Split Dollar Agreement - The Primadonna Corp. and Gary E. Primm
AMENDED AND RESTATED SPLIT-DOLLAR AGREEMENT
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THIS AMENDED AND RESTATED SPLIT DOLLAR AGREEMENT is made and entered into
as of this 22nd day of December, 1998, by and between The Primadonna
Corporation, a Nevada corporation, with principal offices and place of business
in the State of Nevada (hereinafter referred to as the "Corporation"), Gary E.
Primm, an individual residing in the State of Nevada (hereinafter referred to as
the "Employee"), and Robert E. Armstrong, Trustee of the 1992 Primm Children's
Trust U/A dated December 22, 1992 (hereinafter referred to as the "Owner").
WITNESSETH THAT:
WHEREAS, the parties previously entered into two (2) split dollar
agreements, dated January 19, 1993 and January 19, 1994, respectively ("Existing
Agreements"); and
WHEREAS, the parties have substituted two (2) variable joint life policies
purchased by the Owner insuring the joint lives of Gary E. and Carolee Primm
("Insureds") in the aggregate face amount of $50,000,000 issued by John Hancock
(Policy No. 20, 023,115) and Pacific Life Insurance Company (Policy No. VP 605,
970,50) ("New Policies") for the $70,000,000 of joint and individual insurance
coverages set forth in the Existing Agreements ("Old Policies") and to credit
the cash value of the New Policies with cash values under the Old Policies; and
WHEREAS, the Corporation, the Employee and the Owner desire to amend the
Existing Agreement to reflect the substitution of the New Policies for the Old
Policies and to confirm, restate, and consolidate the terms and conditions of
the Existing Agreements by this Agreement; and
NOW, THEREFORE, in consideration of the premises and of the mutual promises
contained herein, the parties hereto agree to amend and restate the Existing
Agreements, in their entirety, as follows:
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1. Incorporation of Recitals and Definitions. The parties hereby
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incorporate by this reference the recitals set forth in the Existing Agreements,
but references to and definitions of the Policy, the Policies, Insurer and
Insurers shall mean respectively, the New Policies and the insurers under the
New Policies set forth above. All capitalized words and phrases used in the
Existing Agreements and not otherwise defined herein shall have the same
meanings such words and phrases have in the Existing Agreement.
2. Purchase of Policies. The Owner has purchased the Policies on the
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lives of the Insureds from the Insurers, each of which has a total Face Amount
of Insurance of $25,000,000. The parties hereto have taken all necessary action
to cause the Insurers to issue the Policies, and shall take any further action
which may be necessary to cause 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 collateral assignments
filed with the Insurers relating to the Policies. All capitalized words and
phrases not otherwise defined herein shall have the same meaning such words and
phrases have in the Policies.
3. Ownership of Policies. The Owner shall be the sole and absolute owner
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of the Policies, and may exercise all ownership rights granted to the Owner
thereof by the terms of the Policies, including, but not limited to, the right
to elect and to change the Death Benefit Option, the Face Amount of Insurance,
and the investment options of the Policies, except as may otherwise be provided
herein.
4. Payment of Premiums.
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a. Thirty (30) days prior to the due date of each Policy anniversary
date, the Corporation shall notify the Employee and the Owner of the exact
amount due from the Employee hereunder, which shall be an amount equal to the
annual cost of current life insurance protection on the life of the Insureds,
measured by the lower of the PS 58 Table rate if one of the Insureds is living,
the US Life Table 38 rate if both Insureds are living or the current published
premium rate of the Insurer which issued such Policy for annually
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renewable term insurance for standard risks if one of the Insureds is living.
Either the Employee or the Owner, on behalf of the Employee, shall pay such
required contribution to the Corporation prior to the premium due date. If
neither the Employee nor the Owner makes such timely payment, the Corporation,
in its sole discretion, may elect to make the Employee's portion of the premium
payment which payment shall be recovered by the Corporation as provided herein.
b. On or before the due date of each Policy premium, or within the
grace period provided therein, the Corporation shall pay the full amount of the
planned periodic premium to the Insurer which issued such Policy, and shall,
upon request, promptly furnish the Employee evidence of timely payment of such
premium. Except with the consent of the Employee and the Owner, the Corporation
shall not pay less than such planned periodic premium, but it may, in its
discretion, at any time and from time to time, subject to acceptance of such
amount by such Insurer, pay more than such planned periodic premium or make
other premium payments on such Policy so long as the Policy remains a policy of
life insurance and not a modified endowment contract by or defined by I.R.C.
(S)7702A reason of such payment. The Corporation shall annually furnish the
Employee a statement of the amount of income reportable by the Employee for
federal and state income tax purposes, if any, as a result of the insurance
protection provided the Owner as the beneficiary of such Policy. Subject to the
foregoing paragraph, in the event the Corporation elects to prepay the remaining
premium payments under the Policy, the required contributions by the Employer,
or the Owner shall be paid directly to the Corporation in immediate reduction of
the amounts payable to the Corporation by the Owner for premiums previously paid
by the Corporation hereunder.
5. Collateral Assignment. To secure the repayment to the Corporation of
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the amount of the premiums on the Policies paid by it hereunder, the Owner has,
contemporaneously herewith, assigned both of the Policies to the Corporation as
collateral. The collateral assignments of the Policies to the Corporation
hereunder shall not be terminated, altered or amended by the Owner, without the
express written consent of the Corporation. The parties hereto agree to take
all action necessary to cause such collateral assignments to conform to the
provisions of this Agreement.
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6. Limitations on Owner's Rights in Policies. Except as otherwise
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provided herein, the Owner shall not sell, assign, transfer, borrow against or
withdraw from the cash surrender value of either Policy, surrender or cancel
either Policy, change the beneficiary designation provision of either Policy,
decrease the Face Amount of Insurance, make or change the allocation of the
Policy Account established pursuant to the terms of either Policy among the
various investment options under such Policy, nor change the Death Benefit
Option provisions thereof without, in any such case, the express written consent
of the Corporation.
7. Collection of Death Proceeds.
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a. Upon the death of the Insureds, the Corporation shall cooperate
with the Owner to take whatever action is necessary to collect the death benefit
provided under the Policies; when such benefits have been collected and paid as
provided herein, this Agreement shall thereupon terminate.
b. Upon the death of the Insureds, with respect to each Policy, the
Corporation shall have the unqualified right to receive a portion of such death
benefit of such Policy equal to the total amount of the premiums paid by it
hereunder with respect to such Policy, reduced by any outstanding indebtedness
which was incurred by the Corporation and secured by such Policy, including any
interest due on such indebtedness. The balance of the death benefit provided
under such Policy, if any, shall be paid directly to the Owner, in the manner
and in the amount or amounts provided in the beneficiary designation provision
of such Policy. In no event shall the amount payable to the Corporation
hereunder with respect to any one Policy exceed the death benefit of such Policy
payable at the death of the Insureds. No amount shall be paid from such death
benefit to the Owner until the full amount due the Corporation hereunder has
been paid. The parties hereto agree that the beneficiary designation provisions
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 a Policy upon
the death of the Insureds and in lieu thereof the Insurer refunds all or any
part of the premiums paid for such
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Policy, the Corporation and the Owner shall have the unqualified right to share
such premiums based on their respective cumulative contributions thereto.
8. Termination of the Agreement Before Last Insureds' Death.
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a. This Agreement shall terminate, before the last of the Insureds
death, without notice, upon the occurrence of any of the following events: (i)
total cessation of the Corporation's business; (ii) bankruptcy, receivership or
dissolution of the Corporation; (iii) termination of Employee's employment by
the Corporation (other than by reason of his death); (iv) the death of the
Employee; (v) mutual consent of the parties; or (vi) failure of both the
Employee and the Owner to timely pay to the Corporation the Employee's portion
of the premiums, if any, due hereunder, unless the Corporation elects to make
such payment on behalf of the Employee, as provided herein.
b. In addition, either the Employee or the Owner may terminate this
Agreement, while no premium under either Policy is overdue, by written notice to
the Corporation. Such termination shall be effective as of the date of such
notice.
9. Disposition of the Policies on Termination of the Agreement Before
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Last Insured's Death.
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a. For sixty (60) days after the date of the termination of this
Agreement prior to the last of the Insureds' death, the Owner shall have the
option of obtaining the release of the collateral assignments of either or both
of the Policies to the Corporation. To obtain such release with respect to a
Policy, the Owner shall repay to the Corporation the total amount of the premium
payments made by the Corporation hereunder with respect to such Policy, less any
indebtedness secured by such Policy which was incurred by the Corporation and
remains outstanding as of the date of such termination, including any interest
due on such indebtedness. Upon receipt of such amount, the Corporation shall
release the collateral assignment of such Policy, by the execution and delivery
of an appropriate instrument of release.
b. If the Owner fails to exercise such option within such sixty (60)
day period with respect to one or both of the Policies, then, at the request of
the Corporation, the
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Owner shall execute any document or documents required by the Insurer to
transfer the interest of the Owner in those Policies for which a release of the
collateral assignment was not obtained to the Corporation. Alternatively, the
Corporation may enforce its right to be repaid the amount of the premiums on any
such Policy paid by it from the cash surrender value of such Policy under the
collateral assignment of such Policy; provided that in the event the cash
surrender value of such Policy exceeds the amount due the Corporation, such
excess shall be paid to the Owner. Thereafter, neither the Owner nor the Owner's
successors, assigns or beneficiaries shall have any further interest in and to
any such Policy, either under the terms thereof or under this Agreement.
10. Insurers Not Parties. Each Insurer shall be fully discharged from its
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obligations under the Policy issued by it by payment of the insurance benefits
under such Policy to the beneficiary or beneficiaries named in such Policy,
subject to the terms and conditions of such Policy. In no event shall either
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 either Insurer as expressly
provided in the Policy issued by such Insurer, except insofar as the provisions
hereof are made a part of such Policy by the collateral assignment executed by
the Owner and filed with such Insurer in connection herewith.
11. Named Fiduciary, Determination of Benefits, Claims Procedure and
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Administration.
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a. Named Fiduciary. The Corporation 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. (1) Claim. A person who believes that he or she being denied a
benefit to which he or she is entitled under this Agreement (hereinafter
referred to as a "Claimant")
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may file a written request for such benefit with the Corporation, setting forth
his or her claim. The request must be addressed to the President of the
Corporation at its then principal place of business.
(2) Claim Decision. Upon receipt of a claim, the Corporation
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 Corporation
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 Corporation
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. With 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 Corporation review the determination of the
Corporation. 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 Corporation. If
the Claimant does not request a review of the Corporation's determination by the
Secretary of the Corporation within such sixty (60) day period, he or she shall
be barred and estopped from challenging the Corporation'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
Corporation'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)
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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.
12. Amendment. This Agreement may not be amended, altered or modified,
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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.
13. Binding Effect. This Agreement shall be binding upon and inure to
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the benefit of the Corporation and its successors and assigns, and the Employee,
the Owner, and their respective successors, assigns, heirs, executors,
administrators and beneficiaries.
14. Notice. Any notice, consent or demand required or permitted to be
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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 Corporation. The date of such mailing shall be deemed the
date of notice, consent or demand.
15. Governing Law. This Agreement, and the rights of the parties
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hereunder, shall be governed by and construed in accordance with the laws of the
State of Nevada.
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IN WITNESS WHEREOF, the parties hereto have executed multiple original
copies of this Agreement the day and year first above written.
Corporation: Employee:
The Primadonna Corporation,
a Nevada corporation /s/
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Gary E. Primm, a married man
By: /s/
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Title:
----------------------------- Owner:
1992 Primm Children's Trust (u/d/t
Attest: December 22, 1992)
/s/ By: /s/
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John Shigley, Secretary Robert E. Armstrong, Trustee
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EXHIBIT A
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The following life insurance policies are subject to the attached Split-
Dollar Agreement:
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1. John Hancock Policy No. 20, 023,115
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2. Pacific Life Insurance Company Policy No. VP 605, 970,50
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