EXHIBIT 10.40
IMNET SYSTEMS, INC.
ENDORSEMENT SPLIT-DOLLAR LIFE INSURANCE AGREEMENT
THIS IMNET SYSTEMS, INC. ENDORSEMENT SPLIT-DOLLAR LIFE
INSURANCE AGREEMENT made and entered into this day of October, 1997, by and
between IMNET SYSTEMS, INC., a Delaware corporation with its principal office in
Alpharetta, Georgia (hereinafter referred to as the "Company"), and XXXXXXX X.
XXXXXX, a resident of the State of Georgia (hereinafter referred to as the
"Employee").
W I T N E S S E T H
WHEREAS, the Employee is employed by the Company; and
WHEREAS, the Employee wishes to obtain life insurance protection for
his designated beneficiaries in the event of his death and the Company is
willing to assist the Employee in obtaining such protection as an additional
employment benefit, all as hereinafter provided.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, it is agreed between
the parties as follows:
1. Definitions. The following capitalized terms have the
indicated meanings for purposes of this
Agreement:
"Agreement" means this IMNET Systems, Inc. Endorsement
Split-Dollar Agreement, as amended from time to time in accordance with the
terms hereof.
"Annual Insurance Cost" means, with respect to any calendar
year for which such amount is to be determined for purposes of this Agreement,
the cost (calculated by application of the lower of (i) the PS 58 rate set forth
in Rev. Rul. 55-747, 1955-2 C.B. 228 (or the corresponding applicable provision
of any future Revenue Ruling), or (ii) the Insurance Company's current published
premium rate for annually renewable term insurance for standard risks, or such
other amount as may be required or permitted pursuant to Revenue Ruling, 64-328,
1964-2 C.B.11 and subsequent interpretations or modifications thereof, all as
determined by the Company in its sole and absolute discretion) of the portion of
the death benefit which the Beneficiary would receive under the Policy and in
accordance with this Agreement if the Employee died during such year, all as
determined by the Company in its sole and absolute discretion.
"Beneficiary" means the beneficiary or beneficiaries
designated by the Employee in accordance with Section 6(a) hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Claims Manager" means the Company or such person or persons
as may be designated from time to time by the Company.
"Company" means IMNET Systems, Inc., a Delaware corporation
and its successors and assigns.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Employee" means Xxxxxxx X. Xxxxxx and his/her successors and
assigns in accordance with this Agreement (as modified by Section 13(b) hereof).
"Insurance Company" means, with respect to the Policy, the
insurance company that issues the Policy, and its successors and assigns.
"Minimum Death Benefit" means $925,000.
"Net Cash Surrender Value" means, with respect to the Policy,
and as of any particular date, the excess of the cash surrender value of the
Policy over any outstanding indebtedness incurred by the Company and secured by
the Policy, including any interest due on such indebtedness.
"Policy" means any policy or policies insuring the life of the
Employee obtained by the Company in accordance with Section 2 hereof.
"Total Company Premium Payments" means the aggregate premium
payments made by the Company with respect to the Policy.
2. Life Insurance.
(a) Subject to the other terms and limitations set forth in
this Agreement (including, without limitation, Section 2(b) below), the Company
shall obtain such life insurance policy or policies (the "Policy") as the
Company shall determine in its sole and absolute discretion necessary to
provide, upon the Employee's death, a death benefit to the Beneficiary in
accordance with Section 8 hereof equal to the Minimum Death Benefit. The Policy
may be issued by such insurance company or companies as the Company shall select
in its sole and absolute discretion so long as any such insurance company has a
rating of "A+" or better from two of the following life insurance company rating
agencies: A.M. Best, Duff & Xxxxxx, Moodys and Standard and Poors. The Policy
may have such additional terms and features as the Company shall in its sole and
absolute discretion determine appropriate. The Company shall identify the Policy
by delivering written notice to the Employee describing the Policy substantially
in the form as Exhibit "A" attached hereto. Notice of any replacement Policies
in accordance with Section 3(b) hereof shall be provided to the Employee in
substantially similar manner.
(b) Notwithstanding the foregoing, if through reasonably
diligent efforts, the Company is unable to obtain any insurance policy which
provides a death benefit which satisfies the requirements of Section 2(a)
hereof, the Company will be deemed to have been released, to the extent of the
amount of the death benefit for which such policy was sought, from its
obligation hereunder to provide a death benefit to the Beneficiary equal to the
Minimum Death Benefit.
3. Ownership of the Policy.
(a) Subject to the terms and conditions of this Agreement, the
Company shall be the sole owner of the Policy, shall not transfer, assign or
terminate the Policy and shall have the right to exercise all the rights of
ownership with respect to the Policy.
(b) Notwithstanding anything to the contrary in Section 3(a)
hereof, the Company shall be permitted to encumber and to transfer and assign
the Policy in any manner it shall determine necessary or appropriate, subject,
however, in all events to the terms of this Agreement and of the endorsement(s),
designations and settlement options to be filed with the Insurance Company in
accordance with Section 6 hereof. Furthermore the Company shall be permitted to
cancel and terminate any Policy so long as prior to or simultaneous with such
termination or cancellation, a replacement Policy is obtained which satisfies
the terms and conditions of this Agreement.
4. Payment of Premiums on Policy; Income Reporting by the Company. So
long as the Employee is an employee of the Company, this Section 4(a) shall
apply to the premiums due under the Policy until the Company's obligation with
respect to the Policy is terminated pursuant to Section 9 hereof.
(a) The Company shall pay the entire premium due on the
Policy, whether such premium is payable annually, semi-annually, quarterly,
monthly or on some other basis. Premiums due shall be billed to the Company
without notice to the Employee. In the event that any premiums or charges are
waived under the terms of the Policy, the Company shall not pay any part of the
premium or charges so waived.
(b) The portion of the annual payment of premiums by the
Company pursuant to Section 4(a) hereof equal to the Annual Insurance Cost for
each calendar year shall be treated by the Company and the Employee as income of
the Employee for each calendar year for income and employment tax purposes.
5. Dividends. Any dividends that may be received on the
Policy, or any part thereof, shall be applied to purchase additional paid up
insurance on the life of the Employee. In no event shall the Company be under
any obligation whatsoever, however, to acquire a Policy that pays dividends.
6. Split-Dollar Endorsements.
(a) Split-Dollar Endorsement for Policy. Contemporaneous with
the acquisition of the Policy or as soon as possible following acquisition of
the Policy, the Company and the Employee shall complete an endorsement for the
Policy in the form attached hereto as Exhibit "B" or such other form as may be
required by the Insurance Company to grant the Company the right to recover the
amount to which the Company is entitled pursuant to Section 8 hereof, to permit
the Employee to designate a beneficiary and settlement options with respect to
the amount to which the Employee is entitled pursuant to Section 8 hereof, and
such other matters not inconsistent with the terms hereof. Such endorsement
shall be filed with the Insurance Company as soon as possible following
completion by the Company and the Employee. Except to the extent permitted
otherwise in accordance with Section 3(b) hereof, such endorsement shall not be
terminated, altered or amended by the Company, without the express written
notice of the Employee.
(c) Cooperation; Limitation on Changes. The parties hereto
agree to take all action necessary to cause the beneficiary designation and
settlement election provisions of the Policy to conform to the terms hereof.
Except to the extent otherwise provided in Section 3(b) hereof, the Company
shall not terminate, alter or amend beneficiary designation, settlement options
or endorsements provided for herein without the express written consent of the
Employee.
7. The Company's Right to Make Policy Loans. The Company shall have the
right to obtain loans secured by the Policy. These loans may be obtained either
from the Insurance Company or from others. The Company shall have the right to
assign the Policy as security for the repayment of such loans. All interest
charges with respect to any such loans shall be paid by the Company or shall be
paid from the death proceeds of the Policy in accordance with Section 8 hereof.
8. Death Proceeds.
(a) Upon the Employee's death, the Company will cooperate with
the Beneficiary to take whatever action is reasonably necessary to collect the
death benefit provided under the Policy.
(b) Upon the Employee's death, the Company shall have the
unqualified right to receive a portion of the death benefits provided under the
Policy equal to the greater of (i) the Total Company Premium Payments, or (ii)
the Net Cash Surrender Value of the Policy as of the date of the Employee's
death. The balance of the death benefit provided under the Policy, if any, shall
be paid directly to the Beneficiary. No amount shall be paid from such death
benefit to the Beneficiary until the full amount due the Company hereunder has
been paid.
(c) Notwithstanding any provision hereof to the contrary, in
the event that no death benefit is payable under the Policy upon the death of
the Employee pursuant to the Insurance Company's right to contest the death
benefit thereunder, and in lieu thereof the Insurance Company refunds all or any
part of the premiums paid for the Policy, the Company shall have the unqualified
right to receive all such premium refunds, together with any interest thereon,
and the Beneficiary shall be entitled to nothing hereunder.
9. Termination of the Company's Obligation to Make Premium Payments.
The Company's obligation to make premium payments with respect to any Policy
pursuant to this Agreement shall terminate during the Employee's lifetime,
without notice, upon the occurrence of the first of the following events:
(a) The cessation by the Company of the Company's business
through a liquidation or dissolution of the Company (as opposed to the
continuation of the Company's business by a successor to the Company in a merger
or other acquisition transaction);
(b) Termination of the Employee's employment with the Company
for any reason; or
(c) The bankruptcy, receivership or liquidation of the
Company.
10. Disposition of the Policy on Termination of the Company's
Obligation to Make Premium Payments. In the event of termination of the
Company's obligation to make premium payments for any reason, then the Company
may surrender or cancel the Policy for its Net Cash Surrender Value, or it may
change the beneficiary designation provisions of the Policy, naming itself or
any other person or entity as revocable beneficiary thereof, or exercise any
other ownership rights in and to the Policy, without regard to the provisions
hereof. In any event, no person other than the Company and its assignees shall
thereafter have an interest in and to the Policy, either under the terms thereof
or under this Agreement, without regard to the net Cash Surrender Value of the
Policy.
11. Insurance Company Not a Party. The Insurance Company:
(a) shall not be deemed to be a party to this Agreement for
any purpose nor in any way responsible for its validity;
(b) shall not be obligated to inquire as to the distribution
of any monies payable or paid by it under the Policy pursuant to the terms of
this Agreement; and
(c) shall be fully discharged from any and all liability under
the terms of the Policy upon repayment or other performance of its obligations
in accordance with the terms of the Policy.
12. ERISA. The following provisions are part of this Agreement
and are intended to address the application of ERISA to this Agreement:
(a) The Company is hereby designated as the named fiduciary
under this Agreement and shall have the authority to control and manage the
operation and administration of this Agreement, and shall be responsible for
establishing and carrying out a funding policy and method consistent with the
terms of this Agreement. The funding policy under this Agreement is that all
premiums on the Policy be remitted to the Insurance Company when due. Direct
payment by the Insurance Company is the basis of payment of benefits under this
Agreement, with those benefits in turn being based on the payment of premiums as
provided in this Agreement.
(b) (i) If for any reason a claim for benefits under this
Agreement is denied by the Company, the Claims Manager shall deliver to the
claimant a written explanation setting forth the specific reasons for the
denial, pertinent references to the Section(s) of this Agreement on which the
denial is based, such other data as may be pertinent and information on the
procedures to be followed by the claimant in obtaining a review of his claim,
all written in a manner calculated to be understood by the claimant. For this
purpose:
(A) The claimant's claim shall be deemed
filed when presented in writing to the Claims Manager.
(B) The Claims Manager's explanation shall
be in writing delivered to the claimant within 90 days of the
date the claim is filed.
(ii) The claimant shall have 60 days following his receipt of
the denial of the
claim to file with the Claims Manager a written request for review of the
denial. For such review, the claimant or his representative may submit pertinent
documents and written issues and comments.
(iii) The Claims Manager shall decide the issue on review and
furnish the claimant with a copy within 60 days of receipt of the claimant's
request for review of his claim. The decision on review shall be in writing and
shall include specific reasons for the decision, written in a manner calculated
to be understood by the claimant, as well as specific references to the
pertinent Plan provisions on which the decision is based. If a copy of the
decision is not so furnished to the claimant within such 60 days, the claim
shall be deemed denied on review.
(c) It is the intention and agreement of the Company and the
Employee that this Agreement is (i) maintained for a select group of management
or highly compensated employees and thereby exempt from Parts 2, 3, and 4 of
Title I of ERISA, and (ii) described in U.S. Department of Labor Regulation
ss.2520.104-24.
13. Assignability By Employee.
(a) Except as otherwise provided in Section 13(b) hereof, the
Employee's rights under this Agreement are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors of Employee.
(b) Notwithstanding any provision hereof to the contrary, the
Employee shall have the right to assign irrevocably by gift all of the
Employee's right, title and interest in and to this Agreement and the Policy to
an assignee. This right shall be exercisable by the execution and delivery to
the Company of a written assignment, in substantially the form attached hereto
as Exhibit "B." Upon receipt of such written assignment executed by the Employee
and duly accepted by the assignee thereof, the Company shall consent thereto in
writing, and shall thereafter treat the Employee's assignee as the sole owner of
all of the Employee's right, title and interest in and to this Agreement and in
and to the Policy. Thereafter, the Employee shall have no right, title, or
interest in and to this Agreement or the Policy, all such rights being vested in
and exercisable only by such assignee and any reference herein to the "Employee"
shall be deemed to mean such assignee; provided, however, that any reference
herein to termination of employment of the Employee shall continue to mean the
Employee.
14. No Special Employment Rights. Nothing contained in this
Agreement shall be construed or deemed by any person under any circumstances to
bind the Company to continue the employment of Employee for the period of time.
15. Withholding and Employment Taxes. The Company's obligation to make
Policy premium payments in accordance with this Agreement shall be subject to
satisfaction of all applicable federal, state and local income and employment
tax withholding requirements in a manner and form satisfactory to the Company,
which obligations may apply to the Employee whether or not an assignment has
been made pursuant to Section 13(b) hereof.
16. 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.
17. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of Company and its successors and assigns, and Employee,
his respective successors, assigns, heirs, executors, administrators and
beneficiaries.
18. Notices
(a) In Writing; Address. All notices, demands, consents and
other communications provided for in this Agreement shall be in writing, shall
be given by a method prescribed in Section 18(b) hereof, and shall be given to
the party to whom it is addressed at the address set forth below or at such
other address as such party hereto may hereafter specify by at least 15 days'
prior written notice:
If to the Company: IMNET Systems, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxxx XX
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Director of Human Resources
If to Employee: Xxxxxxx X. Xxxxxx
c/o IMNET Systems, Inc.
0000 Xxxxxxxx Xxxxx
Windward Fairways II
Xxxxxxxxxx, Xxxxxxx 00000
(b) Method. Any notice, report or other communication shall be
delivered by hand or nationally recognized overnight courier which maintains
evidence of receipt, or mailed by United States certified mail, return receipt
requested, postage prepaid, deposited in a United States post office or a
depository for the receipt of mail regularly maintained by the Post Office. Any
notices, demands, consents or other communication shall be deemed given when
received at the address for which such party has given notice in accordance with
the provisions hereof. Refusal to accept delivery at the address specified for
the giving of such notice in accordance herewith shall constitute delivery.
19. Governing Law. This Agreement, and the rights of the
parties hereunder, shall be governed by and construed in accordance with ERISA,
and, to the extent not preempted by ERISA, the laws of the State of Georgia.
20. Headings. The headings of the sections of this Agreement
are inserted solely for convenience and are not to be given controlling effect,
or used as an aid in the construction of any provision hereof.
21. Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as the
identity of the person or persons may require.
22. No Waiver. The waiver of any breach of any term, covenant
or condition of this Agreement by any of the parties hereto shall not constitute
a continuing waiver or waiver of any subsequent breach, either of the same or of
any other additional or different term, covenant or condition of this Agreement.
23. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be valid under applicable law, but
if any such provision is invalid or prohibited under said applicable law, such
provision shall be ineffective only to the extent of such invalidity or
prohibition without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
24. Exhibits. All exhibits attached hereto are incorporated
into and made a part of this Agreement without need for any further reference.
25. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
[Signatures on following page]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of date set forth above.
IMNET SYSTEMS, INC.
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
-----------------------------------
Xxxxxxx X. Xxxxxx
1708.1
EXHIBIT A
FORM OF NOTICE TO EMPLOYEE OF POLICY
[ATTACHED]
[Date]
[Name and
Address of Employee]
Re: Split-Dollar Insurance Agreement
Dear ___________:
In accordance with Section 2(a) of that certain IMNET Systems, Inc.
Endorsement Split-Dollar Life Insurance Agreement dated as of ___________ __,
1997 by and between IMNET Systems, Inc. (the "Company") and the undersigned (the
"Agreement") , you are hereby notified that the following life insurance policy
has been obtained by the Company as the "Policy" subject to the Agreement.
Insurance Company -____________________________
Policy Number -
Face Amount - $
Date of (Anticipated) Issue - , ____
------------------------
Please complete the enclosed Split-Dollar Endorsement with respect to
the Policy and return it the undersigned.
IMNET SYSTEMS, INC.
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
Acknowledged and received this _______ day of ____________________, 199___.
----------------------------------
Name: __________________________________
481708.1
481708.1
EXHIBIT B
FORM OF SPLIT-DOLLAR ENDORSEMENT
[ATTACHED]
SPLIT-DOLLAR ENDORSEMENT
REQUEST TO: o CONSENT TO INSURANCE - #1 (Multilife Cases - only)
[Check appropriate o ENDORSEMENT/AMENDMENT TO APPLICATION - #2
Boxes] o BENEFICIARY DESIGNATION - #3
o SMOKER/NONSMOKER CONFIRMATION #4
Employer - IMNET Systems, Inc. Insurance Company -____________________________
PROPOSED INSURED APPLICATION OR POLICY NUMBER
1. CONSENT TO INSURANCE AND CERTIFICATION OF CURRENT EMPLOYMENT:
I consent to my Employer purchasing a life insurance policy on my life
inasmuch as the Policy is issued in connection with a Split-Dollar Life
Insurance Agreement entered into by my Employer and me for my benefit and under
which there exists an insurable interest between my Employer and me. Further, I
certify that I am currently engaged in active full-time work (i.e., working at
least 30 hours per week in a normal capacity and, in particular, not
hospitalized or absent from work due to illness or accident more than a total of
three days in the preceding three month period).
2. SPLIT-DOLLAR POLICY ENDORSEMENT: The following changes and
additional statements are made to the application for insurance on the life
shown above: In the event of the maturity of this Policy by the death of the
Insured, anything herein to the contrary notwithstanding, there shall first be
paid from the Policy proceeds to the Employer, its successor or assigns, an
amount equal to the amount claimed by the Employer to equal the GREATER of the
(i) net cash surrender value of the Policy as of the date of death, or (ii) the
total premiums paid under the Policy, not to exceed in any event the amount
payable under the Policy. Payment by the Insurance Company of a portion or all
of such death proceeds to the Employer, its successors or assigns, in reliance
upon the affidavit of any officer of the Employer as to the amount of such death
proceeds which are due the Employer shall be a full discharge of the Insurance
Company for the amount thereof and shall be binding on all parties having or
claiming any interest under this Policy. I or my assignees shall have the right
to designate the beneficiary or elect an income settlement option with respect
to any portion of the death benefit of the Policy which is in excess if any, of
the amount payable to the Employer, its successors or assigns. The parties to
this document desire this document to constitute the split dollar endorsement to
the Policy. This endorsement and application amendment are not effective until
received and accepted by the Home Office of the Insurance Company, as Evidenced
by Home Office's written confirmation. It is agreed by the undersigned that
these changes and statements shall be incorporated in the application referred
to above as fully and completely as if they had been originally set forth
therein, and shall be subject in all respect to the agreement contained in the
application. This endorsement shall not affect or limit in any way the rights of
the Employer with respect to the Policy upon cancellation or other termination
of the Policy, it being intended to only apply to death benefits.
3. BENEFICIARY DESIGNATION:
I revoke all previous beneficiary designations. Reserving the right to
change the beneficiary, I direct that the death benefit which is not payable to
the Employer, its successors or assigns, be paid in one sum to:
Name: __________________________________
Address: _________________________
-------------------------
Relationship to Insured: _______________________
4. SMOKER/NONSMOKER CONFIRMATION:
Have you smoked any cigarettes within the last 12 months?
Yes No
-------------
Signed at ________________________________ this ____day of
________________________, 199__.
City/State
Applicant and Employer: IMNET SYSTEMS, INC. Employee/Insured:_____________
By: _____________________ Name: ______________
Name:____________________
Title:_____________________
EXHIBIT C
FORM OF IRREVOCABLE ASSIGNMENT
[ATTACHED]
375356.6
IRREVOCABLE ASSIGNMENT OF SPLIT-DOLLAR AGREEMENT
THIS ASSIGNMENT, dated this __ day of __________, 19__.
W I T N E S S E T H
WHEREAS, the undersigned (the "Assignor") is the "Employee" pursuant to
that certain IMNET Systems, Inc. Endorsement Split-Dollar Life Insurance
Agreement (the "Agreement") dated as of _________ __, 1997, by and between the
Assignor and IMNET Systems, Inc., a Delaware corporation (the "Company"), which
Agreement confers upon the undersigned certain rights and benefits with regard
to a policy of insurance (the "Policy") insuring the Assignor's life; and
WHEREAS, pursuant to Section 13(b) of the Agreement, the Assignor
retained the right, exercisable by the execution and delivery to the Company of
a written form of assignment, to absolutely and irrevocably assign all of the
Assignor's right, title and interest in and to said Agreement and Policy to an
assignee; and
WHEREAS, the Assignor desires to exercise such right as hereinafter
provided.
NOW, THEREFORE, the Assignor, without consideration and intending to
make a gift, hereby absolutely and irrevocably assigns, gives, grants and
transfers to __________________________________________________ (the "Assignee")
all of the Assignor's right, title and interest in and to the Agreement and the
Policy, intending that, from and after this date, the Agreement be solely
between the Company and the Assignee and that hereafter the Assignor shall
neither have nor retain any right, title or interest therein or in the Policy.
--------------------------------
--------------------------------
ACCEPTANCE OF ASSIGNMENT
The undersigned Assignee hereby accepts the above assignment of all
right, title and interest of the Assignor therein in and to the Agreement and
the Policy and the undersigned hereby agrees to be bound by all of the terms and
conditions of the Agreement, as if the original "Employee" party thereto.
Dated ___________ __, 19__.
================================
[Company Consent to Assignment on Next Page]
CONSENT TO ASSIGNMENT
The undersigned Company hereby consents to the foregoing assignment of
all of the right, title and interest of the Assignor in and to the Agreement and
the Policy to the Assignee designated therein. The undersigned hereby agrees
that, from and after the date hereof, the undersigned Company shall look solely
to such Assignee for the performance of all obligations under said Agreement
which were heretofore the responsibility of the Assignor, shall allow all rights
and benefits provided therein to the Assignor to be exercised only by said
Assignee, and shall hereafter treat Assignee in all respects as if the original
"Employee" party thereto.
Dated ___________ __, 19__.
IMNET SYSTEMS, INC.
By:
Name:___________________________________
Title:
