Contract
Exhibit
10.18
THIS
AGREEMENT
is made
and entered into this 1st day of May, 2006 by and among Reliv International,
Inc., a Delaware corporation, with its principal offices and place of business
at 000 Xxxxxxxxxxxx Xxxxxxxxxx Xxxxxxxxx, Xxxxxxxxxxxx, Xxxxxxxx 00000
(hereinafter referred to as the “Company”) and Xxxxxx X. Xxxxxxxx, an individual
whose address is 18180 Bent Ridge, Wildwood, Missouri (hereinafter referred
to
as the “Executive”).
WHEREAS,
Executive is employed by the Company;
WHEREAS,
Executive 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 which has been issued by Metropolitan Life Insurance
Company (hereinafter referred to as the “Insurer”);
WHEREAS,
the Company is willing to pay premiums due on the Policy as an additional
employment benefit for Executive, on the terms and conditions set
forth;
WHEREAS,
the Company is the owner of the Policy and, as such, possesses all of the
incidents of ownership of the policy; and,
WHEREAS,
the Company wishes to retain such ownership rights in order to secure the
repayment of the amounts which it will pay toward the premiums on the
Policy.
NOW,
THEREFORE,
in
consideration of the premises and of the terms, covenants and conditions
hereinafter contained, the parties hereto agree as follows:
1. Purchase
of Policy.
The
Company has purchased the Policy from the Issuer in the total face amount
of
$500,000. The parties hereto have taken 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 endorsement to the Policy filed with
the
Insurer.
2. Ownership
of the Policy.
The
Company 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 my otherwise be provided herein.
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3. Election
of Settlement Option and Beneficiary.
The
Executive may select the settlement option for payment of the death benefit
provided under the Policy and the beneficiary or beneficiaries to receive
the
portion of the Policy proceeds to which the Executive is entitled hereunder,
by
specifying the same in a written notice to the Company. Upon receipt of such
notice, the Company shall execute and deliver to the Insurer the forms necessary
to elect the requested settlement option and to designate the requested persons,
persons or entity as the beneficiary or beneficiaries to receive the death
proceeds of the Policy in excess of the amount to which the Company is entitled
hereunder. The parties do agree to take all action necessary to cause the
beneficiary designation and settlement election provisions of the Policy
to
conform to the provisions hereof. The Company shall not terminate, alter
or
amend such designation or election without the express written consent of
the
Executive.
4.
Payment
of Premiums.
On or
before the due date of each Policy premium, or within the grace period provided
therein, the Company shall pay the full amount of the premium to the Insurer,
and shall, upon request, promptly furnish to the Executive evidence of timely
payment of such premium. The Company annually shall furnish to the Executive
a
statement of the amount of income reportable by the Executive for federal
and
state income tax purposes as a result of the insurance protection
provided.
5. Designation
of Policy Beneficiary/Endorsement.
Contemporaneously with the execution of this Agreement, the Company has executed
a beneficiary designation for and/or an endorsement to the Policy, under
the
form used by the Insurer for such designations, in order to secure the
Corporation’s recovery of the amount of the premiums on the Policy paid by the
Corporation hereunder. Such beneficiary designation or endorsement shall
not be
terminated, altered or amended by the Company without the express written
consent of the Executive. The parties hereto agree to take all actions necessary
to cause such beneficiary designation or endorsement to conform to the
provisions of this Agreement.
6. Limitations
on Company’s Rights in Policy.
Except
as otherwise provided herein, the Company shall not sell, assign, transfer,
surrender or cancel the Policy, change the beneficiary designation provision
thereof, or terminate the dividend election thereof without, in any such
case,
the express written consent of the Executive.
7.
Policy
Loans.
The
Company may pledge or assign the Policy, subject to the terms and conditions
of
this Agreement, for the sole purpose of securing a loan from the Insurer
or from
a third party. The amount of such loan, including accumulated interest thereon
shall not exceed the lesser of (i) the amount of the premiums on the Policy
paid
by the Company hereunder or (ii) the cash surrender value of the Policy (as
defined herein) as of the date to which premiums have been paid. Interest
charges on such loan shall be paid by the Company. If the Company so encumbers
the Policy, other than by a policy loan from the Insurer, then, upon death
of
the Executive or upon election of the Executive hereunder to purchase the
Policy
from the Company, the Company shall take all action necessary to secure the
release or discharge of such encumbrance.
8.
Collection
of Death Proceeds.
8.1 Upon
the
death of the Executive, the Company shall cooperate with the beneficiary
or
beneficiaries designated by the Executive 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.
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8.2 Upon
the
death of the Executive, the Company shall have the unqualified right to receive
a portion of such death benefit equal to the greater of (i) one-third thereof
or
(ii) the greater of the total amount of premiums paid by it hereunder or
the
then cash surrender value of the policy, such amount reduced by the amount,
if
any, of indebtedness against the Policy existing at the date of the death
of the
Executive (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
beneficiary or beneficiaries designated by the Company at the direction of
the
Executive, in the manner and in the amount or amounts provided in the
beneficiary designation provisions of the Policy. In no event shall the amount
payable to the Company hereunder exceed the Policy proceeds payable at the
death
of the Executive. No amount shall be paid from such death benefit to the
beneficiary or beneficiaries designated by the Company at the direction of
the
Executive until the full amount due the Company hereunder has been paid.
The
parties hereto agree that the beneficiary designation provision of the Policy
shall conform to the provisions hereof.
8.3 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
Executive and in lieu thereof the Insurer refunds all or any part of the
premiums paid for the Policy, the Company and the Executive’s beneficiary or
beneficiaries shall have the unqualified right to share such premiums based
on
their respective cumulative contributions thereto.
9.
Termination
of Agreement During Executive’s Lifetime.
9.1 This
Agreement shall terminate during the Executive’s lifetime, without notice, upon
the occurrence of any of the following events: (a) a total cessation of the
Company’s business, (b) bankruptcy, receivership or dissolution of the Company
or (c) termination of the Executive’s full-time employment by the Company (other
than by reason of his death).
9.2 In
addition, the Executive may terminate this Agreement at any time by written
notice to the Company, such termination to be effective as of the date such
notice is given.
10.
Disposition
of Policy on Termination of Agreement During Executive’s
Lifetime.
10.1 For
sixty
(60) days after the date of the termination of this Agreement during Executive’s
lifetime, the Executive shall have the assignable option to purchase the
Policy
from the Company. The purchase price for the Policy shall be an amount equal
to
the then Fair Market Value of the Policy as determined pursuant to Revenue
Procedure 2005-25 or the most recent guidance regarding proper valuation
of a
life insurance policy. Upon receipt of such amount, the Company shall transfer
all of its right, title and interest in and to the Policy to the Executive,
or
his assignee, by the execution and delivery of an appropriate instrument
of
transfer.
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10.2 If
the
Executive or his assignee fails to exercise such option with such sixty (60)
day
period, then the Company may enforce its right to be repaid for the premiums
which it paid hereunder by surrendering or canceling the Policy for its cash
surrender value, or it may change the beneficiary designation provisions
of the
Policy, naming itself or any other person or entity as revocable beneficiary
thereof, or exercise any other ownership rights in and to the Policy, without
regard to the provisions hereof. Thereafter, neither the Executive, his assignee
nor their heirs, assigns or beneficiaries shall have any further interest
in or
to the Policy, either under the terms thereof or under this
Agreement.
11.
Insurer
Not a Party.
The
Insurer shall be fully discharged from its obligations under the Policy by
payment of the 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 beneficiary designation executed by the Company and
filed
with the Insurer in connection herewith.
12.
Assignment
by Executive.
Notwithstanding any provision hereof to the contrary, the Executive shall
have
the right absolutely and irrevocably to assign by gift all of his right,
title
an interest in and to this Agreement and to the Policy to an assignee. This
right shall be exercisable by the execution and delivery to the Company of
a
written assignment, in substantially the form attached hereto as Exhibit
B,
which by this reference is made a part hereof. Upon receipt of such written
assignment executed by the Executive and duly accepted by the assignee thereof,
the Company shall consent thereto in writing, and shall thereafter treat
the
Executive’s assignee as the sole owner of all of the Executive’s right, title
and interest in and to this Agreement and in and to the Policy. Thereafter,
the
Executive shall have no right, title or interest in or to this Agreement
or the
Policy, all such rights being vested in and exercisable only by such
assignee.
13.
Named
Fiduciary, Determination of Benefits, Claims Procedure and Administration.
13.1 The
Company is hereby designated as the named fiduciary under this Agreement.
The
named fiduciary shall have the 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.
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13.2 (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 “Claimant”) may file a
written request for such benefit with the Company, setting forth his or her
claim. The request must be addressed to the President of the Company at its
then
principal place of business.
(2)
Claim
Decision.
Upon
receipt of a claim, the Company 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 Company 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 Company 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.
Within
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
Company review the determination of the Company. 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 Company. If the Claimant does not request a review of
the
Company’s determination by the Secretary of the Company within such sixty (60)
day period, he or she shall be barred and estopped from challenging the
Company’s determination.
(4)
Review of Decision.
Within
sixty (60) days after the Secretary’s receipt of a request for review, he or she
will review the Company’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.
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14.
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.
15.
Notices.
15.1 Any
notice, demand, consent, service or other communication required or permitted
to
be given under this Agreement shall be in writing and addressed to the party
at
its address stated below:
| If to the Company | Xxxxxx X. Xxxxxxxxxx | |
|
Chief
Executive Officer
|
||
| Reliv International, Inc. | ||
| 000 Xxxxxxxxxxxx Xxxxxxxxxx Xxxxxxxxx | ||
| Xxxxxxxxxxxx, XX 00000 | ||
| If to Executive | At his address as shown on the books of the Company |
Any
party
may change the address to which notices to it shall be sent hereunder by
giving
a proper notice of such change of address to the other party
hereunder.
15.2 Notices
may be delivered by hand, registered mail, or fax and shall be deemed to
have
been received as follows:
15.2.1 If
delivered by hand, at the time of delivery to a responsible person at the
address for the party;
15.2.2 If
sent
by fax, at the time of confirmation of transmission provided a confirmation
copy
is sent by airmail or registered mail within twenty-four hours after the
transmission; or,
15.2.3 If
sent
by registered mail, at the time of delivery or at the time of attempted delivery
in the case delivery cannot be completed due to no fault of the
sender.
If
the
time of such deemed receipt as provided above is not during the customary
business hours of the party, the notice shall be deemed to have been received
at
10:00 a.m. at the place of delivery on the first customary day of business
thereafter.
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16.
Binding
Effect.
This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors in interest and, to the extent permitted
herein, their assigns.
17.
Severability.
Whenever possible, each provision of this Agreement shall be interpreted
in such
manner as to be effective and valid under applicable law. If any paragraph
of
this Agreement shall be unenforceable or invalid under applicable law, such
provision shall be ineffective only to the extent and duration of such
unenforceability or invalidity and the remaining substance of such provision
and
the remaining paragraphs of this Agreement shall in such event continue to
be
binding and in full force and effect.
18.
Waivers.
Nor
failure by a party to exercise any of such party’s rights hereunder or to insist
upon strict compliance with respect to any obligation hereunder, and no custom
or practice of the parties at variance with the terms hereof, shall constitute
a
waiver by any party to demand exact compliance with the terms hereof. Waiver
by
any party of any particular default by any other party shall not affect or
impair such party’s rights in respect to any subsequent default of the same or
of a different nature, nor shall any delay or omission of any party to exercise
any right arising from any default by any other party affect or impair such
party’s rights as to such default or any subsequent default.
19.
Entire
Agreement.
This
Agreement constitutes the entire agreement among the parties hereto with
respect
to the subject matter hereof and supersedes all prior written or oral
negotiations, representations, inducements, understandings, commitments,
contracts or agreements.
20.
Governing
Law.
This
Agreement shall be governed by, and shall be construed and enforced in all
respects in accordance with, the laws of the State of Missouri.
IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement as of the day and year first
above
written.
| RELIV INTERNATIONAL, INC. | |||
| By /s/ Xxxxxx X. Xxxxxxxxxx | |||
| Authorized Officer | |||
| /s/ Xxxxxx X. Xxxxxxxx | |||
| Xxxxxx X. Xxxxxxxx | |||
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