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Exhibit 10.23
MEDICAL UNDERWRITERS, INC.
SUPPLEMENTAL EXECUTIVE INSURANCE PLAN
RESTRICTED SPLIT-DOLLAR LIFE INSURANCE AGREEMENT
COLLATERAL ASSIGNMENT METHOD
THIS AGREEMENT is made this 12th day of September, 1996, by and between Medical
Underwriters, Inc., a New Jersey corporation (the "Corporation") and Xxxxxx
Xxxxxxxx (the "Executive").
The Corporation is attorney-in-fact for Medical Inter-Insurance Exchange of New
Jersey (MIIX), an unincorporated association providing professional liability
and other insurance on the inter-insurance method; and
The Corporation highly values the efforts, abilities and accomplishments of the
Executive; and
The Executive is deemed a member of a select group of management and/or one of
the highly compensated employees of the Corporation; and
The Corporation, as an inducement of such continued employment, wishes to assist
the Executive with his personal life insurance program; and
The Executive and the Corporation wish a portion of the values created hereby to
remain available to satisfy the claims of creditors of the Corporation or MIIX
during the period of Executive's employment; and
The Executive agrees to participate in such program to the extent hereinafter
provided.
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NOW, THEREFORE, the parties named above agree as follows:
(1) Life Insurance Policy:
(a) In furtherance of the purposes of this Agreement, life
insurance (hereinafter referred to as the "Policy") has been
applied for on the life of the Executive from Phoenix Home
Life Mutual Insurance Company (hereinafter called "Insurer").
See Schedule A attached hereto for particulars on the Policy
and any other life insurance policies issued in connection
with this Agreement.
(b) This Agreement is effective as to a particular policy upon
execution or upon issuance and acceptance of such Policy,
whichever is later.
(2) Ownership Rights and Duties under the Policy:
(a) The Executive shall retain and may exercise all incidents and
rights of ownership with respect to the Policy except as
otherwise hereinafter provided.
(b) The Corporation shall have the right to:
1. Obtain Policy loans or other withdrawals to the
extent of Part One of the Policy as defined in
Paragraph 8 of this Agreement. The Policy may be
assigned as collateral for such loans or withdrawals.
The interest due on such loans shall be a debt of the
Corporation owed to the Insurer;
2. Upon termination of this Agreement other than by
reason of Executive's death, collect from the Insurer
Part One of the Policy as defined in Paragraph 7 of
this Agreement.
3. Upon the death of the Insured, collect from the
Insurer Part One and Part Two of the Policy as
defined in Paragraph 7 of this Agreement; or
(c) The Corporation shall be responsible for safeguarding the
Policy.
(d) The parties to this Agreement shall execute and forward
promptly and without unreasonable delay, changes in
beneficiary designations forms and documents, including the
Policy, as required by the Insurer, to facilitate the exercise
of any rights of the parties hereto. The parties hereto shall
not be required to execute any
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documents or take any action that would impair their own
interests under the Policy.
(3) Collateral Assignment:
Concurrently with the execution of this Agreement, the Executive shall
execute a Collateral Assignment of the Policy as security for the
premium advances made by the Corporation. Such Collateral Assignment
shall not be inconsistent with the rights of the parties under this
Agreement.
(4) Payment of Premiums:
The Corporation will pay all premiums on the Policy. The payment of the
premium shall be made on the date the premium is due and within the
grace period allowed by the Policy for the payment of the premium.
Premiums shall be paid in accordance with the Illustration attached
hereto as Exhibit A.
(5) Use of Dividends:
All dividends attributable to the Policy shall be applied to the
purchase of Paid-Up Additions from the Insurer.
(6) Payment of Proceeds:
On Executive's death, the Corporation shall receive Part One and Part
Two of the Policy, and such party or parties as designated by the
Executive, in writing, shall receive Part Three of the Policy.
(7) Key-man element:
Upon termination of this Agreement for reasons other than Executive's
death, discharge without cause, or other unilateral action by the
Corporation, Executive shall designate the Corporation or MIIX, at the
Corporation's election, as beneficiary of an amount of death proceeds
equal to the sum of Parts One and Two of the Policy as of the date of
such termination, and such designation shall be irrevocable until one
year after the date of the event described in Paragraph 9 from which
such termination results. If Executive dies after the expiration of
such one-year period without designating a beneficiary other than the
Corporation or MIIX, any death proceeds of the Policy received by the
Corporation or MIIX shall be held for and payable to Executive's
estate.
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(8) Definitions:
(a) Part One of the Policy is:
1. Prior to a Declaration of Insolvency, zero; and
2. after a Declaration of Insolvency, an amount equal to the
lesser of the cash surrender value of the Policy or the sum of
premiums paid by the Corporation, net of previous withdrawals
or policy loans made to the Corporation.
The Corporation shall properly certify, as required by the
Insurer, the extent of Part One of the Policy and payment of
such amount shall release the Insurer from any liability to
the Corporation. Absent such certification, the insurer may
rely on a certification by Executive, which certification is
not contested by the Corporation within thirty days of
receiving notice thereof from the insurer.
(b) Part Two of the Policy is an amount equal to the proceeds of
the policy less the sum of Part One and $900,000.00.
(c) Part Three of the Policy is the proceeds of the Policy in
excess of the sum of Part One and Part Two.
(d) Declaration of Insolvency means an order of a court of
competent jurisdiction placing the assets of the Corporation
or MIIX in the hands of a bankruptcy trustee, receiver,
rehabilitator, or other holder for the benefit of creditors.
(9) Termination of Agreement:
This Agreement shall terminate for any of the following reasons:
(a) Performance of its terms, following death of Executive;
(b) Termination of Executive's employment with the Corporation for
reasons other than death and disability;
(c) A party's submission of written notice of such intention to
the other party;
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(d) Any action by one party that would defeat or impair the
interest of such other party other than death or termination
of employment. Such action shall include, but is not limited
to failure to pay premiums as agreed upon, cancellation of the
Policy by any party hereto.
Termination of Agreement because of death, termination of
employment, or termination by notice shall be effective
immediately. All other terminations shall be effective 30 days
from any such action.
(10) Repayment for Reasons Other Than Death:
(a) The amounts owed to the Corporation in the event of
termination other than by death shall be Part One of the
Policy as defined in Paragraph 8 of this Agreement.
(b) In all instances of termination other than by death, the
amount of Part I of the Policy shall be certified as provided
in Paragraph 8, and payment of such amount shall release the
Insurer from any liability to the Corporation.
(c) Such repayment to the Corporation of the amounts owed it under
this Agreement shall be made from the total cash values of the
Policy. All parties shall execute the documents necessary to
facilitate such use of the total cash values, regardless of
any rights any party may have in such total cash values.
(11) Disposition of Policy Upon Termination of Agreement:
The Executive may dispose of the Policy upon termination of this
Agreement by sale or otherwise except that no disposition of such
Policy shall take place unless (i) the Corporation has certified to the
Insurer that its interest in such Policy has been satisfied or
released; or (ii) the Executive so certifies and the Corporation does
not, within thirty (30) days after notice thereof, contest such
certification. For purposes of this Paragraph, the Corporation's
interest shall not be deemed satisfied if the action contemplated by
Executive will adversely affect the Corporation's rights under
Paragraph 7.
(12) Named Fiduciary:
This Agreement and other similar agreements constitute the Medical
Underwriters, Inc., Supplemental Executive Split-Dollar Plan ("The
Plan"). The Corporation is hereby designated as the Named Fiduciary of
the Plan in accordance with the Executive
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Retirement Income Security Act of 1974 and shall serve in such capacity
until removed by the Board of Directors of the Corporation and
appointment of a successor by duly adopted resolution of the Board. The
business address and telephone number of the Named Fiduciary are:
Medical Underwriters, Inc.
Two Xxxxxxxx Xxxx
Xxxxxxxxxxxxx, XX 00000
(000)000-0000
The Named Fiduciary shall have the authority to control and manage the
operation and administration of this Plan. However, the Named Fiduciary
may allocate responsibilities for the operation and administration of
the Plan, including the designation of persons who are not Named
Fiduciaries, to carry out fiduciary responsibilities. The Named
Fiduciary shall effect such allocation of responsibilities by
delivering to the Corporation a written instrument that specifies the
nature and extent of the responsibilities allocated, including, if
appropriate, the persons, not Named Fiduciaries, who are designated to
carry out fiduciary responsibilities under this Plan. The Named
Fiduciary of this Plan shall be responsible for making timely delivery
of any required premiums to the Insurer. All Plan documents shall be
retained by the Named Fiduciary and made available for examination at
the above indicated business address. Upon written request, the Plan
document and other information shall be provided to the parties of this
Plan.
(13) Claims Procedure:
Benefits shall be payable in accordance with the Plan provisions.
Should the Executive or beneficiary fail to receive benefits to which
such Executive or beneficiary believes he is entitled, a claim may be
filed. Any claim for a Plan benefit hereunder shall be filed by
Executive or beneficiary (claimant) of this Plan by written
communication which is made by the claimant or the claimant's
authorized representative which is reasonably calculated to bring the
claim to the attention of the Named Fiduciary.
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If a claim for a Plan benefit is wholly or partially denied, a written
notice of the decision shall be furnished to the claimant by the Named
Fiduciary or his designee within a reasonable period of time after
receipt of the claim by the Plan, which notice shall include the
following information:
(a) The specific reason(s) for the denial;
(b) Specific reference to the pertinent Plan provisions upon which
the denial is based;
(c) A description of any additional material or information necessary
for the claimant to perfect the claim and an explanation of why
such material or information is necessary; and
(d) An explanation of the Plan's claim review procedures.
In order that a claimant may appeal a denial of a claim, a claimant or
his duly authorized representative:
(a) May request a review by written application to the Named
Fiduciary or his designee not later than sixty (60) days after
receipt by the claimant of written notification of denial of a
claim;
(b) May review pertinent documents; and
(c) May submit issues and comments in writing.
A decision on review of a denied claim shall be made not later than
sixty (60) days after the Plan's receipt of a request for review,
unless special circumstances require an extension of time for
processing, in which case a decision shall be rendered within a
reasonable period of time, but not later than one hundred twenty (120)
days after receipt of a request for review. The decision on review
shall be in writing and shall include the specific reason(s) for the
decision and the specific reference(s) to the pertinent Plan provisions
on which the decision is based.
Notwithstanding anything contained in this Paragraph to the contrary,
any claim for a death benefit under an insurance policy under this Plan
shall be filed with the Insurer by the claimant or his authorized
representative on the form or forms prescribed for such purpose by the
Insurer. The Insurer shall have sole authority for determining whether
a death claim shall or shall not be paid, either in whole or in part,
in accordance with the
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terms of such insurance contract which may have been purchased on the
life of the Executive.
(14) Amendment of Agreement:
This Agreement may be altered, amended or modified, including the
addition of any extra Policy provisions, by a written agreement signed
by the Corporation and the Executive. The law of the State of New
Jersey shall govern this Agreement. It shall be the obligation of the
Corporation to notify the Insurer of any amendments or changes to this
Agreement.
(15) Interpretation of Agreement:
Where appropriate in this Agreement, words used in the singular shall
include the plural and words used in the masculine shall include the
feminine and vice versa.
(16) Liability of Insurer:
No Insurer shall be a party to this Agreement. With respect to any
Policy of insurance issued pursuant to this Agreement, the issuing
Insurer shall have no liability except as set forth in the Policy. Such
Insurer shall not be bound to inquire into or take notice of any of the
covenants herein contained as to policies of life insurance, or as to
the application of the proceeds of such policies.
The Insurer shall be discharged from all liability in making payments
of the proceeds and in permitting rights and privileges under a Policy
to be exercised pursuant to the provisions of the Policy.
(17) Binding Agreement:
This Agreement shall bind all parties, their successors and assigns and
any Policy beneficiary.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year
above stated.
MEDICAL UNDERWRITERS, INC.
By: /s/Xxxxx X. Xxxxxxx
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Witness: Executive:
/s/Xxxxxxx X. Xxxxxx /s/Xxxxxx Xxxxxxxx
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Xxxxxx Xxxxxxxx
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SCHEDULE A
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
INSURED POLICY NO. FACE AMOUNT DATE OF ISSUE
Xxxxxx Xxxxxxxx 2693161 $1,400,000 12/27/95
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COLLATERAL ASSIGNMENT OF SPLIT-DOLLARED POLICY
THIS ASSIGNMENT is made this 12th day of September, 1996, by the undersigned
(herein referred to as "Policyowner") to Medical Underwriters, Inc., a New
Jersey Corporation (hereinafter referred to as "Assignee"), its successors and
assigns.
1. The subject of this Assignment is a certain life insurance policy, No.
2693161, issued by Phoenix Home Life Mutual Insurance Company
(hereinafter referred to as "Insurer"). See Schedule A of Agreement
mentioned in Paragraph 2 below.
2. The Policy is subject to a Restricted Split-Dollar Life Insurance
Agreement (hereinafter called the "Agreement"), dated September 12,
1996, between the Assignee and Xxxxxx Xxxxxxxx. The Agreement was
created to assist Policyowner with his or her personal life insurance
program as an employee benefit for a valued key employee. Such
Agreement is hereby incorporated into and made a part of this
Assignment.
3. The Policyowner hereby assigns, transfers and sets over to the Assignee
the following specific limited rights in the Policy and subject to the
following terms and provisions:
(a) This Assignment is made and the Policy is held as collateral
security for Assignee's interest in the Policy under the terms
of the Agreement.
(b) The Assignee's rights in the Policy are to the extent of its
interest in the Policy as stated in the Agreement.
4. The Assignee shall have the right to be repaid to the extent of its
interest:
(a) In the event of the death of the insured on the Policy;
(b) In the event the Policy is lapsed, canceled or surrendered
by the Policyowner; or
(c) In the event of the termination of the Agreement.
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5. The Assignee is strictly prohibited:
(a) From surrendering the Policy for cancellation; or
(b) From assigning its rights to any person other than to the
Policyowner or to some other person as the Policyowner may direct;
and
(c) In general, from taking any action which would endanger the
interests of the Policyowner or endanger the payment of the death
proceeds in excess of its interest in the Policy.
Notwithstanding any provisions of this Assignment to the contrary,
the Assignee shall, when its interest has been satisfied, be
obligated to release this Assignment, or make a reassignment of
its interest in the Policy to the Policyowner's successors or
assigns.
6. Except as specifically provided herein, the Policyowner shall retain
and possess all other incidents of ownership in the Policy, including,
but not limited to:
(a) The sole and exclusive right to cancel or surrender the Policy for
its cash surrender value, if any;
(b) The right to designate and change the beneficiary of the death
proceeds on the Policy; and
(c) The right to elect and exercise any optional mode of settlement
permitted by the Policy.
However, all rights retained by the Policyowner shall be subject
to the terms and conditions of the Agreement.
7. The Insurer shall:
(a) Have no duty or obligation to inquire into or investigate the
reason or validity of the Assignee's request to exercise any of
its rights hereunder, or whether the Policyowner has notice of it.
The Insurer may treat any such request by the Assignee as an
affirmation that the request conforms to this Assignment and the
Agreement and is thereby authorized to act upon such requests;
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(b) Be fully protected in recognizing a request by the Policyowner to
exercise any right of ownership, whether or not the Assignee has
notice of such request including, but not limited to, the right to
surrender the Policy.
(c) Have the right in determining the amount of the interests of the
Assignee or Policyowner in any of Part One, Part Two, or Part
Three to rely on a statement as to the amount of those remaining
interests signed by the Assignee (or any officer of the Assignee)
(the "Statement") in order to determine the amount of any payment
to be made to the Assignee or Policyowner, or, as provided in the
Agreement, to rely on certain statements by Policyholder of which
Assignee has notice and which Assignee does not contest as
provided in the Agreement. As between the Insurer and all parties
claiming any interest in the Policy, payment in reliance upon such
Statement shall be a full discharge of the Insurer for such
portion of the Cash Surrender Values, Paid-Up Additions, Loans or
Death Benefit and shall be binding on all parties claiming an
interest in the Policy.
(d) Bear no liability to any party claiming an interest in the Policy
should the release of Paid-Up Additions, the Full or Partial
Surrender for the Cash Surrender Value, or the use of policy loans
in accordance with the parties' rights under this assignment
result in a reduction of either Part One or Part Two of the
Policy.
8. Upon request, the Assignee shall forward the Policy to the Insurer for
endorsement of any designation or change of the Policy beneficiary, or any
election of an optional plan for payment of the proceeds. The Assignee
shall forward the Policy for these purposes without unreasonable delay.
9. The exercise of any right given herein to the Assignee, or retained by
the Policyowner, shall be solely at the option of each party respectively
and shall not require notice or consent of one party to the other.
Nevertheless, the Assignee and the Policyowner covenant that they will not
exercise any rights or privileges in this Policy in a manner which would
adversely affect any right or interest of the other or his or her
designated beneficiary.
10. The Assignee shall release and reassign all of its specific rights in the
Policy transferred by this Assignment upon satisfaction or release of its
interest in the Policy without unreasonable delay.
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11. The Insurer is not a party to the Agreement or to this Assignment.
IN WITNESS WHEREOF, this Assignment is hereby executed this 12th day of
September, 1996.
Witness: Policyowner:
/s/Xxxxxxx X. Xxxxxx /s/Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxxx
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