LIFE INSURANCE ENDORSEMENT METHOD SPLIT DOLLAR PLAN AGREEMENT
Exhibit
10.20
LIFE
INSURANCE
ENDORSEMENT
METHOD SPLIT DOLLAR PLAN
AGREEMENT
Insurer/Policy
Number:
Bank: Heritage
Bank of Commerce
Insured:
Relationship
of Insured to Bank: Executive
Date:
The
respective rights and duties of the Bank and the Insured in the above
policy(ies) the "Policy" or "Policies" shall be as follows:
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I.
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DEFINITIONS
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Refer to
the Policy provisions for the definition of all terms in this
Agreement.
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II.
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POLICY
TITLE AND OWNERSHIP
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Title and
ownership shall reside in the Bank for its use and for the use of the Insured
all in accordance with this Agreement. The Bank alone may, to the extent of its
interest, exercise the right to borrow or withdraw the Policy cash values. Where
the Bank and the Insured (or beneficiary[ies] or assignee[s], with the consent
of the Insured) mutually agree to exercise the right to increase the coverage
under the subject split dollar Policy, then, in such event, the rights, duties
and benefits of the parties to such increased coverage shall continue to be
subject to the terms of this Agreement.
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III.
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BENEFICIARY
DESIGNATION RIGHTS
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The
Insured (or beneficiary[ies} or assignee[sj) shall have the right and power to
designate a beneficiary or beneficiaries to receive his share of the proceeds
payable upon the death of the Insured, and to elect and change a payment option
for such beneficiary, subject to any right or interest the Bank may have in such
proceeds, as provided in this Agreement.
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IV.
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PREMIUM
PAYMENT METHOD -
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The Bank
shall pay an amount equal to the planned premiums and any other premium payments
that might become necessary to maintain the Policy in force.
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V.
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TAXABLE
BENEFIT
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Annually
the Insured will receive a taxable benefit equal to the assumed cost of
insurance, as required by the Internal Revenue Service. The Bank (or its
administrator) will report to the Insured the amount of imputed income each year
on Form W-2 or its equivalent. In addition, Insured shall be responsible for all
additional appropriate or required taxes, if any.
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VI.
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DIVISION
OF DEATH PROCEEDS
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Subject
to Paragraph VII herein, the division of the death proceeds of the Policy is as
follows:
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1.
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The
Insured’s beneficiary(ies), designated in accordance with Paragraph III,
shall be entitled to an amount equal to Forty Percent (40%) of the
Net-at-Risk insurance portion of the proceeds. The Net-at-Risk insurance
portion is the total proceeds less the cash value of the
Policy.
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2.
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The
Bank shall be entitled to the remainder of such
proceeds.
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3.
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The
Bank and the Insured (or beneficiary[ies] or assignee[s]) shall share in
any interest due on the death proceeds on a pro rata basis in the ratio
that the proceeds due the Bank and the Insured, respectively, bears to the
total proceeds, excluding any such
interest.
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4.
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In
the event that the Policy is terminated other than as a result of (a) a
termination of this Agreement pursuant to paragraph X or (b) any
intentional act of the Insured which results in the termination of the
Policy, then the Bank shall pay to the Insured’s beneficiary(ies) an
amount which will provide a total after-tax death benefit equal to the
benefit that the Insured would have received if the Policy had not been
terminated.
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VII.
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DIVISION
OF CASH SURRENDER VALUE
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The Bank
shall at all times be entitled to an amount equal to the Policy’s cash value, as
that term is defined in the Policy, less any Policy loans and unpaid interest or
cash withdrawals previously incurred by the Bank and any applicable Policy
surrender charges. Such cash value shall be determined as of the date of
surrender of the Policy or death of the Insured as the case may be.
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VIII.
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PREMIUM
WAIVER
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If the
Policy contains a premium waiver provision, any such waived amounts shall be
considered for all purposes of this Agreement as having been paid by the
Bank.
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IX.
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RIGHTS
OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY ELECTION
EXISTS
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In the
event the Policy involves an endowment or annuity element, the Bank’s right and
interest in any endowment proceeds or annuity benefits shall be determined under
the provisions of this Agreement by regarding such endowment proceeds or the
commuted value of such annuity benefits as the Policy’s cash value. Such
endowment proceeds or annuity benefits shall be treated like death proceeds for
the purposes of division under this Agreement.
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X.
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TERMINATION
OF AGREEMENT
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This
Agreement shall terminate at the option of the Bank following thirty (30) days
written notice to the Insured upon the happening of any one of the
following:
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1.
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The
Insured’s right to receive benefits under that certain Supplemental
Executive Retirement Plan, effective as of _____________ , shall terminate
for any reason other than the Insured’s death,
or
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2.
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The
Insured shall be discharged from service with the Bank “for cause”. The
term “for cause” shall mean:
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a.
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The
willful, intentional and material breach or the habitual and continued
neglect by the Executive of his employment responsibilities and
duties;
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b.
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The
Executive’s willful and intentional violation of (i) any state, federal,
banking or securities laws, or of the Bylaws, rules, policies or
resolutions of Employer, or the rules or regulations of the California
Commissioner of Financial Institutions, Board of Governors or the Federal
Reserve System, Federal Deposit Insurance Corporation, or other regulatory
agency or governmental authority having jurisdiction over the Employer,
which has a material adverse effect upon the
Employer;
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c.
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The
Executive’s final conviction after exhaustion of all appeals of (i) any
felony or (ii) a crime involving moral turpitude, or the Executive’s
willful and intentional commission of a fraudulent or dishonest act, which
in any of the foregoing circumstances has a material adverse effect upon
the Employer.
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Upon such
termination, the Insured (or beneficiary[ies] or assignee[s] shall have a ninety
(90) day option to receive from the Bank an absolute assignment of the Policy in
consideration of a cash payment to the Bank, whereupon this Agreement shall
terminate. Such cash payment shall be the greater of:
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1.
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The
Bank’s share of the cash value of the Policy on the date of such
assignment, as defined in this
Agreement.
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2.
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The
amount of the premiums that have been paid by the Bank prior to the date
of such assignment.
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Should
the Insured (or beneflciary[ies] or assignee[s]) fail to exercise this option
within the prescribed ninety (90) thy period, the Insured (or beneflciary[ies]
or assignee[s]) agrees that all of his or her rights, interest and claims in the
Policy shall terminate as of the date of the termination of this
Agreement.
Except as
provided above, this Agreement shall terminate upon distribution of the death
benefit proceeds in accordance with Paragraph VI above.
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XI.
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INSURED’S
OR ASSIGNEE’S ASSIGNMENT RIGHTS
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The
Insured may not, without the prior written consent of the Bank, assign to any
individual, trust or other organization, any right, title or interest in the
Policy nor any rights, options, privileges or duties created under this
Agreement.
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XII.
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AGREEMENT
BINDING UPON THE PARTIES
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This
Agreement shall be binding upon the Insured and the Bank, and their respective
heirs, successors, personal representatives and assigns, as
applicable.
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XIII.
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NAMED
XXXXXXXXX AND PLAN ADMINISTRATOR
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The Bank
is hereby designated the “Named Fiduciary’ until resignation or removal by its
Board of Directors. As Named Fiduciary, the Bank shall be responsible for the
management, control, and administration of this Agreement as established herein.
The Named Fiduciary may allocate to others certain aspects of the management and
operations responsibilities of this Agreement, including the employment of
advisors and the delegation of any ministerial duties to qualified
individuals.
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XIV.
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FUNDING
POLICY
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The
finding Policy for this Agreement shall be to maintain the Policy in force by
paying, when due, all premiums required.
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XV.
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CLAIM
PROCEDURES
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Claim
forms or claim information as to the subject Policy can be obtained by
contacting Benmark, Inc. (800-544-6079). When the Named Fiduciary has a claim
which may be covered under the provisions described in the Policy, it should
contact the office named above, and they will either complete a claim form and
forward it to an authorized representative of the Insurer or advise the named
Fiduciary what further requirements are necessary. The Insurer will evaluate and
make a decision as to payment. If the claim is payable, a benefit check will be
issued to the Named Fiduciary.
In the
event that a claim is not eligible under the Policy, the Insurer will notify the
Named Fiduciary of the denial pursuant to the requirements under the terms of
the Policy. If the Named Fiduciary is dissatisfied with the denial of the claim
and wishes to contest such claim denial, it should contact the office named
above and they will assist in making inquiry to the Insurer. All objections to
the Insurer’s actions should be in writing and submitted to the office named
above for transmittal to the Insurer.
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XVI.
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GENDER
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Whenever
in this Agreement words are used in the masculine, feminine or neuter gender,
they shall be read and construed as in the masculine, feminine or neuter gender,
whenever they should so apply.
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XVII.
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INSURANCE
COMPANY NOT A PARTY TO THIS
AGREEMENT
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The
Insurer shall not be deemed a party to this Agreement, but will respect the
rights of the parties as set forth herein upon receiving an executed copy of
this Agreement. Payment or other performance in accordance with the Policy
provisions shall fully discharge the Insurer from any and all
liability.
IN
WITNESS WHEREOF, the Insured and a duly authorized Bank officer have signed this
Agreement as of the above written date.
HERITAGE
BANK OF
COMMERCE
INSURED
____________________________
____________________________
BENEFICIARY
DESIGNATION FORM
FOR
THE LIFE INSURANCE ENDORSEMENT METHOD
SPLIT
DOLLAR PLAN AGREEMENT
I. PRIMARY
DESIGNATION
(You may refer to the beneficiary
designation information prior to completion of this form.)
A. Person(s)
as a Primary Designation:
(Please indicate the percentage for
each beneficiary)
Name_______________________________ Relationship__________________/__________%
Address:__________________________________________________________________
(State) (City) (State)(Zip)
Name_______________________________ Relationship__________________/__________%
Address:__________________________________________________________________
(State) (City) (State)(Zip)
Name_______________________________ Relationship__________________/__________%
Address:__________________________________________________________________
(State) (City) (State)(Zip)
Name_______________________________ Relationship__________________/__________%
Address:__________________________________________________________________
(State) (City) (State)(Zip)
B. Estate as a Primary
Designation:
My primary Beneficiary is the Estate of
________________________ as set forth in the last will and testament dated the
_________________
day of ___________,
___________ and any codicils thereto.
C. Trust as a Primary
Designation:
Name of the
Trust:_______________________________________
Execution Date of the
Trust: ________________/_______/_______
Name of the
Trustee:_____________________________________
Beneficiary(ies) of the Trust (please
indicate the percentage for each beneficiary):
__________________________________________________________________________
__________________________________________________________________________
Is this an Irrevocable Insurance
Trust? ________Yes ________No
(If yes and this designation is for a
Split Dollar agreement, an Assignment of Rights form should be
completed.)
II. SECONDARY
DESIGNATION
A. Person(s)
as a Secondary (Contingent) Designation:
(Please indicate the percentage for
each beneficiary)
Name_______________________________ Relationship__________________/__________%
Address:__________________________________________________________________
(State) (City) (State)(Zip)
Name_______________________________ Relationship__________________/__________%
Address:__________________________________________________________________
(State) (City) (State)(Zip)
Name_______________________________ Relationship__________________/__________%
Address:__________________________________________________________________
(State) (City) (State)(Zip)
Name_______________________________ Relationship__________________/__________%
Address:__________________________________________________________________
(State) (City) (State)(Zip)
B. Estate as a Secondary
(Contingent) Designation:
My
primary Beneficiary is the Estate of ________________________ as set forth in
the last will and testament dated the _________________
day of ___________, ___________ and any
codicils thereto.
C. Trust as a Primary
(Contingent) Designation:
Name
of the Trust:_______________________________________
Execution Date of the
Trust: ________________/_______/_______
Name
of the Trustee:_____________________________________
Beneficiary(ies) of the Trust (please indicate the
percentage for each beneficiary):
__________________________________________________________________________
__________________________________________________________________________
All sums
payable under the Joint Beneficiary Designation Agreement by reason of my death
shall be paid to the Primary Beneficiary(ies), if he or she survives me, and if
no Primary Beneficiary(ies) shall shall survive me, then to the Secondary
(Contingent) Beneficiary(ies). This beneficiary designation is valid
until the participant notifies the bank in writing.
____________________________ _______________________
Insured Date
NOTE** IF
YOU RESIDE IN A COMMUNITY PROPERTY STATE (ARIZONA, CALIFORNIA, IDAHO, LOUISIANA,
NEVADA, NEW MEXICO, TEXAS, WASHINGTON OR WISCONSIN), AND YOU ARE DESIGNATING A
BENEFICIARY OTHER THAN YOUR SPOUSE, THEN YOUR SPOUSE MUST ALSO SIGN THE
BENEFICIARY DESIGNATION FORM.
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I
am aware that my spouse, the above named Insured has designated someone
other than me to be the beneficiary and waive any rights I may have to the
proceeds of such insurance under applicable community property
laws. I understand that this consent and waiver supersedes any
prior spousal consent or waiver under this plan.
Spouse
Signature:______________________ Date:____________________________
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