SPLIT DOLLAR AGREEMENT
Exhibit
10.41
THIS
AGREEMENT made and entered into this 18th day of December, 2008, effective as of
August 18, 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”), SHAMROCK PTC, LLC,
TRUSTEE OF THE XXXXX XXXXXXXX 2008 INSURANCE TRUST DATED JULY 17, 2008
(hereinafter referred to as the “Trust”), and XXXXXXX X. XXXXXXXX, TRUSTEE OF
THE XXXXX XXXXXXXX NON-EXEMPT IRREVOCABLE TRUST DATED JANUARY 5, 2000 and THE
XXXXX XXXXXXXX EXEMPT IRREVOCABLE TRUST DATED JANUARY 5, 2000 (collectively the
“Prior Trusts”).
WITNESSETH
THAT:
WHEREAS,
Xxxxx X. Xxxxxxxx (the “Employee”) is employed by the Company;
WHEREAS,
the Prior Trusts 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 numbers 58050001 and 58051001, each insuring the life of the
Employee, each with face amounts of $6,219,128 as of January 31, 2008
(individually a “Policy” and collectively the “Policies”), both issued by Xxxx
Xxxxxxx Variable Life Insurance Company (the “Insurer”);
WHEREAS,
the Company had been paying all the premiums on the Policies as an additional
employment benefit for the Employee;
WHEREAS,
the Prior Trusts had collaterally assigned the Policies 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 Policies
with the Company in light of the Act, the Prior Trusts agreed to transfer
ownership of the Policies 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 the income and
gift tax consequences of the arrangement determined under traditional
split-dollar economic benefit concepts, rather than imputed interest, the Prior
Trusts 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
Policies’ respective cash values, ignoring surrender or other similar
charges;
WHEREAS,
the Policies have been reissued, as described herein, to the Company as the
owner of each;
WHEREAS,
after the Policies were transferred to the Company, the Company released its
collateral assignments of each of the Policies with the Insurer and the Company
designated the Prior Trusts as the beneficiary of the Policies to the extent of
any proceeds remaining after repayment of the amount due the
Company;
WHEREAS,
due to the pending termination of the Prior Trusts, the Trustee of the Prior
Trusts has agreed to substitute the Trust as a party to this Agreement, in place
of the Prior Trusts;
WHEREAS,
the parties acknowledge that the Company is entitled to repayment of the amounts
it has paid toward the premiums on each of the Policies under the 1999 Agreement
prior to the transfer of the Policies to the Company;
WHEREAS,
the Company is the owner of each of the Policies and, as such, possesses all
incidents of ownership in and to the Policies, except as otherwise provided
herein; and
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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 Policies. The Trust had previously purchased the Policies
from the Insurer; the Policies have been reissued to the Company as the owner,
each with face amounts of $6,219,128 (as of January 31, 2008) and Increasing
Death Benefit Option (as such term is defined in the Policies). The
parties hereto will take all necessary action to cause both of the Policies to
conform to the provisions of this Agreement. The parties hereto agree
that the Policies shall be subject to the terms and conditions of this Agreement
and of the endorsement to each of the Policies or beneficiary designation filed
with the Insurer in accordance herewith.
2. Ownership
of Policies. The Company shall be the sole and absolute owner
of both of the Policies, and may exercise all ownership rights granted to the
owner thereof by the terms of each of the Policies, except as may otherwise be
provided herein.
3. Designation
of Policies Beneficiary/Endorsement. The Company has executed
a beneficiary designation for and/or an endorsement to each of the Policies,
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 each of the Policies (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
each of the Policies.
4. Election
of Settlement Option. The Trust may select the settlement
option for payment of the death benefit provided under each of the Policies in
excess of the amount due the Company hereunder, by specifying the same in a
written notice to the Company. The Company
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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 each of the Policies 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 Policies 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.
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 each of the Policies 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 each of the Policies. 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 Policies’
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.
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7. Limitations
on Company’s Rights in Policies. Notwithstanding any other
provision hereof or either of the Policies, the Company shall not sell, assign,
transfer, surrender or cancel either of the Policies, change the beneficiary
designation of either of the Policies, 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 either of the Policies, 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 any such loan, including
accumulated interest thereon, shall not exceed the lesser of (i) the cumulative
amount of the premiums on such 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 such Policy permitted hereunder; or (ii) the cash surrender
value of such 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 a 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 such Policy from the Company, the Company
shall promptly repay such loan from the death proceeds of such Policy or the
amount received from the Employee for the purchase of such 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 a Policy, subject to the terms and conditions
hereof. The amount of any such withdrawal shall not exceed the lesser
of: (i) cumulative amount of the premiums on such Policy paid by the
Company hereunder (including all such premiums paid pursuant to the 1999
Agreement), less any portion thereof previously
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recovered
by the Company through a loan from or against a withdrawal from such Policy
permitted hereunder; or (ii) the cash surrender value of such 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
Policies; 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 either of the Policies 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 either of the Policies; (2) or the cash
value of the Policies, 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 Policies, 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 each of the Policies. In no
event shall the amount payable to the Company hereunder exceed the death
proceeds payable under the Policies 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
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hereunder
has been paid. The parties hereto agree that the beneficiary
designation provision of each of the Policies 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 either of the Policies upon the
death of the Employee and in lieu thereof the Insurer refunds all or any part of
the premiums paid for either of the Policies, the Company and the Trust shall
have the unqualified right to share such premiums based on their respective
cumulative contributions thereto.
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
either 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 Policies 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
Policies from the Company. The purchase price for the Policies shall
be (i) the total amount of the premium payments made by the Company hereunder
(including all such premiums paid pursuant to the 1999 Agreement), 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 Policies, net of any loans from the Insurer or withdrawals
(excluding surrender charges or other similar charges or reductions), less any
indebtedness incurred by the
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Company
secured by either 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 either Policy. In no event shall the amount
payable to the Company hereunder exceed the death proceeds available 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
Policies to the Trust or its assignee, by the execution and delivery of an
appropriate instrument of transfer.
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 Policies for its cash surrender
value, or it may change the beneficiary designation provisions of the Policies,
naming itself or any other person or entity as revocable beneficiary thereof, or
exercise any other ownership rights in and to the Policies, without regard to
the provisions hereof. Thereafter, neither the Trust nor its assigns
or beneficiaries shall have any further interest in and to either of the
Policies, 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 Policies by payment of the death benefits of the Policies
to the beneficiary or beneficiaries named in the Policies, subject to the terms
and conditions of each of the Policies. 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 Policies, except insofar as the provisions hereof are made a
part of each of the Policies by the beneficiary designation executed by the
Company and filed with the Insurer in connection herewith.
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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.
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;
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(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;
(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
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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 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
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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.
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/ Xxxxxx X.
Kadow_____________
Name:
Xxxxxx X
Xxxxx
Title:
Executive Vice
President_______
ATTEST:
/s/ Xxxxx X.
Xxxxxxxx
Xxxxx X.
Xxxxxxxx,
Assistant
Secretary
“COMPANY”
THE XXXXX
XXXXXXXX 2008 INSURANCE
TRUST
DATED JULY 17, 2008
By: SHAMROCK
PTC, LLC
/s/ Xxxx X.
Creager________________
Xxxx
X.
Xxxxxxx Trustee
“TRUST”
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XXXXX
XXXXXXXX NON-EXEMPT IRREVOCABLE
TRUST
DATED JANUARY 5, 2000
By: /s/ Xxxxxxx X.
Sullivan________________
Xxxxxxx
X.
Xxxxxxxx, Trustee
XXXXX
XXXXXXXX EXEMPT IRREVOCABLE
TRUST
DATED JANUARY 5, 2000
By: /s/ Xxxxxxx X.
Sullivan________________
Xxxxxxx
X.
Xxxxxxxx, Trustee
“PRIOR
TRUSTS”
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EXHIBIT
A
The
following life insurance Policies are subject to the Split Dollar Agreement to
which this Exhibit is attached:
Insurer Xxxx Xxxxxxx Variable Life
Insurance Company
Insured Xxxxx X.
Sullivan______________________
Policy
Number 58051001______________________
Date of
Issue November 7,
1999________________
Face
Amount $6,219,128 (as of January
31, 2008)__
Death
Benefit Option Increasing Death Benefit
Option
Insurer Xxxx Xxxxxxx Variable Life
Insurance Company
Insured Xxxxx X.
Sullivan______________________
Policy
Number 58050001______________________
Date of
Issue November 7,
1999_________________
Face
Amount $6,219,128 (as of January
31, 2008)___
Death
Benefit Option Increasing Death Benefit
Option
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