives of the Employee and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, (the "Employee's spouse") so as to provide life insurance
protection for the Employee's family; and
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WHEREAS, the Trustee will be the owner of the Insurance Policies
acquired pursuant to the terms of the Agreement, and Sysco's Investment in the
Insurance Policies will be represented by an assignment from the Trustee to
Sysco of limited ownership rights in the Insurance Policies; and
WHEREAS, this plan is intended to qualify as a life insurance employee
benefit plan as described in Revenue Ruling 64-328.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, Sysco and the Trustee agree as
follows:
ARTICLE 1
Definitions
1.1 "Agreement" means this agreement, as it may be amended from time to
time.
1.2 "Change of Control" is defined in section 3.5.
1.3 "Committee" means the administrative committee under the Plan.
1.4 "Employee" means ▇▇▇▇ ▇. ▇▇▇▇▇▇.
1.5 "Employee's spouse" means ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
1.6 "Insurance Policies" means the policies or policy shown on the
attached Schedule 1, together with any other policies that may be added to the
Agreement.
1.7 "Insurer" means an insurance company issuing an Insurance Policy
subject to this Agreement.
1.8 "Plan" means the Sysco Corporation Split Dollar Life Insurance Plan.
1.9 "Rabbi Trust" means the Sysco Corporation Split Dollar Life
Insurance Trust.
1.10 "Sysco" means Sysco Corporation.
1.11 "Sysco's Investment" means the interest of Sysco in the Insurance
Policy as defined in Section 4.1 of the Agreement.
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1.12 "Trust" means the ▇▇▇▇▇▇ 1999 Family Trusts created by that certain
instrument dated September 30, 1999, between ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, as grantors and ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and
▇▇▇▇▇ Manhattan Bank Delaware, as trustees.
1.13 "Trustee" means for the purposes of this Agreement, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or their successors in office as individual
trustees of the Trust. Pursuant to express provisions of the Trust, the
individual trustees have the sole authority to execute this Agreement and Chase
Manhattan Bank Delaware, the corporate co-trustee, has no such authority.
ARTICLE 2
Insurance Policies
The Trustee has purchased on behalf of the Trust insurance on the joint
lives of the Employee and the Employee's spouse for the benefit and protection
of the Employee's family under the Insurance Policy or Insurance Policies shown
on the attached Schedule 1 in the face amounts as shown on such schedule.
ARTICLE 3
Premium Payments
3.1 Sysco shall pay the required premium specified on Schedule 1 for
each Insurance Policy on or before the due date.
3.2 Any dividends attributable to each Insurance Policy shall be applied
as Sysco and the Trustee agree by an instrument in writing.
3.3 The Trustee shall pay to Sysco during each year the Insurance Policy
is subject to this Agreement and during which Sysco makes a premium payment
under section 3.1, an amount equal to the one-year term cost of the insurance
protection to which the Trust is entitled under such Insurance Policy pursuant
to the terms of this Agreement, including any term insurance rider and any
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insurance purchased by dividends, and such cost is to be determined under the
principles established by applicable U.S. Treasury Department pronouncements,
rulings and regulations in effect for determining such costs for insurance
protection. The Trustee shall reimburse Sysco for such one-year term cost within
a reasonable time after payment of the required premium to the Insurer by Sysco
on each Insurance Policy under section 3.1.
(a) Until changed by U.S. Treasury Department pronouncements,
rulings or regulations, the one-year term cost of insurance protection
on a second to die policy on the joint lives of the Employee and the
Employee's spouse shall be:
(i) With regard to the Pacific Life Insurance Company
Policy listed on Schedule 1, the lesser of the following:
(y) the current published one-year term
rates available to all standard risks of the
Insurer issuing such insurance protection, or
(z) U.S. Life Table 38.
(ii) With regard to the ▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life
Insurance Company Policy listed on Schedule 1, U.S. Life Table
38.
(b) Until changed by U.S. Treasury Department pronouncements,
rulings or regulations, the one-year term cost of insurance protection
on the single life of the Employee or the Employee's spouse (including
the single life of the survivor after the death of the first of the
Employee and the Employee's spouse to die if the Insurance Policy covers
their joint lives), shall be the lesser of the following:
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(i) the current published one-year term rates of the
Insurer issuing such insurance coverage, pursuant to the
guidelines set forth in Rev. Rul. 66-110 and Rev. Rul. 67-154,
or
(ii) an amount determined in accordance with the
tables set forth in Rev. Rul. 55-747 (called the "PS 58 costs").
3.4 Upon a Change of Control, Sysco shall, as soon as possible, but in
no event longer than ninety days following the Change of Control, as defined
herein, make an irrevocable contribution to the Rabbi Trust in an amount equal
to the present value, using a 5% interest factor, of the remaining aggregate
premiums required to be paid by Sysco on Schedule 1 for each Insurance Policy.
The trustee of the Rabbi Trust shall pay future premiums for such Insurance
Policy from such contributions and the appreciation and earnings thereon;
provided, however, that, should such contributions and appreciation and earnings
thereon prove insufficient to pay all of the premiums required by Schedule 1 for
such Insurance Policy, Sysco shall remain liable to make such remaining premium
payments.
3.5 For purposes of this Agreement, Change of Control shall mean the
occurrence of one or more of the following events:
(a) Any "person," including a "syndication" or "group" as those
terms are used in Section 13(d)(3) of the Securities Act, is or becomes
the beneficial owner, directly or indirectly, of securities of Sysco
representing 20% or more of the combined voting power of Sysco's then
outstanding "Voting Securities" which is any security which ordinarily
possesses the power to vote in the election of the Board of Directors of
Sysco without the happening of any precondition or contingency;
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(b) Sysco is merged or consolidated with another corporation and
immediately after giving effect to the merger or consolidation either
(i) less than 80% of the outstanding Voting Securities of the surviving
or resulting entity are then beneficially owned in the aggregate by (x)
the stockholders of Sysco immediately prior to such merger or
consolidation, or (y) if a record date has been set to determine the
stockholders of Sysco entitled to vote on such merger or consolidation,
the stockholders of Sysco as of such record date, or (ii) the Board of
Directors, or similar governing body, of the surviving or resulting
entity does not have as a majority of its members the persons specified
in subparagraph (c)(i) and (ii) below;
(c) If at any time the following do not constitute a majority of
the Board of Directors of Sysco (or any successor entity referred to in
subparagraph (b) above):
(i) Persons who are directors of Sysco on July 4,
1999;
(ii) persons who, prior to their election as a director of
Sysco (or successor entity if applicable) were nominated,
recommended or endorsed by a formal resolution of the Board of
Directors of Sysco;
(d) If at any time during a calendar year a majority of the
directors of Sysco are not persons who were directors at the beginning
of the calendar year; and
(e) Sysco transfers substantially all of its assets to another
corporation which is a less than 80% owned subsidiary of Sysco.
ARTICLE 4
Sysco's Investment
4.1 Sysco's Investment in each Insurance Policy shall be:
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(a) except as provided in subsection (b) below, the lesser of (1)
the cash surrender value of the Insurance Policy and (2) the amounts
paid by Sysco as premiums on such Insurance Policy under the provisions
of section 3.1 with both (1) and (2) reduced by the amount of any
indebtedness which may exist against such Insurance Policy and any
unpaid interest on such indebtedness if said indebtedness was incurred
after such Insurance Policy becomes subject to the Agreement and with
(2) only reduced by the premiums paid by the Trustee with respect to
such Insurance Policy under the provisions of section 3.3;
(b) at any time upon the death of the last insured, the amounts
paid by Sysco as premiums on such Insurance Policy under the provisions
of section 3.1 less (1) the amount of any indebtedness which may exist
against such Insurance Policy and any unpaid interest on such
indebtedness if said indebtedness was incurred after such Insurance
Policy becomes subject to this Agreement, and (2) the premiums paid by
the Trustee with respect to such Insurance Policy under the provisions
of section 3.3.
4.2 The Trustee will collaterally assign the Insurance Policies acquired
pursuant to the terms of this Agreement to a Rabbi Trust established by Sysco as
evidence of Sysco's Investment. The collateral assignment shall not be altered
or changed without the written consent of Sysco. The Rabbi Trust shall have
possession of the Insurance Policy during the term of this Agreement; provided,
however, that the possessor of the Insurance Policy shall make such Insurance
Policy available to the Insurer when it shall be necessary to endorse changes of
beneficiary thereon in accordance with the Trustee's right to appoint
beneficiaries as provided in this Agreement or to exercise any other rights of
the Trustee to such Insurance Policy.
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4.3 The rights of Sysco and the Rabbi Trust under the collateral
assignment are restricted to (a) assigning Sysco's Investment in the Insurance
Policy to the Trustee or the Trustee's designee upon payment of Sysco's
Investment, (b) upon the death of the last insured, obtaining that portion of
the Insurance Policy death proceeds in an amount equal to Sysco's Investment at
such insured's death, and (c) upon surrender of the Insurance Policy, obtaining
that portion of the surrender proceeds not in excess of Sysco's Investment.
4.4 Sysco and the Rabbi Trust are prohibited from taking any action that
would endanger either the interest of the Trustee or the payment of the proceeds
in excess of Sysco's Investment to the beneficiary designated by the Trustee
upon the last insured's death. Prior to the termination of this Agreement, Sysco
and the Rabbi Trust will not exercise the right to pledge the Insurance
Policies, to surrender the Insurance Policies or paid up additions for
cancellation or to partially surrender the Insurance Policies, to assign its
rights to anyone other than the Trustee or the Trustee's designee, and to borrow
against the Insurance Policies even for the purpose of paying premiums unless
there has been a default by the Trustee under this Agreement.
4.5 The Trustee has the power to assign all rights of the Trustee in the
Insurance Policies and under this Agreement, change the beneficiary designation
on each Insurance Policy and exercise settlement options. In the event of an
assignment, the assignee shall possess all of the rights and obligations of the
Trustee under such Insurance Policy and this Agreement. The Trustee has all
rights to the Insurance Policies, not specifically granted to Sysco by this
Agreement; provided, however, that the Trustee may not exercise any rights in a
manner which would endanger Sysco's Investment.
4.6 Sysco and the Trustee recognize that the investment of Sysco in the
Insurance Policies and other assets held in the Rabbi Trust is also subject to
the general creditors of Sysco as
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set forth in the Rabbi Trust. The Trustee and the beneficiaries of the Trust
shall have no preferred claim on, or any beneficial ownership interest in,
any assets of the Rabbi Trust. Any rights created under the Plan or this
Agreement shall be mere unsecured contractual rights of the Trustee and the
beneficiaries of the Trust against Sysco. Any assets held by the Rabbi Trust
will be subject to the claims of Sysco's general creditors under Federal and
state law as specified in the Rabbi trust.
4.7 Any payments of Sysco's Investment in the Insurance Policy pursuant
to the collateral assignment shall be first made from Insurance Policy cash
values attributable to paid up additional life insurance and purchased by
Insurance Policy dividends, if any. The Trustee shall have no interest in paid
up additional life insurance protection, if any, except to the extent the death
benefit or cash value thereof exceeds Sysco's Investment.
ARTICLE 5
Termination
This Agreement shall terminate on the happening of any one or more of
the following events:
(a) Mutual agreement of the parties;
(b) Adjudication of Sysco as a bankrupt or a general assignment
by Sysco to or for the benefit of creditors or dissolution of Sysco;
(c) Surrender of all the Insurance Policies;
(d) Payment in full to Sysco at any time of Sysco's Investment, at
which time Sysco shall release the collateral assignment;
(e) Cessation of Sysco's business;
Additionally, Sysco, in its sole discretion, may terminate this
Agreement upon any failure of the Trustee to pay premiums to Sysco as provided
in section 3.3.
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With regard to each Insurance Policy, the Agreement shall terminate upon
the expiration of the number of years specified on Schedule 1 for such Insurance
Policy unless the agreement is otherwise terminated at an earlier date.
The termination of employment with Sysco by the Employee for any reason,
including Employee's death, will not terminate this Agreement.
ARTICLE 6
Termination of Sysco's Investment
6.1 Upon the death of the last insured, Sysco shall receive from the
proceeds of all Insurance Policies payable upon such insured's death the full
amount of Sysco's Investment in the death benefits in all such Insurance
Policies. The balance of the proceeds of such Insurance Policies shall be paid
(a) to the beneficiary designated by the Trustee or (b) if no such beneficiary
has been designated, to the Trust.
6.2 In the event of the termination of this Agreement under Article 5
(except as provided in Section (d) of Article 5), the Trustee or the designee of
the Trustee shall have ninety days in which to pay Sysco in an amount equal to
Sysco's Investment in each affected Insurance Policy. Upon the payment of such
an amount, Sysco and the Rabbi Trust shall release the collateral assignment of
such Insurance Policies. If the Trustee or the designee of the Trustee does not
make such payment to Sysco within such ninety day period, the Trustee may either
(a) surrender such Insurance Policy as provided in the collateral assignment, or
(b) transfer ownership of such Insurance Policy to Sysco, thereby discharging
the obligation of the Trustee to purchase Sysco's Investment in such Insurance
Policy and relinquishing all rights of the Trustee to such Insurance Policy
under this Agreement.
6.3 Upon the surrender or partial surrender of any Insurance Policy
covered by this Agreement or should the Trustee borrow against any Insurance
Policy covered by this Agreement,
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the proceeds received upon such surrender, partial surrender or loan shall be
used first to pay Sysco in an amount equal to Sysco's Investment in such
Insurance Policy and any excess proceeds shall be paid to the Trust.
ARTICLE 7
Insurers
The Insurer(s) issuing the Insurance Polices shall not be deemed to be a
party to this Agreement for any purpose, nor is the Insurer in any way
responsible for its validity or its enforcement. The Insurer shall not be
obligated to inquire as to the distribution or application of any monies,
payable or paid by the Insurer under the Insurance Policies, if the Insurer
makes appropriate payment or otherwise performs its contractual obligations in
accordance with the terms of the Insurance Policies. The Insurer shall be bound
only by the provisions of the Insurance Policies or an endorsement thereto. Any
payments made or actions taken by the Insurer in accordance with such Insurance
Policies shall fully discharge the Insurer from liability.
ARTICLE 8
Amendments and Miscellaneous
8.1 This Agreement shall not be modified or amended except by a written
instrument signed by Sysco and the Trustee. This Agreement shall be binding upon
the administrators, assigns and successors of the parties to this Agreement.
8.2 The provisions of this Agreement shall be construed and enforced
according to the laws of the State of Texas, except to the extent preempted by
federal law.
8.3 This Agreement and the Plan contain the entire contract between the
parties and constitute a complete integration of the representations, covenants
and promises of the Employee
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and Sysco. In case of a conflict, express or implied, between the terms of the
Plan and this Agreement, the terms of the Plan will govern.
8.4 This Agreement is not the basic employment contract between Sysco
and the Employee and Sysco reserves the unqualified and unrestricted right to
terminate the services of the Employee on exactly the same basis as if this
Agreement had never been entered into.
8.5 The Trustee shall have no interest or rights in Sysco's Investment
in any Insurance Policy.
ARTICLE 9
ERISA Provisions
9.1 Sysco is the named fiduciary of the Plan for purposes of the
Employee Retirement Income Security Act of 1974 and shall have the authority to
control and manage the operation and administration of the Plan.
9.2 The funding policy of this Plan will be through premium payments to
the Insurer as specified in this Agreement.
9.3 The basis of payments from the Plan will consist of payments by the
Insurer in accordance with the Insurance Policies.
9.4 Claims for death benefits are established under the Insurance Policy
by the Insurer. If for any reason a claim for benefits under the Plan other than
death benefits is denied, Sysco 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 was based, such other data as
may be pertinent and information on procedures to be followed by the claimant in
obtaining a review of his or her claim, all written in a manner calculated to be
understood by the claimant. For this purpose:
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(a) The claimant's claim shall be deemed filed when presented
orally or in writing to Sysco.
(b) Sysco's explanation shall be in writing and delivered to
the claimant within ninety days of the date the claim is filed.
The claimant shall have sixty days following his or her receipt of the
denial of the claim to file with Sysco a written request for review of the
denial. For such review, the claimant or his or her representative may submit
pertinent documents and written issues and comments.
Sysco shall decide the issue on review and furnish the claimant with a
copy within sixty days of receipt of the claimant's request for review of his or
her claim. The decision on review shall be in writing and shall include specific
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 so furnished to
the claimant within such sixty days, the claim shall be deemed denied on review.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
this _____ day of ________________________, _____.
SYSCO CORPORATION, Employer
By
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▇▇▇▇▇▇ 1999 FAMILY TRUSTS, Trust
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▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Co-Trustee
----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Co-Trustee
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SCHEDULE 1
The Insurance Policy or Insurance Policies covered by the foregoing
Split Dollar Life Insurance Agreement between Sysco Corporation and the Employee
include the following:
1. Insurer: ▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance Company
2. Policy No. ______________________________
3. Initial Face Amount: $13,145,000
4. Insured(s): ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
5. Sysco Premium: $878,050 annually from 1999 through 2003
6. Trustee section 3.3 Reimbursement: from 1999 through 2003
7. Unless terminated earlier under the Agreement, the Agreement
will terminate for this Policy on its anniversary date in
2016.
1. Insurer: Pacific Life Insurance Company
2. Policy No. ______________________________
3. Initial Face Amount: $6,855,000
4. Insured(s): ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
5. Sysco Premium: $535,240 annually from 1999 through 2002
6. Trustee section 3.3 Reimbursement: from 1999 through 2002
7. Unless terminated earlier under the Agreement, the Agreement
will terminate for this Policy on its anniversary date in
2019.
EXECUTED this _____ day of ___________________, __________.
SYSCO CORPORATION, Employer
By
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▇▇▇▇▇▇ 1999 FAMILY TRUSTS, Trust
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▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Co-Trustee
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▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Co-Trustee
