Exhibit 10.5(10)
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
This Split Dollar Life Insurance Agreement ("Agreement") is
made, as of ____________, 199__, by and between Sierra Health Services, Inc., a
Nevada corporation (the "Company"), _______________(the "Executive"), and any
other person, in his or her capacity as trustee of a trust designated by the
Executive, as may from time to time agree to be bound by this Agreement.
RECITALS
The Executive desires to insure his or her life for the
benefit and protection of his or her family or designated beneficiary under the
Policy (as defined below);
The Company desires to help the Executive provide certain
insurance for the benefit and protection of his or her family or designated
beneficiary by providing funds from time to time to pay the premiums due on the
Policy, subject to reimbursement; and
The Executive desires the Executive or a trust designated by
Executive to become the owner of the Policy and to assign certain rights and
interests in the Policy to the Company, to the extent provided herein, as
security for reimbursement of certain funds provided by the Company for the
acquisition and/or maintenance of the Policy.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and the
mutual agreements and covenants set forth below, the parties to this Agreement
agree as follows:
1. Definitions. For purposes of this Agreement, unless
otherwise clearly apparent from the context, the
following phrases or terms shall have the following indicated meanings:
(a) "Aggregate Premiums Paid" shall mean, at any
time, an amount equal to (i) the cumulative premiums paid by the
Company on the Policy, less (ii) any policy loans to the Company and
accrued and unpaid interest thereon (excluding any loan under Section
6(e)(ii)), and less (iii) any amounts received by the Company from the
Executive for life insurance coverage provided under this Agreement.
Despite the foregoing, Aggregate Premiums Paid shall not include extra
benefit riders or agreements, other than those providing additional
life insurance coverage on the insured, and shall not include premiums
waived pursuant to the terms of any disability waiver of a premium
rider. In addition, no interest shall be deemed to be accrued on and no
present value adjustment to the cumulative premiums paid by the Company
shall be made in calculating Aggregate Premiums Paid.
(b) "Base Annual Compensation" shall mean the
Executive's annual salary plus an amount of annual incentive
compensation payable by the Company and its subsidiaries equal to 50%
of such annual salary for employment services in a specified year,
before reduction for compensation deferred pursuant to all qualified,
non-qualified and Code Section 125 plans of the Company. Base Annual
Compensation excludes amounts payable in connection with long-term
incentive awards (including compensation resulting from option
exercises), perquisites, other annual compensation not properly
categorized as salary or annual incentive compensation, reimbursement
of expenses, and employee benefits. For purposes of determining the
Executive's Base Annual Compensation as of the Benefit Measurement Date
or any other date, the Executive's Base Annual Compensation as of the
most recent preceding July 1 will be used (which means that the
Executive's Base Annual Compensation will be increased or decreased
under this Agreement only once a year).
(c) "Benefit Measurement Date" shall mean the
date on which the first of any of the following events occurs:
(i) The Executive's Termination of Employment;
(ii) Termination of this Agreement in accordance
with Section 9 below;
(iii) The Executive's Retirement; or
(iv) The Executive's death.
(d) "Cash Surrender Value" shall mean an amount that
equals, at any specified time, the cash surrender value of the Policy
as determined under the terms of the Policy.
(e) "Change in Control" shall mean the earliest
transaction or event occurring after the effective date of the Plan in
which (i) the Company shall merge or consolidate with any other
corporation and shall not be the surviving corporation; (ii) the
Company shall transfer all or substantially all of its assets to any
other person; or (iii) any person shall have become the beneficial
owner of more than 50% of the voting power of outstanding voting
securities of the Company.
(f) "Code" means the Internal Revenue Code of 1986,
as amended from time to time, including regulations thereunder and
successor provisions and regulations.
(g) "Collateral Assignment" shall mean an assignment
of the Policy made by the Executive or a trust designated by the
Executive, as owner of the Policy, in favor of the Company in a form
mutually agreed to by the Company and the Executive and any trust
designated by the Executive and accepted by the Insurer.
(h) "Collateral Interest" shall mean the
Company's rights and interests in the Policy, as set forth in
Section 6 below.
(i) "Executive's Death Benefit" shall mean (i), in
the event of the Executive's death while employed by the Company or a
subsidiary, an amount that is equal to the Executive's Base Annual
Compensation, determined as of the date of his or her death, multiplied
by three, less (A) the amount of death benefits payable to
beneficiaries of the Executive under any group life insurance policy or
program of the Company or a subsidiary (other than this Plan), and less
(B) the Benefit Reduction Amount (but in no event shall these
reductions result in a negative number), and (ii), in the event of the
Executive's death at a time the Executive is no longer employed by the
Company or a subsidiary but not later than the Rollout Date, an amount
that is equal to the Executive's Base Annual Compensation, determined
as of the Benefit Measurement Date, multiplied by 1.5, less (A) the
amount of death benefits payable to beneficiaries of the Executive
under any group life insurance policy or program of the Company or a
subsidiary (other than this Plan), and less (B) the Benefit Reduction
Amount (but in no event shall these reductions result in a negative
number). For purposes of this definition, the "Benefit Reduction
Amount" shall mean the amount by which the Aggregate Premiums Paid plus
Executive's Death Benefit, calculated without regard to the Benefit
Reduction Amount, exceeds the death proceeds payable under the Policy
assuming the maximum cumulative increases in the death proceeds under
the Policy permitted by the Insurer, over and above the death proceeds
initially payable under the Policy, without requiring new evidence of
insurability of the Executive. The foregoing notwithstanding, the death
proceeds initially payable under the Policy shall be sufficient such
that the Benefit Reduction Amount in the initial year that this
Agreement is in effect shall be zero.
(j) "Insurer" shall mean Metropolitan Life
Insurance Company.
(k) "Minimum Retirement Cash Value" shall mean, on
the Rollout Date, the amount of Cash Surrender Value of the Policy
payable to the Executive (i.e., exclusive of portions payable to the
Company under Section 6(a)) equal to (i) the amount sufficient to
maintain a death benefit that is equal to 1.5 multiplied by the
Executive's Base Annual Compensation, determined on the Benefit
Measurement Date, assuming that the Policy will be held without
surrender, withdrawal or loan by the Executive for 20 years following
the Benefit Measurement Date and using the Insurer's then-current
interest rate and expense loads under the Policy as of the Rollout
Date, multiplied by (ii) 1.6667; provided, however, that if the
Executive's termination of employment is an Early Retirement, the
Minimum Retirement Cash Value shall be reduced by a percentage equal to
10% times the number of full and fractional years that remain from the
date of the Executive's Early Retirement until the date the Executive
would have completed 15 Years of Service.
(l) "Permanently Disabled" shall mean the Executive
is unable to perform the usual assigned duties of his or her position
(i) due to a disability which qualifies the Executive for disability
benefits under the Company's long-term disability plan, (ii) if the
Executive does not participate in such a plan, due to a disability
which would have qualified the Executive for disability benefits under
such a plan had the Executive been a participant in such a plan, or
(iii), if the Company does not sponsor a long-term disability plan, due
to a physical or mental disease, injury or infirmity, of long duration,
as determined by the Committee in its sole discretion.
(m) "Plan" shall mean the plan described in
Section 8(a) below.
(n) "Policy" shall mean the following policy or
policies on the life of the Executive that are issued by the Insurer:
Policy Number Type of Policy
------------ ---------------
------------ ---------------
(o) "Retirement" or "Retire" shall mean severance
from employment from the Company for any reason other than an
authorized leave of absence or death on or after the earlier of the
attainment of (i) age 65 ("Normal Retirement"), (ii) age 55 and
completion of ten Years of Service, or (iii) completion of ten Years of
Service (Retirement under this clause (iii) being "Early Retirement,"
which is subject to a reduction in benefit levels under Section 6(a)(i)
and Section 1(k) if the Executive has completed less than 15 Years of
Service). In addition, a person who is Permanently Disabled (regardless
of his or her employment status with the Company) and who reaches age
55 shall be treated as having reached Retirement under this Agreement;
provided, however, that such person may elect instead, at the time of
termination of employment, to have such termination treated as an Early
Retirement if such termination would at that time qualify as an Early
Retirement. For purposes of the foregoing, "Years of Service" shall
mean the total number of full years in which the Executive has been
employed by the Company. For purposes of this definition, a year of
employment shall be a 365-day period (or 366-day period in the case of
a leap year) commencing on the date of hiring and each anniversary
thereof (subject to adjustment to reflect unpaid leaves of absence of
more than 90 days). A Participant's paid leave of absence or unpaid
leave of absence for 90 days or less shall constitute employment for
purposes of this definition, but a Participant's unpaid leave of
absence for more than 90 days shall not constitute employment for
purposes of this definition.
(p) "Rollout Date" shall mean the later of the
Benefit Measurement Date or the fifteenth anniversary of the date of
this Agreement, but in no event later than the death of the Executive;
provided, however, that the Company may accelerate the Rollout Date to
a date specified by the Company, but in no event earlier than the
Benefit Measurement Date, and only if at such Rollout Date, in any case
governed by Section 6(a)(i), the Cash Surrender Value equals or exceeds
the Minimum Retirement Cash Value.
(q) "Tax Limitation Date" shall mean the date on
which the Policy will no longer be subject to those provisions of
Section 7702(f)(7) of the Code that would cause any distribution or
surrender from or under the Policy to be taxed under that Section (or
Section 72 of the Code by reason of that Section).
(r) "Termination of Employment" shall mean the
ceasing of Executive's employment with the Company for any reason other
than Retirement, death, a Permanent Disability, or an authorized leave
of absence.
2. Acquisition of Policy; Ownership of Insurance.
(a) Cooperation With Respect to the Policy. The
parties to this Agreement shall cooperate in applying for, obtaining,
and maintaining the Policy, and in obtaining any increase in coverage
of the Policy.
(b) Ownership of the Policy. The Policy shall be
issued to the Executive or to a trust designated by the Executive in
accordance with this Section 2(b). If the Policy is originally issued
to the Executive, the Executive may transfer the Policy to a trust
designated by the Executive, if such transfer is approved by the
Company. The trustee, on behalf of a trust to which the Policy is
issued or transferred, must execute a copy of this Agreement and agree
to be bound by the terms hereof. The Executive or the trustee, on
behalf of such a designated trust, as the case may be, shall be the
sole and exclusive owner of the Policy, subject to the rights and
interests granted to the Company, as provided in this Agreement and the
Collateral Assignment. The Executive and any such trustee acknowledge
and agree that the Company and its agents have not provided advice with
respect to Executive's estate planning.
3. Premium Payments on Policy.
(a) Payments and Reimbursements. Prior to the
occurrence of the Rollout Date, the Company shall pay to the Insurer,
on or before each applicable premium due date, all applicable premiums
for the Policy. In the event that the Company fails to make any such
payment, the Executive or any trust which then owns the Policy may make
(but is not required to make) any such payment, and the Company shall
immediately reimburse the Executive or such trust for any amount so
paid. All such premium payments made by the Company under this
Agreement shall constitute advances by the Company to the Executive for
which the Executive or any trust then owning the policy shall be
responsible for reimbursement in accordance with the terms of this
Agreement, but only up to an amount equal to the Company's Collateral
Interest. The Company does not guarantee the Policy or the payment of
any death benefit or other amount thereunder to the Executive or his or
her Beneficiaries, nor is the Company otherwise obligated to pay or
provide any benefit to the Executive by virtue of this Agreement except
for the payment of premiums on the terms and subject to reimbursement
as specified in this Agreement.
(b) Prefunding Upon a Change in Control. In the event
of a Change in Control, the Company shall, not later than 45 days after
such event, pay to the Insurer an amount sufficient to prepay all
premiums for the Policy through the earlier of the date on which
Executive will be eligible for Normal Retirement or the date one year
after the Change in Control. The Company will arrange for the Insurer
to apply such prefunding payments to premiums or hold such prefunding
payments in a premium reserve account, which shall be non-refundable
(without regard to whether Executive's employment terminates prior to
the end of the period covered by such prefunding).
(c) Additional Compensation. Each calendar year, the
Executive shall be considered to have taxable compensation income for
that portion of the premiums paid by the Company that is equal in
amount to the value of the "economic benefit" derived by the Executive
from the Policy's life insurance protection, as determined for Federal
income tax purposes under Revenue Rulings 64-328 and 66-110, and may
have other taxable income under other applicable tax regulations and
authorities. The Company shall withhold from the Executive's Base
Annual Compensation, or other compensation paid to the Executive, in a
manner determined by the Company, the Executive's share of FICA and
other employment and income taxes required to be withheld under
applicable tax regulations and authorities.
4. Company's Rights.
(a) Generally. The Company's rights and interests in
and to the Policy shall be specifically limited to (i) the right to be
paid its Collateral Interest in accordance with Section 6 below, (ii)
the rights specified in the Collateral Assignment, (iii) the Company's
rights under Section 4(b) and (iv) the right to obtain one or more
loans or advances on the Policy, provided, however, that any such loans
shall not, in the aggregate, result in the Aggregate Premiums Paid
becoming a negative amount at any specified date without the written
consent of the Executive, and provided further, that prior to any
Rollout date the Company shall repay any such loans, including accrued
interest thereon, to the extent necessary so that the Aggregate
Premiums Paid shall not be a negative amount at the Rollout Date.
(b) Investment Decisions. Until such time as the
Company's Collateral Interest has been settled under Section 6(b), the
Company shall have the exclusive right to exercise the investment
discretion, if any, under the Policy that the Policy may confer upon
the Executive or any other person. After settlement of the Company's
Collateral Interest, the Executive or any other owner of the Policy
shall have the right to exercise such investment discretion (if any),
without consultation with or participation by the Company.
5. Executive's Rights and Rights of Trustee as Owner of
Policy. Subject to the terms of this Agreement and the Collateral Assignment
(and any agreement or deed of trust between the Executive and any trustee which
may become the owner of the Policy in trust), the Executive or the trustee of a
trust designated under Section 2(b) shall be the owner of the Policy, and shall
be entitled to exercise all rights in the Policy while the Collateral Assignment
is in effect, except for the following, which may be exercised only in
accordance with Section 6:
(a) To borrow against or pledge the Policy;
(b) To surrender, cancel or assign the Policy;
(c) To take a distribution or withdrawal from
the Policy; or
(d) To exercise investment discretion under the
Policy, except as provided in Section 4(b).
6. Collateral Interest.
(a) On the Rollout Date, the Company's interest in
the Policy (the "Collateral Interest") shall be determined in the
following manner:
(i) If the Benefit Measurement Date occurred
due to the Executive's Retirement or due to a termination of
this Agreement by the Company subject to Section 9(b)(i) and
the Rollout Date did not occur due to Executive's death, the
Company shall be entitled to receive from the Policy's Cash
Surrender Value (or otherwise, as specified in Section 6(b))
at the Rollout Date an amount equal to the lesser of (i) the
Aggregate Premiums Paid or (ii) the Cash Surrender Value minus
the Minimum Retirement Cash Value (if this calculation results
in a negative number, the Company's Collateral Interest shall
be zero).
(ii) If the Benefit Measurement Date
occurred due to the Executive's Termination of Employment or
the termination of this Agreement by either party subject to
Section 9(b)(ii) below and the Rollout Date did not occur due
to Executive's death, the Company shall be entitled to receive
from the Policy's Cash Surrender Value (or otherwise, as
specified in Section 6(b)) at the Benefit Measurement Date an
amount equal to that portion of the Policy's Cash Surrender
Value up to but not exceeding the Aggregate Premiums Paid.
(iii) If the Benefit Measurement Date or
Rollout Date occurred due to the death of the Executive, the
Company shall be entitled to that portion of the Policy's
death proceeds that exceeds the Executive's Death Benefit,
except as provided in Section 6(a)(iv) below.
(iv) If the Benefit Measurement Date or
Rollout Date occurred due to the suicide of the Executive, and
the death proceeds from the Policy are limited by either a
suicide or contestability provision under the Policy such that
the amount payable to the Company under Section 6(a)(iii)
would be less than the Aggregate Premiums Paid with respect to
the Policy or the portion thereof so limited, the Company
shall be entitled to that portion of the Cash Surrender Value
and/or death proceeds resulting from the Policy or portion
thereof so limited that does not exceed the Aggregate Premiums
Paid with respect to the Policy or portion thereof so limited.
(b) If the Benefit Measurement Date and Rollout Date
are each on a date other than the date of the Executive's death, the
Company's Collateral Interest in the Policy, as determined in Section
6(a)(i) and (ii) above, shall be paid to the Company in one of the
following ways, as elected by the Executive or the trustee then owning
the Policy in trust (if the power to make this election has been
transferred to such owner by the Executive), in writing within 30 days
after the date the Company first notifies the Executive or such trustee
in writing of the occurrence of the Rollout Date, if the Collateral
Interest is determined under Section 6(a)(i), or the Benefit
Measurement Date, if the Collateral Interest is determined under
Section 6(a)(ii):
(i) By the Executive's or such trustee's
surrender or partial surrender of, or withdrawal from, the
Policy in an amount equal to the Company's Collateral
Interest, and the payment of the cash proceeds thereof to the
Company;
(ii) By the Executive or such trustee taking
a loan out on the Policy in an amount equal to the Company's
Collateral Interest, and payment of the loan proceeds to the
Company, provided that the Company shall not be responsible
for repayment of any principal of or interest accruing on such
loan;
(iii) By the Executive's or such trustee's
payment to the Company, from other funds available to the
Executive or such trustee, an amount equal to the Company's
Collateral Interest; or
(iv) By the Executive's or such trustee's
transfer of the ownership of the Policy, and all rights
thereunder, to the Company, provided that the Cash Surrender
Value of the Policy is at least equal to the Company's
Collateral Interest at the time of the transfer.
The Company's Collateral Interest in the Policy shall be paid to the
Company as soon as is reasonably practical after the Rollout Date.
(c) If the Benefit Measurement Date or Rollout Date
is the date of the Executive's death, the Company's Collateral Interest
in the Policy, as determined in Section 6(a)(iii) above, shall be paid
to the Company from the Policy's proceeds as soon as is reasonably
practicable after the Executive's death.
(d) Despite Section 6(b) above and Section 6(e)
below, if, at the time the Company's Collateral Interest is determined,
the Tax Limitation Date has not occurred, (i) the Company shall have
the right, in its sole discretion, to require the Executive or the
trustee then owning the Policy in trust to elect to pay the Company's
Collateral Interest in accordance with Section 6(b)(ii) above, and (ii)
the Company's rights under Section 6(e) shall be limited to taking a
loan in accordance with Section 6(e)(ii) below.
(e) If the Executive or the trustee then owning the
Policy in trust fails to exercise any of the options under Section 6(b)
above, by delivering written notice of such election to the Company no
later than 30 days after the date the Company first notifies the
Executive or such trustee in writing of the occurrence of an event
whereby the Company's Collateral Interest has been determined, the
Company shall be entitled to: (i) exercise the right to surrender the
Policy and to receive the Policy's Cash Surrender Value, to the extent
of the Company's Collateral Interest, or (ii) take out a loan on the
Policy in an amount equal to the Company's Collateral Interest, with
the loan proceeds paid to the Company and the Company not responsible
for repayment of principal of or interest accruing on such loan, or
(iii) transfer the ownership of and beneficial interest in the Policy
to the Company. In the case of (i) or (iii) above, the Company shall
pay to the Executive, if he or she then owns the Policy, or to the
trustee of the trust then owning the Policy in trust, the Cash
Surrender Value or death proceeds that remain after the Company has
been paid its Collateral Interest.
(f) The Company agrees to keep records of its premium
payments and to furnish the Insurer with a statement of its Collateral
Interest (with a copy to the Executive and to the trustee then owning
the Policy in trust) whenever the Insurer requires such statement.
(g) Concurrent with the signing of this Agreement,
the Executive or the trustee which owns or will own the Policy in
trust, will collaterally assign the Policy to the Company, in the form
of the Collateral Assignment, as security for the payment of the
Collateral Interest, which assignment shall not be altered or changed
without the written consent of the Company, the Executive, and any such
trustee.
(h) Promptly following the Executive's death, the
Company and the Executive's designated beneficiary under the Policy
shall take all steps necessary to collect the death proceeds of the
Policy by submitting the proper claims forms to the Insurer. The
Company shall notify the Insurer of the amount of the Executive's Death
Benefit (subject to adjustment if the Policy's proceeds are limited
because of the Executive's death by suicide) and the Company's
Collateral Interest in the Policy at the time of such death. Such
amounts shall be paid, respectively, by the Insurer to the Executive's
designated beneficiary and the Company.
(i) If the Executive or the trustee of a trust then
owning the Policy elects to retain the Policy in accordance with
Section 6(b) above, the Company shall (i) assign its Collateral
Interest in the Policy to the Executive or such trustee, as the case
may be, (ii) execute and file with the Insurer an appropriate release
of the Company's Collateral Interest in the Policy and (iii) have no
further interest in the Policy; provided that, in all instances, the
Company receives payment in full for its Collateral Interest in the
Policy. Further, the Executive hereby acknowledges, understands and
agrees that, upon the release of the Company's Collateral Interest, the
Company shall not have any responsibility for the future performance of
the Policy and shall have no obligation to make any additional premium
payments.
(j) If the Executive or the trustee of a trust then
owning the Policy elects to transfer the Policy to the Company, or the
Company makes such an election in accordance with Section 6(e)(iii)
above, the Executive or such trustee shall sign all documents necessary
to transfer the Policy to the Company, and the Executive, such trustee,
and any beneficiary designated by Executive or beneficiary of such
trust or other party (other than the Company) with a right or interest
in the Policy from or through the Executive or such trust shall have no
further right or interest in and to the Policy.
(k) Upon payment to the Company of its Collateral
Interest in accordance with this Section 6, this Agreement, and the
Executive's participation in the Plan, shall terminate, and no party
shall have any further rights or obligations under the Agreement or the
Plan.
7. Insurer.
(a) The Insurer is not a party to this Agreement,
shall in no way be bound by or charged with notice of its terms, and is
expressly authorized to act only in accordance with the terms of the
Policy.
(b) The signature(s) required for the Insurer to
recognize the exercise of a right under the Policy shall be specified
in the Collateral Assignment.
8. Plan; Named Fiduciary; Claims Procedure.
(a) This Agreement is part of the Company's
Split-Dollar Life Insurance Plan, which consists of all Company's
Split-Dollar Life Insurance Agreements that so reference their
association with the Plan.
(b) The Company is the named fiduciary of the Plan
for purposes of this Agreement. The Plan is administered by a Plan
Administrator which consists of the Compensation Committee of the
Company's Board of Directors or such committee as the Board shall
appoint.
(c) The following claims procedure shall be followed
in handling any benefit claim under this Agreement and the Plan:
(i) The Executive, the trustee of the trust
then owning the Policy, or any beneficiary of Executive if the
Executive is dead (the "Claimant"), may deliver to the Plan
Administrator a written claim for a determination with respect
to the benefits distributable to such Claimant hereunder. If
such a claim relates to the contents of a notice received by
the Claimant, the claim must be made within 60 days after such
notice was received by the Claimant. The claim must state with
particularity the determination desired by the Claimant. All
other claims must be made within 180 days of the date on which
the event that caused the claim to arise occurred. The claim
must state with particularity the determination desired by the
Claimant.
(ii) The Plan Administrator shall consider a
Claimant's claim within a reasonable time, and shall notify
the Claimant in writing:
(A) that the Claimant's
requested determination has been made, and that the
claim has been allowed in full; or
(B) that the Plan Administrator has
reached a conclusion contrary, in whole or in part,
to the Claimant's requested determination, and such
notice must set forth in a manner calculated to be
understood by the Claimant:
(1) the specific reason(s) for the
denial of the claim, or any part of it;
(2) specific reference(s) to pertinent
provisions of the Plan upon which such
denial was based;
(3) 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
(4) an explanation of the claim review
procedure set forth below.
(iii) Within 60 days after receiving a
notice from the Plan Administrator that a claim has been
denied, in whole or in part, a Claimant (or the Claimant's
duly authorized representative) may file with the Plan
Administrator a written request for a review of the denial of
the claim. Thereafter, but not later than 30 days after the
review procedure began, the Claimant (or the Claimant's duly
authorized representative):
(A) may review pertinent documents;
(B) may submit written comments or
other documents; and/or
(C) may request a hearing, which
the Plan Administrator, in its sole discretion, may
grant.
(iv) The Plan Administrator shall render its
decision on review promptly, and not later than 60 days after
the filing of a written request for review of the denial,
unless a hearing is held or other special circumstances
require additional time, in which case the Plan
Administrator's decision must be rendered within 120 days
after such date. Such decision must be written in a manner
calculated to be understood by the Claimant, and it must
contain:
(A) specific reasons for the
decision;
(B) specific reference(s) to the
pertinent Plan provisions upon which the decision
was based; and
(C) such other matters as the Plan
Administrator deems relevant.
(v) A Claimant's compliance with the
foregoing provisions of this Section 8(c) is a mandatory
prerequisite to a Claimant's right to commence any legal
action with respect to any claim for benefits under this
Agreement.
(d) In no event shall the Company's liability under
this Agreement exceed the amount of proceeds from the Policy.
9. Amendment of Agreement; Termination.
(a) This Agreement shall not be modified or amended
except by a writing signed by the Company, the Executive, and, if any
rights or obligations of the trustee of a trust then owning the Policy
are affected, by such trustee.
(b) The Company or Executive may terminate this
Agreement, and Executive's participation in the Plan, at any time,
subject to the requirement that each such party fully perform its or
his or her obligations under the Agreement, and subject to the
following:
(i) If the Company terminates the Agreement
at a time that the Executive's termination of employment would
qualify as a "Retirement," the Company's Collateral Interest
shall be determined under Section 6(a)(i); and
(ii) If the Company terminates the Agreement
in circumstances other than those described in (i) above or if
the Executive terminates the Agreement, the Company's
Collateral Interest shall be determined under Section
6(a)(ii).
10. Binding Agreement; Assigns. This Agreement shall be
binding upon the heirs, administrators, executors and permitted successors and
assigns of each party to this Agreement. The Executive and any trustee of a
trust then owning the Policy shall not assign his or her rights or obligations
under this Agreement without the prior written consent of the Company.
11. Governing Law. This Agreement shall be subject to
and be construed and interpreted according to the internal laws of the State
of Nevada without regard to its conflicts of laws principles.
12. Validity. In case any provision of this Agreement shall be
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts of this Agreement, but this Agreement shall be
construed and enforced as if such illegal or invalid provision had never been
inserted herein.
13. Not a Contract of Employment. The terms and conditions of
this Agreement shall not be deemed to constitute a contract of employment
between the Company and the Executive. Such employment is hereby acknowledged to
be an "at will" employment relationship that can be terminated at any time for
any reason, with or without cause, unless expressly provided in a separate
written employment agreement. Nothing in this Agreement shall be deemed to give
the Executive the right to be retained in the service of the Company or to
interfere with the right of the Company to discipline or discharge the Executive
at any time.
14. Notice. Any notice or filing required or permitted
to be given under this Agreement to shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, to the address below:
Sierra Health Services, Inc.
0000 Xxxxx Xxxxxx Xxx
Xxx Xxxxx, Xxxxxx 00000
Attn.: Office of General Counsel
or to such other address as may furnished to the Executive in writing in
accordance with this notice provision. Any notice or filing required or
permitted to be given to the Executive or the Executive's beneficiary under this
Agreement shall be sufficient if in writing and hand-delivered, or sent by mail,
to the last known address of the Executive. Any notice under this Agreement
shall be deemed given as of the date of delivery or, if delivery is made by
mail, as of the date shown on the postmark on the receipt for registration or
certification.
15. Entire Agreement. This Agreement together with the
Collateral Assignment constitutes the entire agreement between the parties
hereto with regard to the subject matter of this Agreement and supersedes all
previous negotiations, agreements and commitments in respect thereto. No oral
explanation or oral information by either of the parties to this Agreement shall
alter the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have signed this
Agreement as of the date first written above.
The "Company"
Sierra Health Services, Inc.
a Nevada corporation
By:
Its:
The "Executive"
Trustee of a trust designated by the
Executive under Section 2(b)
COLLATERAL ASSIGNMENT
This Collateral Assignment (this "Assignment") is made and
entered into as of _________, 199__, by and between _________________ (the
"Executive"), the insured under [a life insurance policy, No. _______] [life
insurance policies, Nos. and ] (the "Policy"), issued by ____________ (the
"Insurer"), Sierra Health Services, Inc., a Nevada corporation (the "Company"),
and, if this Assignment has been executed by the trustee of a trust which has
become the owner of the Policy, such trustee (the "Trustee"). Executive or the
Trustee, as the owner of the Policy, is referred to herein as "Owner."
RECITALS
The Executive desires to insure his or her life for the
benefit and protection of his or her family or designated beneficiary under the
Policy (as defined below);
The Company desires to help the Executive provide certain
insurance for the benefit and protection of his or her family or designated
beneficiary by providing funds from time to time to pay the premiums due on the
Policy, subject to reimbursement, as more specifically provided for in that
certain Split Dollar Life Insurance Agreement entered into between the
Executive, the Trustee (if any) and the Company as of the date hereof (the
"Agreement"); and
In consideration of the Company agreeing to provide such funds
in accordance with the terms and conditions of the Agreement, the Executive and
Trustee (if any) have agreed to grant to the Company a security interest in the
Policy, to provide security for the payment of the Company's Collateral Interest
(as defined below).
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and the
mutual agreements and covenants set forth below, the parties to this Assignment
agree as follows:
1. Assignment. The Owner hereby assigns, transfers and sets
over to the Company, and its permitted successors, those certain rights and
interests described in the Agreement that are to be assigned to the Company in
accordance with the Agreement. Furthermore, this Assignment is made, and the
Policy is to be held as collateral security for, any and all liabilities of the
Owner to the Company, either now existing, or that may hereafter arise, pursuant
to the terms of the Agreement.
2. Signatures. To facilitate the operation of this
Assignment, the parties agree that the Insurer is hereby notified that the
following signatures are sufficient, without the signature or consent of the
other party, to exercise the following rights under the Policy while the
Assignment is in effect:
(a) The Company may sign a request to take a
loan or partial withdrawal without the Executive's or Trustee's
signature or consent;
(b) The Company may sign a request to (i) surrender
or partially surrender the Policy or (ii) change the owner and
beneficiary of the Policy without the Executive's or Trustee's
signature or consent, provided that the Company simultaneously delivers
to the Insurer (with a copy to the Executive and Trustee, if any) an
affidavit stating that the Company is exercising its rights in
accordance with Section 6(e) of the Agreement;
(c) The Executive or the Trustee (if any), as
authorized under the Policy, may sign a request to change the
beneficiary under the Policy without the signature or consent of the
Company;
(d) The Company may sign any election or other
document whereby an investment election is exercised under the
Policy; and
(e) The exercise of any other right under the Policy
not specifically set forth above shall be exercised with the signature
of the Company and either Executive or the Trustee (if any), in
accordance with the terms of the Policy.
3. Policy Proceeds. Any amount payable from the Policy during
the Executive's life or at death shall first be paid to the Company to the
extent of its Collateral Interest (as defined in the Agreement). Any balance
will be paid to the Owner during the Executive's lifetime, or, at the
Executive's death, to the beneficiary designated under the Policy. A settlement
option may be elected by the recipient of the proceeds. For purposes of this
Assignment, the amount of the Collateral Interest shall be determined by the
Company and set forth in an affidavit signed by the Company and delivered to the
Insurer (with a copy to the Executive and the Trustee, if any), and the Insurer
shall be entitled to rely on the statements set forth in such affidavit.
4. Custody; Endorsement. The Company shall hold the Policy
while this Assignment is operative and, upon request, forward the Policy to the
Insurer, without unreasonable delay, for endorsement of any designation or
change of beneficiary, any election of optional mode of settlement, or the
exercise of any other right reserved by the Executive or Trustee (if any) under
the Agreement or this Assignment.
5. Insurer. The Insurer is hereby authorized to recognize the
Company's claims to rights hereunder without investigating the reason for any
action taken by the Company, the validity or amount of any of the liabilities of
the Executive or Trustee (if any) to the Company under the Agreement, the
existence of any default therein, the giving of any notice required herein, or
the application to be made by the Company of any amounts to be paid to the
Company or the transfer of the Policy to the Company. The Insurer shall not be
responsible for the sufficiency or validity of this Assignment and is not a
party to the Agreement (or any other similar split-dollar or other agreement)
among the Company, the Executive and the Trustee (if any).
6. Reassignment. Upon the full payment of the Company's
Collateral Interest in accordance with the terms and conditions of this
Assignment and the Agreement, the Company shall reassign to the Owner, if the
Owner retains the Policy in accordance with the Agreement, the Policy and all
specific rights included in this Assignment.
7. Amendment of Assignment; Termination. This Assignment shall
not be modified, amended or terminated, except by a writing signed by the
Company, the Executive and the Trustee (if any); provided, however, that this
Assignment may be terminated by the Company or the Executive if that Party
terminates the Agreement in accordance with Section 9 of the Agreement and the
obligations of the party terminating the Agreement are performed in full under
the Agreement.
8. Binding Agreement; Assigns. This Assignment shall be
binding upon the heirs, administrators, executors and permitted successors and
assigns of each party to this Assignment. The Executive and/or the Trustee (if
any) shall not assign his or her rights or obligations under this Assignment
without the prior written consent of the Company.
9. Governing Law. This Assignment shall be subject to
and construed and interpreted under the internal laws of the State of Nevada
without regard to its conflicts of laws principles.
10. Validity. In case any provision of this Assignment shall
be illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts of this Assignment, but this Assignment shall be
construed and enforced as if such illegal or invalid provision had never been
inserted herein.
IN WITNESS WHEREOF, the Executive and the Company have signed
this Assignment as of the date first written above.
The "Company"
Sierra Health Services, Inc.
a Nevada corporation
By:
Its:
The "Executive"
Trustee of a trust designated by the
Executive to become the Owner of the
Policy
Filed with the Insurer:
Date:
Insurer:
By:
Its:
