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EXHIBIT 10.13
SPLIT DOLLAR AGREEMENT AND COLLATERAL ASSIGNMENT
AGREEMENT made as of December 31, 1996, by and between
TRANS-RESOURCES, INC. a Delaware Corporation having its principal office at 0
Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Corporation"), and XXXXXX
XXXXXXX, now residing at 000-00X Xxxxx Xxxxxxx Xxxxxxx, Xxxxxx Xxxx, Xxx Xxxx
00000, and XXXXXXXX X. SMALL now residing at 0000 Xxxxxxxx Xxxxx X.X.,
Xxxxxxxxxx, X.X. 00000, as Trustees of the Xxxx Xxxxxx 1995 Life Insurance Trust
u/a/d 11/21/1995 (the "Trustees").
WHEREAS, the Trustees desire to insure the lives of Xxxx
Xxxxxx, who is the Chairman and Chief Executive Officer of the Corporation (the
"Executive") and his wife, Xxxxx Xxxxxx, for the benefit and protection of the
Executive's family, under policies issued by The Equitable Life Insurance
Company (the "Insurance Company");
WHEREAS, the Corporation, on behalf of the Executive, desires
to help the Trustees provide insurance by contributing a portion of the premiums
due on the policies on the Executive's life under a so-called "Split Dollar"
arrangement; and
WHEREAS, the Trustees will be the owner of the insurance
policies acquired pursuant to the terms of this Agreement and the policies will
be collaterally assigned to the Corporation as security for the repayment of the
amounts which the Corporation will pay as premiums due on the policies.
NOW, THEREFORE, in consideration of the mutual covenants
contained in this Agreement, it is agreed between the parties to this Agreement
as follows:
ARTICLE 1
APPLICATION FOR INSURANCE
The Trustees have applied to the Insurance Company and the
Insurance Company has issued to the Trustees as owners thereof policies on the
Executive's and his spouse's joint lives in the total face amount of $25,000,000
(the "Policies"). The policy numbers, face amount and plan of insurance
contained in the Policies are recorded on Schedule A attached hereto and the
parties hereto agree that the Policies are held subject to the terms of this
Agreement.
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ARTICLE 2
OWNERSHIP OF INSURANCE
The Trustees are and shall continue to be the owners of the
Policies and may exercise all rights of ownership with respect to the Policies,
except as to the limited security rights in the Policies specifically granted to
the Corporation herein. The rights reserved to the Trustees include specifically
the right to change the beneficiary of the Policies, the right to surrender the
Policies, the right to assign the Policies or revoke an assignment, and the
right to pledge the policies for a loan or to obtain a loan from the Insurance
Company against the surrender value of the Policies.
ARTICLE 3
PREMIUMS
When used in this agreement the words "the Premiums" shall
mean and refer to the annual planned premiums shown on Schedule A attached
hereto, or such other annual amounts as the parties hereto may from time to time
agree in writing to pay to the Insurance Company with respect to the Insurance
Policies, provided, however, that in no event shall the Premiums be less than
the smallest annual payment necessary to keep all of the Insurance Policies in
full force and effect.
ARTICLE 4
PAYMENT OF PREMIUMS ON Policies
A. The Corporation shall pay either directly to the Insurance
Company or by making the necessary funds therefor available to the Trustees the
Premiums when due less the amounts due from the Trustees pursuant to the
provisions of Section B of this Article 4. The Premiums may be paid under any
payment method acceptable to the Corporation and the Insurance Company.
B. The Trustees shall pay that portion of each annual premium
equal to the cost (calculated by application of the lower of the Internal
Revenue Service's U.S. Life Table 38 rate or the Insurance Company's annual term
insurance rates on the lives of the Executive and his said spouse while they are
both alive, and by application of the lower of the Internal Revenue Service's
U.S. Life Table 58 rate or the Insurance Company's annual term insurance rate on
the life of the survivor of the Executive and his said spouse after the death of
the first of them to die) of the insurance which the beneficiary or
beneficiaries named by the Trustees would be entitled to receive if the survivor
of the
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Executive and his said spouse died during that policy year (before any reduction
for repayments to be made to the Company pursuant to this Agreement).
ARTICLE 5
TRUSTEES' OBLIGATION TO CORPORATION
The Trustees must repay to the Corporation the aggregate
amount paid by the Corporation, under Section A of ARTICLE 4 of this Agreement,
as premiums on the Policies (such amount being hereinafter referred to as the
"Net Payment Amount"). This repayment must be made in accordance with ARTICLES 7
and 10 of this Agreement.
ARTICLE 6
ASSIGNMENT OF POLICIES
The Trustees hereby collaterally assign all their rights,
title and interest in the Policies to the Corporation as security for repayment
of the Net Payment Amount. Such collateral assignment shall not be altered or
changed without the written consent of the Corporation.
ARTICLE 7
DEATH CLAIMS
A. When the survivor of the Executive and his said spouse
dies, the Corporation shall be entitled to receive a portion of the death
benefits provided under the Policies. The amount to which the Corporation shall
be entitled shall be the Net Payment Amount less any repayments made by the
Trustees to the Corporation prior to the death of the survivor of the Executive
and his said spouse. The receipt of this amount by the Corporation shall
constitute satisfaction of the Trustees's obligation under ARTICLE 5 of this
Agreement.
B. When the survivor of the Executive and his said spouse
dies, the beneficiary or beneficiaries named by the Trustees (or by their
assignee) shall be entitled to receive the amount of the death benefits provided
under the Policies in excess of the amount payable to the Corporation under
paragraph A of this ARTICLE 7. This amount shall be paid under the settlement
option elected by the Trustees (or by their assignee).
C. If any interest is due upon the death proceeds under the
terms of the Insurance Policies, the Corporation and the beneficiary or
beneficiaries named by the Trustees (or their assignee)
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shall share such interest in the same proportions as their respective shares of
the death proceeds (as defined in Sections A and B of this Article) bear to the
total death proceeds excluding such interest.
D. If, upon the death of the survivor of the Executive and his
said spouse, there is a refund of unearned premiums under the provisions of the
Insurance Policies, then any such refund shall be divided between the
Corporation and the beneficiary or beneficiaries named by the Trustees (or their
assignee) in the same proportion as the respective shares of the last premium
payment made by the Corporation and the Trustees, respectively, shall bear to
the total of the most recent annual planned premiums.
ARTICLE 8
DIVISION OF THE NET CASH SURRENDER
VALUE OF THE INSURANCE POLICIES
If the Insurance Policies are surrendered, the Corporation
shall thereupon be entitled to receive the Net Payment Amount less any
repayments made by the Trustees to the Corporation prior to such surrender, and
the Trustees, or their assigns, shall be entitled to receive any balance of such
cash surrender value. To the extent that the cash surrender value is not
sufficient to pay in full the Net Payment Amount less any repayments made by the
Trustees to the Corporation prior to such surrender, the Trustees shall be
liable to the Corporation for the amount of such insufficiency.
ARTICLE 9
TERMINATION OF AGREEMENT
This Agreement shall terminate when any of the following
events occur:
(a) cessation of the business of the Corporation as
presently conducted;
(b) termination of the Xxxx Xxxxxx 1995 Insurance Trust;
(c) bankruptcy, receivership or dissolution of the
Corporation;
(d) upon the election of the aggrieved party, if either
the Corporation or the Trustees fail for any reason
to make payment of any portion of the premium due on
the Policies as required by ARTICLE 4 of this
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Agreement, provided that any election to terminate
this Agreement under this subparagraph must be made
within ninety (90) days after the failure to make the
required payment occurs; or
(e) full repayment by the Trustees of the Net Payment
Amount provided that upon receipt of such repayment
the Corporation releases the collateral assignment of
the Policies made by the Trustees pursuant to ARTICLE
6 of this Agreement.
ARTICLE 10
DISPOSITION OF Policies ON
TERMINATION OF AGREEMENT
If this Agreement is terminated under paragraph (a), (b), (c)
or (d) of ARTICLE 8 of this Agreement, the Trustees shall have one hundred
twenty (120) days in which to repay to the Corporation the Net Payment Amount
less any repayments made by the Trustees to the Corporation prior to the
termination of this Agreement. Upon receipt of such amount, the Corporation
shall release the collateral assignment of the Policies. If the Trustees do not
repay such amount within this one hundred twenty (120) day period, the
Corporation may enforce its rights against the Trustees under this Agreement in
any way it sees fit.
ARTICLE 11
INSURANCE COMPANY NOT A PARTY
The Insurance Company:
(a) shall not be deemed to be a party to this
Agreement for any purpose nor in any way
responsible for its validity;
(b) shall not be obligated to inquire as to the
distribution of any monies payable or paid
by it under the Policies; and
(c) shall be fully discharged from any and all
liability under the terms of any policies
issued by it, which is subject to the terms
of this Agreement, upon payment or other
performance of its obligations in accordance
with the terms of such policy.
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ARTICLE 12
PLAN ADMINISTRATION
Xxxxxx X. Xxxxxx, Chief Financial Officer of the Corporation,
is hereby designated the plan administrator until his resignation or removal by
the Board of Directors, and as such he shall be responsible for the management,
control and administration of the Split Dollar plan as established herein.
Xxxxxx X. Xxxxxx may allocate to others certain aspects of the management and
operation responsibilities of the plan including the employment of advisors and
the delegation of any ministerial duties to qualified individuals.
ARTICLE 13
ASSIGNMENT BY CORPORATION
The Corporation is prohibited from assigning its interest in
the Policies to anyone other than the Trustees or their nominee.
ARTICLE 14
AMENDMENT OF AGREEMENT
This Agreement shall not be modified or amended except by a
written agreement signed by the Corporation and the Trustees. This Agreement
shall supercede and take the place of the Split Dollar Agreement and Collateral
Assignment between the parties hereto dated as of December 5, 1996. This
Agreement shall be binding upon the successors and assigns of each party hereto.
ARTICLE 15
GOVERNING LAW
This Agreement shall be deemed a contract made under the laws
of, executed and delivered in the State of New York, and for all purposes shall
be construed and interpreted in accordance with
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the laws of such State without reference to conflicts of laws principles.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
/s/ Xxxxxx Xxxxxxx
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XXXXXX XXXXXXX, as a Trustee of the
Xxxx Xxxxxx 1995 Life Insurance
Trust
/s/ Xxxxxxxx X. Small
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XXXXXXXX X. SMALL, as a Trustee of
the Xxxx Xxxxxx 1995 Life Insurance
Trust
TRANS-RESOURCES, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Chief
Financial Officer
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This Split Dollar Agreement and Collateral Assignment relating to the Policies
was recorded by The Equitable on ____________, 1997.
THE EQUITABLE
By:_____________________________________
Name:
Title:
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SCHEDULE A
INSURANCE POLICIES ON THE JOINT
LIVES OF ARIE AND XXXXX XXXXXX
Annual
The Equitable Planned
Policy Number Type of Policy Face Amount Premium
------------- -------------- ----------- -------
Survivorship
46207953 Variable Life $7,500,000 $86,550
Survivorship $7,500,000 $86,550
46208269 Variable Life
46254462 Survivorship $5,000,000 $57,700
Variable Life
47201858 Survivorship $5,000,000 $57,700
Variable Life
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