EXHIBIT 10.12
-34-
RESTATEMENT OF SPLIT DOLLAR AGREEMENT (SPECIAL TRUST)
RESTATEMENT, made and entered into by and between Tootsie Roll
Industries, Inc., a Virginia corporation (the "Corporation"), and Xxxxx X.
Xxxxxx, not individually, but as trustee of the Xxxxxx Family 1993 Special
Trust (the "Owner").
WHEREAS, the Corporation and the Owner entered into a Split Dollar
Agreement dated July 10, 1993 covering policies of insurance on the joint
lives of Xxxxxx X. Xxxxxx and Xxxxx X. Xxxxxx and policies of insurance on
the sole life of Xxxxx X. Xxxxxx (the "Agreement"); and
WHEREAS, Xxxxxx X. Xxxxxx and Xxxxx X. Xxxxxx (individually, an
"Employee," and collectively, the "Employees") continue to be employed by the
Corporation in which capacity their services have contributed to the
successful operation of the Corporation, and the Corporation and its board of
directors believe it is in the best interest of the Corporation to retain the
services of the Employees; and
WHEREAS, the Corporation and the Owner desire to restate and
continue the Agreement and to expand the Agreement to cover three additional
policies of insurance owned by the Owner on the sole life of Xxxxx X. Xxxxxx,
such additional policies and the original policies subject to the Agreement
(the "policies") are listed on the attached Amended Schedule A; and
WHEREAS, the Corporation and the Owner agree to make all the
policies subject to this restated split dollar agreement; and
WHEREAS, the Owner agrees to assign each additional policy to the
Corporation as collateral for the premium payments to be made by the
Corporation under this restated agreement by an instrument of collateral
assignment (the "assignment"), to record such assignment with the respective
issuing insurance company, and to maintain in full force and effect the
collateral assignments for the original policies.
NOW, THEREFORE, in consideration of the premises, and the services
to be rendered to the Corporation by the Employees, and for other good and
valuable consideration, receipt of which is hereby acknowledged, the
Corporation and the Owner hereby mutually covenant and agree as follows:
ARTICLE I
PAYMENT OF PREMIUMS AND ECONOMIC BENEFIT
1.1. As long as this restated agreement is in force, as to each policy,
the Owner and the Corporation agree to pay the amounts and in the manner set
forth below.
1.2. On or before the anniversary date of the policy, the Owner shall pay
to the insurance company issuing the policy (the "Insurer") an amount equal
to the economic benefit as to the policy that would be taxable as gross
income for federal income tax purposes to one or both of the Employees but
for the payment by the Owner of such amount. The Owner shall have the
option, exercisable upon 30 days' written notice delivered to the
Corporation, to pay a greater amount to the Corporation.
1.3. For purposes of Section 1.2 above, the economic benefit that would
be taxable to one or both of the Employees shall be computed in accordance
with Revenue Rulings 64-328, 1964-2 C.B. 11, and 66-110, 1966-1 C.B 12, and
the Corporation shall be responsible for computing such amount. The
Corporation will advise the Owner of the amount payable by the Owner pursuant
to Section 1.2, and the Owner shall pay that amount directly to the Insurer.
-35-
1.4. On or before the anniversary date of the policy, the Corporation
shall pay to the Insurer the balance of the annual premium, if any, as to the
policy in excess of the amount payable by the Owner pursuant to Section 1.2
above.
ARTICLE II
POLICY OWNERSHIP
2.1. The Owner shall be the sole owner and beneficiary of each policy.
The Owner agrees to assign each policy to the Corporation as collateral for
the Corporation's payment of premiums hereunder, and the Corporation shall
have those rights granted to it under the assignments and this restated
agreement. As between the Owner and the Corporation, this restated agreement
shall take precedence over any provisions of the assignments in case of a
conflict between the terms of this restated agreement and the assignments.
ARTICLE III
DEATH OF EMPLOYEES
3.1. As to each policy on the joint lives of the Employees, on the death
of the last to die of the Employees while this restated agreement is in
force, the Owner will pay to the Corporation an amount equal to the aggregate
of (a) the total premiums paid by the Corporation on the policy from the date
of this restated agreement to the date of death of the last to die of the
Employees, reduced by all distributions from the policy made to the
Corporation during that time and (b) an amount equal to the total premiums
paid by the Corporation from the date of the Agreement to the date of this
restated agreement, reduced by the total payments made to the Corporation by
the Owner during that time (the "Corporation's Interest" and, in the
assignment relating to the policy, the "Assignee's Interest").
3.2. As to each policy on the sole life of Xxxxx X. Xxxxxx, on the death
of Xxxxx X. Xxxxxx while this restated agreement is in force, the Owner will
pay to the Corporation an amount equal to the aggregate of (a) the total
premiums paid by the Corporation on the policy from the date of this restated
agreement to the date of death of Xxxxx X. Xxxxxx, reduced by all
distributions from the policy made to the Corporation during that time and
(b) an amount equal to the total premiums paid by the Corporation from the
date of the Agreement to the date of this restated agreement, reduced by the
total payments made to the Corporation by the Owner during that time (the
"Corporation's Interest" and, in the assignment relating to the policy, the
"Assignee's Interest").
ARTICLE IV
TERMINATION OF RESTATED AGREEMENT
4.1. As to each policy, this restated agreement shall automatically
terminate upon the happening of any of the following events:
(a) As to each policy on the joint lives of the Employees, at
the option of the Corporation, if both the Employees terminate
employment for any reason other than the death of both Employees. An
Employee shall be deemed to be employed by the Corporation during any
period of temporary or permanent disability.
(b) As to each policy on the sole life of Xxxxx X. Xxxxxx, at
the option of the Corporation, if Xxxxx X. Xxxxxx terminates
employment for any reason other than her death.
-36-
Xxxxx X. Xxxxxx shall be deemed to be employed by the Corporation during
any period of temporary or permanent disability.
(c) At the surrender, lapse or termination of the policy.
(d) Upon delivery by the Owner of written notice of such
termination to the Corporation.
(e) Upon failure of the Owner to make a payment required by
Section 1.2 above.
(f) Upon agreement of the parties.
4.2. In the event of a termination under Section 4.1 above, the
Corporation shall be entitled to receive from the Owner within 120 days after
such termination as to a policy on the joint lives of the Employees, an
amount equal to the amount the Corporation would have been entitled to
receive at the death of the last to die of the Employees under Section 3.1
determined as if such death occurred on the date of such termination (the
"termination amount"), or as to a policy on the sole life of Xxxxx X. Xxxxxx,
an amount equal to the amount the Corporation would be entitled to receive at
the death of Xxxxx X. Xxxxxx under Section 3.2 determined as if her death
occurred on the date of such termination (the "termination amount").
4.3. If full payment of the termination amount is not received by the
Corporation pursuant to Section 4.2 above within the 120-day period, the
remaining amount owed by the Owner to the Corporation shall be deemed to be
in default (the "default amount"). Thereafter, the Owner, at the Owner's
option, immediately shall:
(a) Pay the default amount to the Corporation; or
(b) Transfer complete ownership of the policy to the
Corporation.
ARTICLE V
OTHER PROVISIONS
5.1. The Corporation agrees that it will not merge or consolidate with
another corporation or organization, or permit its business activities to be
taken over by any other organization unless and until the succeeding or
continuing corporation or other organization shall expressly assume the
rights and obligations of the Corporation herein set forth.
5.2. This restated agreement will be governed by and construed in
accordance with the laws of Illinois, where it is made and to be performed.
It sets forth the entire agreement between the parties concerning the subject
matter thereof, and any amendment or discharge will be made only in writing.
This restated agreement will bind and benefit the parties and their legal
representatives and successors.
5.3. This restated agreement shall not be deemed to constitute a contract
of employment between the Corporation and either of the Employees, nor shall
any provision restrict the right of the Corporation to discharge either of
the Employees, or restrict the right of either of the Employees to terminate
employment.
5.4. For the purposes of the Employee Retirement Income Security Act of
1974 (ERISA), the Corporation will be the "Named Fiduciary" and Plan
Administrator of the split dollar life insurance plan (the "Plan") for which
this restated agreement is hereby designated the written plan instrument.
-37-
5.5. The Corporation's board of directors may authorize a person or group
of persons to fulfill the responsibilities of the Corporation as Plan
Administrator. The Named Fiduciary or the Plan Administrator may employ
others to render advice with regard to its responsibilities under the Plan.
The Named Fiduciary may also allocate fiduciary responsibilities to others
and may exercise any other powers necessary for the discharge of its duties
to the extent not in conflict with ERISA.
5.6. The following Claims Procedure shall control the determination of
benefit payments under the Plan:
(a) Filing of Claim for Benefits
Any person or entity ("Claimant") entitled to benefits under the Plan
or under a policy will file a claim request with the Plan
Administrator with respect to benefits under the Plan and with the
"Insurer" (defined below) with respect to benefits under the policy.
The Plan Administrator will, upon written request of a Claimant, make
available copies of any claim forms or instructions provided by the
Insurer or advise the Claimant where copies of such forms or
instructions may be obtained.
(b) Denial of Claim
A claim for Benefits under the Plan will be denied if the Corporation
determines that the Claimant is not entitled to receive benefits under
the Plan. Notice of a denial shall be furnished to the Claimant
within a reasonable period of time after receipt of the Claim for
Benefit by the Plan Administrator. In the case of benefits which are
provided under the policy, the initial decision on the claims will be
made by the Insurer.
(c) Content of Notice
The Plan Administrator shall provide to every Claimant who is denied a
Claim for Benefits written notice setting forth, in a manner
calculated to be understood by the Claimant, the following:
(i) The specific reason or reasons for the denial;
(ii) Specific reference to pertinent Plan provisions on
which the denial is based:
(iii) A description of any additional material or
information necessary for the Claimant to perfect the claim, and
an explanation of why such material or information is necessary;
and
(iv) An explanation of the Plan's Claim Review Procedure as
set forth below.
(d) Review Procedure
The purpose of the Review Procedure is to provide a method by which a
Claimant may have a reasonable opportunity to appeal a denial of a
Claim to the Named Fiduciary for a full and fair review. To
accomplish that purpose, the Claimant or his duly authorized
representative:
(i) May require a review upon written application to the
Named Fiduciary;
(ii) May review pertinent Plan documents; and
-38-
(iii) May submit issues and comments in writing.
A Claimant (or his duly authorized representative) shall request a
review by filing a written application for review with the Named
Fiduciary at any time within 60 days after receipt by the Claimant of
written notice of the denial of his claim.
(e) Decision on Review
A decision on review of a denied claim shall be made in the following
manner:
(i) The decision on review shall be made by the Named
Fiduciary, who may in his discretion hold a hearing on the denied
claim. Such decision shall be made promptly, and not later than
60 days after receipt of the request for review, unless special
circumstances (such as the need to hold a hearing) require an
extension of time for processing, in which case a decision shall
be rendered as soon as possible, but not later than 120 days
after receipt of the request for review.
(ii) 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, and specific
references to the pertinent Plan provisions upon which the
decision is based.
5.7. This restated agreement may be amended or modified in whole or in part
by the Owner and the Corporation in writing at any time.
5.8. Notwithstanding the provisions of this restated agreement, each
Insurer is hereby authorized to act in accordance with the terms of its
respective policy as if this restated agreement did not exist, and the
payment or other performance of the contractual obligations by the Insurer,
in accordance with the terms of such policy, shall completely discharge the
Insurer from all claims, suits and demands of all persons whatsoever.
* * *
IN WITNESS WHEREOF, the parties hereto have signed this
restatement on January 31, 1997.
TOOTSIE ROLL INDUSTRIES, INC.
-39-
AMENDED SCHEDULE A (SPECIAL TRUST)
Name Policy No.
---- ----------
Policies on the Joint Lives of Xxxxxx and Xxxxx Xxxxxx
------------------------------------------------------
Guardian 3733408
Xxxx Xxxxxxx 80042963
Mass Mutual 8858899
New York Life 44956816
Principal Mutual 6450780
Policies on the Sole Life of Xxxxx Xxxxxx
-----------------------------------------
Security Life 1526881
Sun Life 9293268Z
Mass Mutual 0027876
New York Life 63542913
Pacific Mutual VP60429270
-40-
COLLATERAL ASSIGNMENT (SPLIT DOLLAR)
1. Xxxxx X. Xxxxxx, Xxxxxxxx X. Xxxxxx, Xxxxx Xxxxxx Xxxxx, and Xxxx X.
Xxxxxx, not individually but as trustees of the Xxxxxx Family 1993 Special
Trust (the "Assignor"), hereby assigns, transfers and sets over to Tootsie
Roll Industries, Inc., a Virginia corporation (the "Assignee"), to the extent
of the amounts defined in and owing from time to time from Assignor to
Assignee under that certain Split Dollar Agreement dated July 10, 1993, as
restated, between Assignor and Assignee (the "Assignee's Interest"), Policy
No. VP60429270 issued by Pacific Mutual Life Insurance Company on the life of
Xxxxx X. Xxxxxx, subject to all the terms and conditions of the policy and to
all superior liens, if any, which the insurer may have against the policy.
The Assignor by this instrument agrees and the Assignee by the acceptance of
this assignment agrees to the conditions and provisions herein set forth.
1. It is expressly agreed that only the following specific rights are
included in this assignment and may be exercised solely by the Assignee:
(f) The right to obtain, upon surrender of the policy by the
Assignor, an amount of the cash surrender proceeds up to the amount of the
Assignee's Interest in the policy.
(g) The right to collect, upon the death of the insured, the net
proceeds of the policy up to the amount of the Assignee's Interest in the
policy.
2. The insurer hereby is authorized to recognize the Assignee's claim
to rights hereunder without investigating the reason for any action taken by
the Assignee, or the giving of any notice, or the application to be made by
the Assignee of any amounts to be paid to the Assignee. The sole signature
of the Assignee shall be sufficient for the exercise of its rights under the
policy and the sole receipt of the Assignee for any sums received shall be a
full discharge and release therefor to the insurer.
Dated: March 8, 1997.
-41-
Xxxxx X. Xxxxxx, not individually, but as trustee
Assignor
Xxxxxxxx X. Xxxxxx, not individually, but as trustee
Assignor
Xxxxx Xxxxxx Xxxxx, not individually, but as trustee
Assignor
Xxxx X. Xxxxxx, not individually, but as trustee
Assignor
Accepted an executed counterpart of this Collateral Assignment as of the
date last above written.
PACIFIC MUTUAL LIFE INSURANCE
COMPANY
-42-
COLLATERAL ASSIGNMENT (SPLIT DOLLAR)
1. Xxxxx X. Xxxxxx, Xxxxxxxx X. Xxxxxx, Xxxxx Xxxxxx Xxxxx, and Xxxx
X. Xxxxxx, not individually but as trustees of the Xxxxxx Family 1993 Special
Trust (the "Assignor"), hereby assigns, transfers and sets over to Tootsie
Roll Industries, Inc., a Virginia corporation (the "Assignee"), to the extent
of the amounts defined in and owing from time to time from Assignor to
Assignee under that certain Split Dollar Agreement dated July 10, 1993, as
restated, between Assignor and Assignee (the "Assignee's Interest"), Policy
No. 63542913 issued by New York Life Insurance Company on the life of Xxxxx
X. Xxxxxx, subject to all the terms and conditions of the policy and to all
superior liens, if any, which the insurer may have against the policy. The
Assignor by this instrument agrees and the Assignee by the acceptance of this
assignment agrees to the conditions and provisions herein set forth.
2. It is expressly agreed that only the following specific rights are
included in this assignment and may be exercised solely by the Assignee:
(a) The right to obtain, upon surrender of the policy by the
Assignor, an amount of the cash surrender proceeds up to the amount
of the Assignee's Interest in the policy.
(b) The right to collect, upon the death of the insured, the
net proceeds of the policy up to the amount of the Assignee's
Interest in the policy.
3. The insurer hereby is authorized to recognize the Assignee's claim
to rights hereunder without investigating the reason for any action taken by
the Assignee, or the giving of any notice, or the application to be made by
the Assignee of any amounts to be paid to the Assignee. The sole signature
of the Assignee shall be sufficient for the exercise of its rights under the
policy and the sole receipt of the Assignee for any sums received shall be a
full discharge and release therefor to the insurer.
Dated: March 8, 1997.
-43-
Xxxxx X. Xxxxxx, not individually, but as trustee
Assignor
Xxxxxxxx X. Xxxxxx, not individually, but as trustee
Assignor
Xxxxx Xxxxxx Xxxxx, not individually, but as trustee
Assignor
Xxxx X. Xxxxxx, not individually, but as trustee
Assignor
Accepted an executed counterpart of this Collateral Assignment as of the
date last above written.
NEW YORK LIFE INSURANCE COMPANY
-44-
COLLATERAL ASSIGNMENT (SPLIT DOLLAR)
1. Xxxxx X. Xxxxxx, Xxxxxxxx X. Xxxxxx, Xxxxx Xxxxxx Xxxxx, and Xxxx X.
Xxxxxx, not individually but as trustees of the Xxxxxx Family 1993 Special
Trust (the "Assignor"), hereby assigns, transfers and sets over to Tootsie
Roll Industries, Inc., a Virginia corporation (the "Assignee"), to the extent
of the amounts defined in and owing from time to time from Assignor to
Assignee under that certain Split Dollar Agreement dated July 10, 1993, as
restated, between Assignor and Assignee (the "Assignee's Interest"), Policy
No. 0027876 issued by Massachusetts Mutual Life Insurance Company on the life
of Xxxxx X. Xxxxxx, subject to all the terms and conditions of the policy and
to all superior liens, if any, which the insurer may have against the policy.
The Assignor by this instrument agrees and the Assignee by the acceptance of
this assignment agrees to the conditions and provisions herein set forth.
2. It is expressly agreed that only the following specific rights are
included in this assignment and may be exercised solely by the Assignee:
(a) The right to obtain, upon surrender of the policy by the
Assignor, an amount of the cash surrender proceeds up to the amount of the
Assignee's Interest in the policy.
(b) The right to collect, upon the death of the insured, the net
proceeds of the policy up to the amount of the Assignee's Interest in the
policy.
3. The insurer hereby is authorized to recognize the Assignee's claim to
rights hereunder without investigating the reason for any action taken by the
Assignee, or the giving of any notice, or the application to be made by the
Assignee of any amounts to be paid to the Assignee. The sole signature of the
Assignee shall be sufficient for the exercise of its rights under the policy and
the sole receipt of the Assignee for the amount of any sums received shall be a
full discharge and release therefor to the insurer.
Dated: March 8, 1997.
-45-
Xxxxx X. Xxxxxx, not individually, but as trustee
Assignor
Xxxxxxxx X. Xxxxxx, not individually, but as trustee
Assignor
Xxxxx Xxxxxx Xxxxx, not individually, but as trustee
Assignor
Xxxx X. Xxxxxx, not individually, but as trustee
Assignor
Accepted an executed counterpart of this Collateral Assignment as of the
date last above written.
MASSACHUSETTSMUTUAL LIFE INSURANCE
COMPANY
-46-
