SPLIT-DOLLAR AGREEMENT
THIS AGREEMENT made this _____ day of ________________, 1996,
by and between JUDGE INC., Two Bala Plaza, Bala Cynwyd, Pennsylvania,
(Corporation) and Xxxxxx X. Judge, Trustee of the Irrevocable Agreement of Trust
of Xxxxxx X. Judge, Jr., Settlor, dated December 20, 1995, and known as the
Xxxxxx X. Judge, Jr. Descendants Trust, II ("Owner")
W I T N E S S E T H T H A T:
WHEREAS, Xxxxxx X. Judge, Jr. ("Employee") is employed by
Corporation; and
WHEREAS, Employee wishes to provide life insurance protection
for his family in the event of his death, under a policy of life insurance
listed on Exhibit "A" attached hereto and made a part hereof (hereinafter
referred to as the "Policy"), which is on the life of Xxxxxx X. Judge, Jr.
(Guardian Life Insurance Company is hereinafter referred to as the "Insurer",
and Xxxxxx X. Judge, Jr. is hereinafter referred to as the "Insured"); and
WHEREAS, Corporation has paid and is willing to continue to
pay a portion of the premiums due on the Policy as an additional employment
benefit for the Employee, on the terms and conditions hereinafter set forth: and
WHEREAS, the Owner is the owner of the Policy and, as such,
possesses all incidents of ownership in and to the Policy; and
WHEREAS, Corporation may wish to have the Policy collaterally
assigned to it by Owner, in order to secure the payment of its Policy Interest,
as hereinafter defined; and
WHEREAS, the parties intend that by this Agreement and such
collateral assignment the Corporation shall receive only the right to such
repayment with the Owner retaining all other ownership rights in the Policy; and
WHEREAS, the parties intend that this arrangement shall
constitute a split-dollar agreement as described in Revenue Ruling 64-328,
1964-2 C.B. 11;
NOW, THEREFORE, in consideration of the premises and of the
mutual promises contained herein, the parties hereto agree as follows:
1. Definition of Policy Interest. At any time prior to the
death of the Insured, the Corporation's "Policy Interest" with respect to a
Policy is an amount equal to the lesser of (I) the aggregate amount paid by
Corporation prior to the execution of this Agreement and under Article 5 of this
Agreement towards the premium payments due with respect to each Policy listed on
Exhibit "A" to this Agreement, less any amounts reimbursed by the Owner to the
Corporation prior to or following the execution of this Agreement under such
Article 5, and (ii) an amount equal to the cash surrender value of the Policy as
of the end of the Policy year with respect to which the current premiums are
paid, plus any dividend accumulations and the cash value of any paid up
additions as of the due date of the current premiums.
At any time following the Insured's death the Corporation's
"Policy Interest" with respect to a policy is that amount which is equal to the
lesser of (I) the aggregate amount paid by Corporation prior to the execution of
this Agreement and under Article 5 of this Agreement towards the premium
payments due with respect to each Policy listed on Exhibit "A" to this
Agreement, less any amounts reimbursed by the Owner to the Corporation prior to
or following the execution of this Agreement under such Article 5, and (ii) an
amount equal to the cash surrender value of such Policy immediately prior to the
Insured's death, plus any dividend accumulations and the cash value of any paid
up additions immediately prior to the Insured's death.
2. Policy of Insurance. The parties hereto shall take any
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 any collateral assignment
filed with the Insurer relating to the Policy. The terms of this Agreement shall
be applicable to any policy of insurance received in exchange for an interest in
the Policy listed on Exhibit "A" attached hereto, provided all sums available to
the Owner under an old policy are applied to the new policy received in such
exchange. Owner shall notify the Corporation of any such exchange and the terms
Policy hereunder shall thereafter include such new policy.
3. Ownership of Insurance.
a. Owner is 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 hereinafter provided.
b. It is the intention of the parties to this
Agreement and any collateral assignments executed by Owner to Corporation in
connection herewith that Owner shall retain all rights that the Policy grants to
the owner thereof, except Corporation's right to its Policy Interest with
respect to the Policy as hereinbefore defined. Specifically, but without
limitation, Corporation shall neither have nor exercise any right as collateral
assignee of the Policy which could in any way defeat or impair any of the
following rights of the Owner:
(1) the right to surrender the Policy;
(2) the right to receive the cash surrender
value or the death proceeds of the Policy in excess of the amount due
Corporation hereunder, if any;
(3) the right to collect from the Insurer
any disability benefit payable in cash that does not reduce the amount of
insurance;
(4) the right to designate and change the
beneficiary with respect to the Policy, and the right to elect any optional mode
of settlement permitted by the Policy or allowed by the Insurer;
(5) the right to exercise all non-forfeiture
rights permitted by the terms of the Policy or allowed by the Insurer and to
receive all benefits and advantages derived therefrom;
(6) the right to borrow upon the cash value
of the Policy; and
(7) the right to obtain one or more loans or
advances on the Policy, either from the Insurer or, at any time, from other
persons, or to pledge or assign the Policy as security for such loans or
advances.
It is the expressed intention of the parties that this
Agreement shall be construed so that the Corporation has absolutely no incidents
of ownership in the Policy. All provisions of this Agreement and of any
collateral assignment executed in conjunction with this Agreement shall be
construed so as to carry out such intention.
4. Application of Dividends.
a. Dividends declared by Insurers on the Policy
shall be accumulated at interest by Insurer until Owner elects a dividend option
and directs how the accumulated dividends and interest earned thereon shall be
applied.
b. Owner shall elect a dividend option as provided
in Paragraph (a) of this Article, subject to any subsequent assignment of
the Policy.
5. Premium Payment.
a. Except as otherwise provided herein, on or before
the due date of each Policy premium -- or within the grace period provided
therein, Corporation shall pay the full amount of the premium due to each
Insurer, and shall, upon request, promptly furnish Owner evidence of timely
payment of such premium.
b. Thirty (30) days prior to the due date of each
premium for the Policy, Corporation shall notify Owner of the exact amount equal
to the annual cost of current life insurance protection under the Policy on the
life of the Insured, measured by the lower of the PS58 rate, set forth in
Revenue Ruling 55-747 (or the corresponding applicable provision of any future
Revenue Ruling), or the Insurer's current lowest published premium rate for
annually renewable term insurance for standard risks at the age of the Insured.
Owner shall pay such amount to Corporation prior to the premium due date. If
Owner shall not make such payment, Corporation shall make Owner's portion of the
premium payment, which payment shall be recovered by Corporation as provided
herein. The Corporation shall annually furnish to the Employee and to the Owner
a statement of the amount of income reportable by the Corporation for federal
and state income tax purposes as a result of such premium payments, indicating
the amount net of any payments by Owner under this Section 5(b), and including
any additional economic benefit to the Employee from this Agreement or the
Policy that is reportable as income for federal and state income tax purposes.
6. Collateral Assignment. To secure the payment to Corporation
of its Policy Interest with respect to the Policy, as hereinbefore defined,
Owner will, upon the request of Corporation, assign the Policy to Corporation as
collateral, under the forms used by Insurer for such assignment, and such
collateral assignment shall specifically limit the right of Corporation
thereunder to payment of its Policy Interest with respect to the Policy. If this
Agreement is terminated, or upon the surrender of the Policy, such payment shall
be made from the cash surrender value of the Policy (as defined therein). Upon
the death of the Insured such payment shall be made from the death proceeds of
the Policy.
In no event shall Corporation have any right to borrow against
the Policy. Any collateral assignment of the Policy to Corporation hereunder
shall not be terminated, altered or amended by Owner, without the express
written consent of Corporation. The parties hereto agree to take all action
necessary to cause any
collateral assignment to conform to the provisions of this Agreement.
7. Owner's Rights in Policy.
a. Owner shall take no action with respect to the
Policy, which would in any way compromise or jeopardize Corporation's right to
be paid its Policy Interest with respect to each Policy, as hereinbefore
defined, without the express written consent of Corporation.
b. Owner shall have the sole right to surrender or
cancel the Policy, and to receive the full cash surrender value of the Policy
directly from Insurer. Upon the surrender or cancellation of the Policy,
Corporation shall have the unqualified right to receive an amount equal to the
Policy Interest with respect to the Policy. Immediately upon receipt of the cash
value, Owner shall pay to Corporation the portion of such cash value to which it
is entitled hereunder, and shall retain the balance, if any.
8. Death of Insured.
a. Upon the death of the Insured, Corporation and
Owner shall promptly take all action necessary to obtain the death benefit
provided under the Policy; when such benefit has been collected and paid as
provided therein, this Agreement shall thereupon terminate.
b. Corporation shall have the unqualified right to
receive a portion of such death benefit received with respect to the Policy
equal to its Policy Interest. The balance of the death benefit provided under
the Policy, if any, shall be paid directly to the beneficiary or beneficiaries
designated by Owner, 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 Corporation hereunder exceed the proceeds of the Policy payable at
the death of the Insured. No amount shall be paid from such death benefit to the
beneficiary or beneficiaries designated by Owner until the full amount due
Corporation hereunder has been paid. The parties hereto agree that the
beneficiary designation provisions of the Policy shall not be inconsistent with
the provisions hereof as modified by the collateral assignment.
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
Corporation and the Owner shall have the unqualified right to share such
premiums based on their respective cumulative contributions thereto.
9. Termination of Agreement.
a. This Agreement shall terminate, without notice,
upon the occurrence of any one of the following events:
(1) Total cessation of the business of
Corporation; or
(2) Bankruptcy, receivership or dissolution
of Corporation.
b. In addition, either the Owner or the
Corporation shall have the right to terminate this Agreement by written notice
to the other party hereto. Such termination shall be effective as of the date of
such notice.
10. Release of Collateral Assignment.
a. For sixty (60) days after the date of the
termination of this Agreement, Owner shall have the option of obtaining the
release by Corporation of any collateral assignment of the Policy. To obtain
such release, Owner shall pay to Corporation the amount of Corporation's Policy
Interest in the policy. Upon receipt of such amount with respect to the Policy,
Corporation shall release the collateral assignment of the Policy, by the
execution and delivery of an appropriate instrument of release.
b. If Owner fails to exercise such option within
such sixty (60) day period, then, at the request of Corporation, Owner shall
execute any document or documents required by the Insurer to transfer the
interest of Owner in the Policy to Corporation.
11. Release of Insurer. Insurer shall be fully discharged from
its obligations with respect to 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 Insurer be considered a party to
this Agreement, or any modification or amendment hereof. No provision of this
Agreement, nor of any subsequent modification or amendment hereof, shall in any
way be construed as enlarging, changing, varying, or in any other way affecting
the obligations of Insurer as expressly provided in the Policy, except insofar
as the provisions hereof are made a part of the Policy by any collateral
assignment executed by Owner and filed with the Insurer in connection herewith.
12. Fiduciary
a. 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 hereof.
b. Corporation shall make all determinations
concerning rights to benefits hereunder. Any decision by Corporation denying a
claim by Owner or a designated beneficiary for benefits hereunder shall be
stated in writing and delivered or mailed to Owner or such beneficiary. Such
decision shall set forth the specific reasons for the denial, written to the
best of Corporation's ability in a manner that may be understood without legal
or actuarial counsel. In addition, Corporation shall afford a reasonable
opportunity to Owner or such beneficiary for a full and fair review of the
decision denying such claim.
13. 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.
14. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of Corporation, Employee, Insured and Owner, and their
respective successors, assigns, heirs, executors, administrators and
beneficiaries.
15. Notice. Any notice, consent or demand required or
permitted to be given under 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 Corporation. The date of such mailing shall be deemed
the date of notice, consent or demand.
16. Governing Law. This Agreement and the rights of the
parties hereunder, shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania.
17. Captains. The captions appearing in this Agreement are for
convenience only, and do not in any way define, limit or describe the scope of
this Agreement, or the intent of any provision thereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement, in duplicate, as of the day and year first above written.
ATTEST: JUDGE, INC.
By:
----------------------------- ---------------------------------
Secretary Title: President
----------------------------- ------------------------------(Seal)
Witness Xxxxxx X. Judge, Trustee Under
Agreement of Trust dated December
20, 1995 of Xxxxxx X. Judge, Jr.,
Settlor, known as the Xxxxxx X.
Judge, Jr., Descendants Trust, II
EXHIBIT "A"
Company Policy Number
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Guardian 3808142
