SPLIT-DOLLAR AGREEMENT
Exhibit
10.40
THIS
AGREEMENT made and entered into this 19th day of August, 2008, effective as of
August, 2005, by and between OSI RESTAURANT PARTNERS, LLC (formerly known as
OUTBACK STEAKHOUSE, INC.), with principal offices and place of business in the
State of Florida (hereinafter referred to as the "Company") and XXXXXXX XXXXXX,
TRUSTEE OF XXXXXX X. XXXXXX IRREVOCABLE TRUST AGREEMENT OF 1999 DATED DECEMBER
20, 1999 (hereinafter referred to as the "Trust"),
WITNESSETH
THAT:
WHEREAS,
XXXXXX X. XXXXXX (the "Employee") is employed by the Company;
WHEREAS,
the Trust entered into a split-dollar life insurance arrangement with the
Company, effective as of November 7, 1999 (the "1999 Agreement") to govern the
rights and obligations of the Trust and the Company with respect to life
insurance policy number 58035001, insuring the life of the Employee, with a face
amount of $12,399,785 as of January 31, 2008 (the "Policy"), issued by Xxxx
Xxxxxxx Variable Life Insurance Company (the "Insurer");
WHEREAS,
the Company had been paying all the premiums on the Policy as an additional
employment benefit for the Employee;
WHEREAS,
the Trust had collaterally assigned the Policy to the Company in order to secure
the repayment of the premium payments made by the Company;
WHEREAS,
because of the potential application of Section 402 of the Xxxxxxxx-Xxxxx Act of
2002 (the "Act") to the 1999 Agreement, the Company suspended the payment of all
premium advances due under the 1999 Agreement as of the effective date of the
Act;
WHEREAS,
in order to maintain a split-dollar life insurance arrangement for the Policy
with the Company in light of the Act, the Trust has agreed to transfer ownership
of the Policy to
the
Company and to enter into this Agreement, to convert the 1999 Agreement from a
collateral assignment split-dollar arrangement to an endorsement split-dollar
arrangement, and in order to have its income and gift tax consequences of the
arrangement determined under traditional split-dollar economic benefit concepts,
rather than imputed interest, the Trust has agreed that, on termination of the
arrangement (as provided herein), the Company will be entitled to recover the
greater of its premium advances or the Policy's cash value, ignoring surrender
or other similar charges;
WHEREAS,
the Policy has been reissued, as described herein, to the Trust as the owner of
the Policy and the Trust has transferred ownership of the Policy to the
Company;
WHEREAS,
after the Policy was transferred to the Company, the Company released its
collateral assignment of the Policy with the Insurer;
WHEREAS,
the parties acknowledge that the Company is entitled to repayment of the amounts
it has paid toward the premiums on the Policy under the 1999 Agreement prior to
the transfer of the Policy to the Company;
WHEREAS,
the Company shall hereafter be the owner of the Policy and, as such, will
possess all incidents of ownership in and to the Policy, except as otherwise
provided herein; and
WHEREAS,
the Company wishes to retain such ownership rights, in order to secure the
repayment of the amount due it under the 1999 Agreement and
hereunder;
NOW,
THEREFORE, in consideration of the premises and of the mutual promises contained
herein, the parties hereto agree as follows:
1. Purchase
of Policy. The Trust had previously purchased the Policy from the
Insurer; the Policy has been reissued in the total face amount of $12,399,785
(as of January 31, 2008) and Increasing Death Benefit Option (as such term is
defined in the Policy). The parties
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hereto
will take all necessary action 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 or beneficiary
designation filed with the Insurer in accordance herewith.
2. Ownership
of 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 may otherwise be provided
herein.
3. Designation
of Policy Beneficiary/Endorsement. The Company has executed a beneficiary
designation for and/or an endorsement to the Policy, using the form required by
the Insurer, naming itself as the beneficiary of the policy death proceeds in an
amount equal to the greater of the total amount of the premiums paid by it
hereunder (including all such premiums paid pursuant to the 1999 Agreement) or
the cash value of the Policy (excluding surrender charges or other similar
charges or reductions), and naming the Trust as the beneficiary of any balance
of the policy death proceeds provided under the Policy.
4. Election
of Settlement Option. The Trust may select the settlement option for
payment of the death benefit provided under the Policy in excess of the amount
due the Company hereunder, by specifying the same in a written notice to the
Company. The Company shall promptly execute and deliver to the Insurer the forms
necessary to elect the requested settlement option and to designate the Trust as
the beneficiary to receive the death proceeds of the Policy in excess of the
amount to which the Company is entitled hereunder. The parties hereto agree to
take all action necessary to cause the beneficiary designation and settlement
option 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 Trust.
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5. 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
annual premium on the Policy to the Insurer, and shall, upon request, promptly
furnish the Trust evidence of timely payment of such premium. Subject to the
acceptance of such amount by the Insurer, the Company may, in its discretion, at
anytime and from time to time, make additional premium payments on the Policy.
The Company shall annually furnish the Employee a statement of the amount of
income reportable by the Employee for any Federal, state or local taxes, as
applicable, as a result of the insurance protection provided the Trust as the
Policy beneficiary.
6. Additional
Payment to Employee. Upon the Employee reaching 65 years of age and while
this Agreement is still in existence, the Company shall pay to the Employee, on
or before March 15th of each year, as additional compensation, an amount equal
to the estimated Federal, state and local taxes, as applicable, on the amount of
income reportable by the Employee as a result of the insurance protection
provided the Policy beneficiary or beneficiaries hereunder for the immediately
preceding calendar year assuming the highest Federal, state and local tax,
income tax bracket for a married individual or single individual as the case may
be.
7. Limitations
on Company's Rights in Policy. Notwithstanding any other provision hereof
or of the Policy, the Company shall not sell, assign, transfer, surrender or
cancel the Policy, change the beneficiary designation of the Policy, change the
Death Benefit Option provision, or decrease the Face Amount of Insurance Death
Benefit, without, in any such case, the express written consent of the
Trust.
8. Policy
Loans.
a. 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
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third
party. The amount of any such loan, including accumulated interest thereon,
shall not exceed the lesser of (i) the cumulative amount of the premiums on the
Policy paid by the Company hereunder (including all such premiums paid pursuant
to the 1999 Agreement), less any portion thereof previously recovered by the
Company through a loan from or against or a withdrawal from the Policy permitted
hereunder; or (ii) the cash surrender value of the Policy (as defined therein)
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 the death of the Employee or upon
the election of the Trust hereunder to purchase the Policy from the Company, the
Company shall promptly repay such loan from the death proceeds of the Policy or
the amount received from the Employee for the purchase of the Policy, as the
case may be, and thereafter shall promptly take all action necessary to secure
the release or discharge of such encumbrance.
b. The
Company may make withdrawals from the Policy, subject to the terms
and
conditions hereof, The amount of any such withdrawal shall not exceed the lesser
of: (i) the cumulative amount of the premiums on the Policy paid by the Company
hereunder (including all such premiums paid pursuant to the 1999 Agreement),
less any portion thereof previously recovered by the Company through a loan from
or against or a withdrawal from the Policy permitted hereunder; or (ii) the cash
surrender value of the Policy (as defined therein) as of the date to which
premiums have been paid, and shall reduce the amount to which the Company would
otherwise be entitled hereunder.
9. Collection
of Death Proceeds.
a. Upon
the death of the Employee, the Company shall cooperate with the Trust to
take whatever action is necessary to collect the death benefit provided under
the Policy;
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when such
benefit has been collected and paid as provided herein, this Agreement shall
thereupon terminate.
b. Upon
the death of the Employee, the Company shall have the unqualified right to
receive a portion of such death benefit equal to the greater of: (1) the total
amount of the premiums paid by it hereunder (including all such premiums paid
pursuant to the 1999 Agreement) reduced by any indebtedness against the Policy
incurred by the Company hereunder existing at the death of the Employee,
including any interest due on such indebtedness, or any withdrawals made by the
Company from the Policy; (2) or the cash value of the Policy, net of any loans
from the Insurer or withdrawals permitted hereunder (excluding surrender charges
or other similar charges or reductions) immediately before the death of the
Employee. The balance of the death benefit provided under the Policy, if any,
shall be paid directly to the Trust, in the manner and in the amount or amounts
provided in the beneficiary designation provision of the Policy. In no event
shall the amount payable to the Company hereunder exceed the death proceeds
payable under the Policy at the death of the Employee. No amount shall be paid
from such death benefit to the beneficiary or beneficiaries designated by the
Company at the direction of the Trust, 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.
c. Notwithstanding
any provision hereof to the contrary, in the event that, for any reason
whatsoever, no death benefit is payable under the Policy upon the death of the
Employee and in lieu thereof the Insurer refunds all or any part of the premiums
paid for the Policy, the Company and the Trust shall have the unqualified right
to share such premiums based on their respective cumulative contributions
thereto.
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10. Termination
of the Agreement During the Employee's Lifetime.
a. This
Agreement shall terminate, during the Employee's lifetime, without notice, upon
bankruptcy, receivership or dissolution of the Company.
b. In
addition, either party may terminate this Agreement while no premium under the
Policy is overdue, by written notice to the other party, provided that the
Company shall have no power to terminate this Agreement. Such termination shall
be effective as of the date of such notice.
11. Disposition
of the Policy on Termination of the Agreement during the Employee's
Lifetime.
a. For
sixty (60) days after the date of the termination of this Agreement during the
Employee's lifetime, the Trust shall have the assignable option to purchase the
Policy from the Company. The purchase price for the Policy shall be (i) the
cumulative amount of the premium payments made by the Company hereunder, less
any portion thereof previously recovered by the Company as a result of a loan
from or against or a withdrawal from the Policy permitted hereunder, or (ii) the
then cash value of the Policy, net of any loans from the Insurer or withdrawals
(excluding surrender charges or other similar charges or reductions), less any
indebtedness incurred by the Company secured by the Policy which remains
outstanding as of the date of such termination, including any interest due on
such indebtedness, or any withdrawals made by the Company from the Policy. In no
event shall the amount payable to the Company hereunder exceed the death
proceeds payable under the Policy at the death of the Employee. Upon receipt of
such amount, the Company shall transfer all of its right, title and interest in
and to the Policy to the Trust or its assignee, by the execution and delivery of
an appropriate instrument of transfer.
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b. If
the Trust or its assignee fails to exercise such option within such sixty (60)
day period, then, the Company may enforce its right to be repaid the amount due
it 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 Trust nor its assigns or
beneficiaries shall have any further interest in and to the Policy, either under
the terms thereof or under this Agreement.
12. Insurer
Not a Party. The Insurer shall be fully discharged from its obligations
under the Policy by payment of the Policy death benefit to the beneficiary or
beneficiaries named in the Policy, subject to the terms and conditions of the
Policy. In no event shall the Insurer be considered a party to this Agreement,
or any modification or amendment hereof. No provision of this Agreement, nor of
any modification or amendment hereof, shall in any way be construed as
enlarging, changing, varying, or in any other way affecting the obligations of
the Insurer as expressly provided in the Policy, except insofar as the
provisions hereof are made a part of the Policy by the beneficiary designation
executed by the Company and filed with the Insurer in connection
herewith.
13. Named
Fiduciary, Determination of Benefits, Claims Procedure and
Administration.
a. Named
Fiduciary. The Company is hereby designated as the named fiduciary under
this Agreement. The named fiduciary shall have authority to control and manage
the operation and administration of this Agreement, and it shall be responsible
for establishing and carrying out a funding policy and method consistent with
the objectives of this Agreement.
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b. Claim.
A person who believes that he or she is being denied a benefit to which he or
she is entitled (hereinafter referred to as "Claimant"), or his or her duly
authorized representative, may file a written request for such benefit with the
Chief Legal Officer of the Company (the "First Level Reviewer") setting forth
his or her claim. Such claim must be addressed to the Chief Legal Officer of the
Company, at its then principal place of business.
c. Claim
Decision. Upon receipt of a claim, the First Level Reviewer shall advise
the Claimant that a reply will be forthcoming within a reasonable period of
time, but ordinarily not later than ninety (90) days, and shall, in fact,
deliver such reply within such period. However, the First Level Reviewer may
extend the reply period for an additional ninety (90) days for reasonable cause.
If the reply period will be extended, the First Level Reviewer shall advise the
Claimant in writing during the initial ninety (90) day period indicating the
special circumstances requiring an extension and the date by which the First
Level Reviewer expects to render the benefit determination. If the claim is
denied in whole or in part, the First Level Reviewer will render a written
opinion, using language calculated to be understood by the Claimant, setting
forth:
(1) the
specific reason or reasons for the denial;
(2) the
specific references to pertinent provisions of the Agreement on which the denial
is based;
(3) a
description of any additional material or information necessary for the Claimant
to perfect the claim and an explanation as to why such material or such
information is necessary;
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(4) appropriate
information as to the steps to be taken if the Claimant wishes to submit the
claim for review, including a statement of the Claimant's right to bring a civil
action under Section 502(a) of ERISA following an adverse benefit determination
on review; and
(5) the
time limits for requesting a review of the denial under Section 13(c) hereof and
for the actual review of the denial under Section 13(d) hereof.
d. 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 Chairman of the Compensation Committee of the Board of Directors of the
Company (the "Second Level Reviewer") review the First Level Reviewer's prior
determination. Such request must be addressed to the Chairman of the
Compensation Committee of the Board of Directors of the Company, at its then
principal place of business. The Claimant or his or her duly authorized
representative may submit written comments, documents, records or other
information relating to the denied claim, which such information shall be
considered in the review under this subsection without regard to whether such
information was submitted or considered in the initial benefit
determination.
The
Claimant or his or her duly authorized representative shall be provided, upon
request and free of charge, reasonable access to, and copies of, all documents,
records and other information which (i) was relied upon by the First Level
Reviewer in making its initial claims decision, (ii) was submitted, considered
or generated in the course of the First Level Reviewer making its initial claims
decision, without regard to whether such instrument was actually relied upon by
the First Level Reviewer in making its decision or (iii) demonstrates compliance
by the First Level Reviewer with its administrative processes and
safeguards
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designed
to ensure and to verify that benefit claims determinations are made in
accordance with this Agreement and that, where appropriate, the provisions of
this Agreement have been applied consistently with respect to similarly situated
claimants. If the Claimant does not request a review of the First Level
Reviewer's determination within such sixty (60) day period, he or she shall be
barred and estopped from challenging such determination.
e. Review of
Decision. Within a reasonable period of time, ordinarily not later than
sixty (60) days, after the Second Level Reviewer's receipt of a request for
review, it will review the First Level Reviewer's prior determination. If
special circumstances require that the sixty (60) day time period be extended,
the Second Level Reviewer will so notify the Claimant within the initial sixty
(60) day period indicating the special circumstances requiring an extension and
the date by which the Second Level Reviewer expects to render its decision on
review, which shall be as soon as possible but not later than 120 days after
receipt of the request for review. In the event that the Second Level Reviewer
extends the determination period on review due to a Claimant's failure to submit
information necessary to decide a claim, the period for making the benefit
determination on review shall not take into account the period beginning on the
date on which notification of extension is sent to the Claimant and ending on
the date on which the Claimant responds to the request for additional
information.
The
Second Level Reviewer has discretionary authority to determine a Claimant's
eligibility for benefits and to interpret the terms of this Agreement. Benefits
under this Agreement will be paid only if the Second Level Reviewer decides in
its discretion that the Claimant is entitled to such benefits. The decision of
the Second Level Reviewer shall be final and non-reviewable, unless found to be
arbitrary and capricious by a court of competent review. Such decision will be
binding upon the Company and the Claimant.
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If
the Second Level Reviewer makes an adverse benefit determination on review, the
Second Level Reviewer will render a written opinion, using language calculated
to be understood by the Claimant, setting forth:
(1) the
specific reason or reasons for the denial;
(2) the
specific references to pertinent provisions of the Agreement on which the denial
is based;
(3) a
statement that the Claimant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records and other
information which (i) was relied upon by the Second Level Reviewer in making its
decision, (ii) was submitted, considered or generated in the course of the
Second Level Reviewer making its decision, without regard to whether such
instrument was actually relied upon by the Second Level Reviewer in making its
decision or (iii) demonstrates compliance by the Second Level Reviewer with its
administrative processes and safeguards designed to ensure and to verify that
benefit claims determinations are made in accordance with this Agreement, and
that, where appropriate, the provisions of this Agreement have been applied
consistently with respect to similarly situated claimants; and
(4) a
statement of the Claimant's right to bring a civil action under Section 502(a)
of ERISA following the adverse benefit determination on such
review.
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.
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15. Binding
Effect. This Agreement shall be binding upon and inure to the benefit of
the Company and its successors and assigns, and the Trust, its successors,
assigns, administrators and beneficiaries.
16. Notices.
Any notice, consent or demand required or permitted to be given under the
provisions of this Agreement shall be in writing, and shall be signed by the
party giving or making the same. If such notice, consent or demand is mailed to
a party hereto, it shall be sent by United States certified mail, postage
prepaid, addressed to such party's last known address as shown on the records of
the Company. The date of such mailing shall be deemed the date of notice,
consent or demand.
17. Governing
Law. This Agreement, and the rights of the parties hereunder, shall be
governed by and construed in accordance with the laws of the State of
Florida.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement, in duplicate,
as of the day and year first above written.
By: /s/ A. Xxxxxxx Xxxxx,
III________
Name:
A. Xxxxxxx Xxxxx,
III
Title: Chief Executive
Officer_______
ATTEST:
/s/ Xxxxxx X.
Kadow__________
Xxxxxx X.
Xxxxx,
Secretary
"COMPANY"
XXXXXX X.
XXXXXX IRREVOCABLE TRUST
AGREEMENT
OF 1999 DATED DECEMBER 20,
1999
By: /s/ Xxxxxxx
Danker_______________
Xxxxxxx
Xxxxxx, Trustee
"TRUST"
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EXHIBIT
A
The
following life insurance Policy is subject to the Split-Dollar Agreement to
which this Exhibit is attached:
Insurer
Xxxx Xxxxxxx Variable
Life Insurance Company
Insured
Xxxxxx X.
Basham________________________
Policy
Number 58035001________________________
Date of
Issue November 7,
1999___________________
Face
Amount $12,399,785 (as
of January 31, 2008)____
Death
Benefit Option Increasing Death Benefit
Option__
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