Exhibit 99.1
SOUTHCOAST FINANCIAL CORPORATION
ENDORSEMENT SPLIT DOLLAR AGREEMENT
This ENDORSEMENT SPLIT DOLLAR AGREEMENT (this "Agreement") is entered
into as of this ___ day of _________, by and between Southcoast Financial
Corporation, a South Carolina corporation ("Southcoast"), and ___________ an
executive of Southcoast (the "Executive").
WHEREAS, to encourage the Executive to remain an employee of
Southcoast, Southcoast is willing to divide the death proceeds of a life
insurance policy on the Executive's life, and
WHEREAS, Southcoast will pay life insurance premiums from its general
assets.
NOW THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows.
ARTICLE 1
GENERAL DEFINITIONS
Capitalized terms not otherwise defined in this Agreement are used
herein as defined in the January 1, 2008 Salary Continuation Agreement between
Southcoast Community Bank, a wholly owned subsidiary of Southcoast, and the
Executive. The following terms shall have the meanings specified.
1.1 "Administrator" means the administrator described in Article 7.
1.2 "Executive's Interest" means the benefit set forth in section 2.2.
1.3 "Insured" means the Executive.
1.4 "Insurer" means each life insurance carrier for which there is a
Split Dollar Policy Endorsement attached to this Agreement.
1.5 "Net Death Proceeds" means the total death proceeds of the Policy
minus the cash surrender value immediately prior to the Executive's death.
1.6 "Policy" means the specific life insurance policy or policies
issued by the Insurer.
1.7 "Split Dollar Policy Endorsement" means the form required by the
Administrator or the Insurer to indicate the Executive's interest, if any, in a
Policy on the Executive's life.
ARTICLE 2
POLICY OWNERSHIP/INTERESTS
2.1 Southcoast Ownership. Southcoast is the sole owner of the Policy
and shall have the right to exercise all incidents of ownership. Southcoast
shall be the beneficiary of the remaining death proceeds of the Policy after the
Executive's interest is paid according to section 2.2 below.
2.2 Death Benefit. Provided the Executive's death occurs (x) before the
earlier of the date of the Executive's Separation from Service or the date that
is six months after the date on which the Executive attains age 70 or (y) after
a Change in Control that occurs before the Executive's Separation from Service,
at the Executive's death the Executive's beneficiary designated in accordance
with the Split Dollar Policy Endorsement shall be entitled to 100% of the Net
Death Proceeds (the "Executive's Interest"). Unless a Change in Control occurs
before the Executive's Separation from Service, the Executive's Interest shall
be extinguished at the earlier of the date of the Executive's Separation from
Service or the date that is six months after the date on which the Executive
attains age 70 and the Executive's beneficiary shall be entitled to no benefits
under this Agreement for the Executive's death occurring thereafter. If a Change
in Control occurs before the Executive's Separation from Service, at the
Executive's death the Executive's beneficiary designated in accordance with the
Split Dollar Policy Endorsement shall be entitled to the Executive's Interest
whether the Executive dies before or after Separation from Service. The
Executive shall have the right to designate the beneficiary of the Executive's
Interest.
2.3 Comparable Coverage. Southcoast shall maintain the Policy in full
force and effect. Southcoast may not amend, terminate, or otherwise abrogate the
Executive's interest in the Policy unless Southcoast replaces the Policy with a
comparable insurance policy to cover the benefit provided under this Agreement
and executes a new split dollar agreement and endorsement for the comparable
insurance policy. The Policy or any comparable policy shall be subject to claims
of Southcoast's creditors.
2.4 Internal Revenue Code Section 1035 Exchanges. The Executive
recognizes and agrees that Southcoast may after this Agreement is adopted wish
to exchange the Policy of life insurance on the Executive's life for another
contract of life insurance insuring the Executive's life. Provided that the
Policy is replaced or intended to be replaced with a comparable policy of life
insurance, the Executive agrees to provide medical information and cooperate
with medical insurance-related testing required by a prospective insurer for
implementing the Policy or, if necessary, for modifying or updating to a
comparable insurer.
ARTICLE 3
PREMIUMS
3.1 Premium Payment. Southcoast shall pay any premiums due on the
Policy.
3.2 Economic Benefit. The Administrator shall annually determine the
economic benefit attributable to the Executive based on the life insurance
premium factor for the Executive's age multiplied by the aggregate death benefit
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payable to the Executive's beneficiary. The "life insurance premium factor" is
the minimum factor applicable under guidance published pursuant to Treasury Reg.
section 1.61-22(d)(3)(ii) or any subsequent authority.
3.3 Imputed Income. (a) Southcoast shall impute the economic benefit to
the Executive on an annual basis, by adding the economic benefit to the
Executive's W-2, or if applicable, Form 1099.
ARTICLE 4
ASSIGNMENT
The Executive may irrevocably assign without consideration all of the
Executive's interest in the Policy and in this Agreement to any person, entity,
or trust established by the Executive or the Executive's spouse. If the
Executive transfers all of the Executive's interest in the Policy, all of the
Executive's interest in the Policy and in the Agreement shall be vested in the
Executive's transferee, who shall be substituted as a party hereunder and the
Executive shall have no further interest in this Agreement.
ARTICLE 5
INSURER
The Insurer shall be bound by the terms of the Policy only. The Insurer
shall not be bound by the provisions of this Agreement.
ARTICLE 6
CLAIMS AND REVIEW PROCEDURES
6.1 Claims Procedure. Any person or entity who has not received
benefits under this Agreement that he or she believes should be paid (the
"claimant") shall make a claim for benefits as follows -
6.1.1 Initiation - written claim. The claimant initiates a
claim by submitting to the Administrator a written claim for the
benefits. If the claim relates to the contents of a notice received by
the claimant, the claim must be made within 60 days after the notice
was received by the claimant. All other claims must be made within 180
days after the date of the event that caused the claim to arise. The
claim must state with particularity the determination desired by the
claimant.
6.1.2 Timing of Administrator response. The Administrator
shall respond to the claimant within 90 days after receiving the claim.
If the Administrator determines that special circumstances require
additional time for processing the claim, the Administrator can extend
the response period by an additional 90 days by notifying the claimant
in writing, before the end of the initial 90-day period, that an
additional period is required. The notice of extension must set forth
the special circumstances and the date by which the Administrator
expects to render its decision.
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6.1.3 Notice of decision. If the Administrator denies part or
all of the claim, the Administrator shall notify the claimant in
writing of the denial. The Administrator shall write the notification
in a manner calculated to be understood by the claimant. The
notification shall set forth -
(a) The specific reasons for the denial,
(b) A reference to the specific provisions of this
Agreement on which the denial is based,
(c) A description of any additional information or
material necessary for the claimant to perfect the
claim and an explanation of why it is needed,
(d) An explanation of the Agreement's review
procedures and the time limits applicable to such
procedures, and
(e) A statement of the claimant's right to bring a
civil action under ERISA section 502(a) after an
adverse benefit determination on review.
6.2 Review Procedure. If the Administrator denies part or all of the
claim, the claimant shall have the opportunity for a full and fair review by the
Administrator of the denial, as follows -
6.2.1 Initiation - written request. To initiate the review,
the claimant must file with the Administrator a written request for
review within 60 days after receiving the Administrator's notice of
denial.
6.2.2 Additional submissions - information access. The
claimant shall then have the opportunity to submit written comments,
documents, records, and other information relating to the claim. Upon
request and free of charge, the Administrator shall also provide the
claimant reasonable access to and copies of all documents, records, and
other information relevant (as defined in applicable ERISA regulations)
to the claimant's claim for benefits.
6.2.3 Considerations on review. In considering the review, the
Administrator shall take into account all materials and information the
claimant submits relating to the claim, without regard to whether the
information was submitted or considered in the initial benefit
determination.
6.2.4 Timing of Administrator response. The Administrator
shall respond in writing to the claimant within 60 days after receiving
the request for review. If the Administrator determines that special
circumstances require additional time for processing the claim, the
Administrator can extend the response period by an additional 60 days
by notifying the claimant in writing before the end of the initial
60-day period that an additional period is required. The notice of
extension must set forth the special circumstances and the date by
which the Administrator expects to render its decision.
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6.2.5 Notice of decision. The Administrator shall notify the
claimant in writing of its decision on review. The Administrator shall
write the notification in a manner calculated to be understood by the
claimant. The notification shall set forth -
(a) The specific reasons for the denial,
(b) A reference to the specific provisions of
the Agreement on which the denial is based,
(c) A statement that the claimant is entitled to
receive, upon request and free of charge,
reasonable access to and copies of all
documents, records, and other information
relevant (as defined in applicable ERISA
regulations) to the claimant's claim for
benefits, and
(d) A statement of the claimant's right to bring
a civil action under ERISA section 502(a).
ARTICLE 7
ADMINISTRATION OF AGREEMENT
7.1 Administrator Duties. This Agreement shall be administered by an
Administrator, which shall consist of Southcoast's board of directors or such
committee as the board shall appoint. The Executive may not be a member of the
Administrator. The Administrator shall have the discretion and authority to (x)
make, amend, interpret, and enforce all appropriate rules and regulations for
the administration of this Agreement and (y) decide or resolve any and all
questions that may arise, including interpretations of this Agreement.
7.2 Agents. In the administration of this Agreement, the Administrator
may employ agents and delegate to them such administrative duties as it sees fit
(including acting through a duly appointed representative) and may from time to
time consult with counsel, who may be counsel to Southcoast.
7.3 Binding Effect of Decisions. The decision or action of the
Administrator concerning any question arising out of the administration,
interpretation, and application of this Agreement and the rules and regulations
promulgated hereunder shall be final and conclusive and binding upon all persons
having any interest in the Agreement.
7.4 Indemnification of Administrator. Southcoast shall indemnify and
hold harmless the members of the Administrator against any and all claims,
losses, damages, expenses, or liabilities arising from any action or failure to
act with respect to this Agreement, except in the case of willful misconduct by
the Administrator or any of its members.
7.5 Information. To enable the Administrator to perform its functions,
Southcoast shall supply full and timely information to the Administrator on all
matters relating to the date and circumstances of the retirement, death, or
Separation from Service of the Executive, and such other pertinent information
as the Administrator may reasonably require.
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ARTICLE 8
MISCELLANEOUS
8.1 Amendment and Termination of Agreement. This Agreement may be
amended or terminated solely by a written agreement signed by Southcoast and the
Executive. However, this Agreement shall terminate upon the first to occur of
(x) distribution of the death benefit proceeds in accordance with section 2.2
above, or (y) the earlier of the date of the Executive's Separation from Service
or the date that is six months after the date on which the Executive attains age
70, except that this Agreement shall not terminate if a Change in Control occurs
before the Executive's Separation from Service (provided Separation from Service
does not occur six months or more after the Executive attains age 70), or (z)
termination of the January 1, 2008 Salary Continuation Agreement between
Southcoast Community Bank and the Executive under Article 5 of that agreement.
8.2 Binding Effect. This Agreement shall bind the Executive and
Southcoast and their beneficiaries, survivors, executors, administrators, and
transferees, and any Policy beneficiary.
8.3 No Guarantee of Employment. This Agreement is not an employment
policy or contract. It does not give the Executive the right to remain an
employee of Southcoast nor does it interfere with Southcoast's right to
discharge the Executive. It also does not require the Executive to remain an
employee or interfere with the Executive's right to terminate employment at any
time.
8.4 Successors; Binding Agreement. By an assumption agreement in form
and substance satisfactory to the Executive, Southcoast shall require any
successor (whether direct or indirect, by purchase, merger, consolidation, or
otherwise) to all or substantially all of the business or assets of Southcoast
to expressly assume and agree to perform this Agreement in the same manner and
to the same extent that Southcoast would be required to perform this Agreement
if no succession had occurred.
8.5 Applicable Law. This Agreement and all rights hereunder shall be
governed by and construed according to the laws of the State of South Carolina,
except to the extent preempted by the laws of the United States of America.
8.6 Entire Agreement. This Agreement constitutes the entire agreement
between Southcoast and the Executive concerning the subject matter. No rights
are granted to the Executive under this Agreement other than those specifically
set forth.
8.7 Severability. If any provision of this Agreement is held invalid,
such invalidity shall not affect any other provision of this Agreement not held
invalid, and each such other provision shall continue in full force and effect
to the full extent consistent with law. If any provision of this Agreement is
held invalid in part, such invalidity shall not affect the remainder of the
provision not held invalid, and the remainder of the provision together with all
other provisions of this Agreement shall continue in full force and effect to
the full extent consistent with law.
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8.8 Headings. Headings and subheadings herein are included solely for
convenience of reference and shall not affect the meaning or interpretation of
any provision of this Agreement.
8.9 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed, certified or registered mail, return receipt
requested, with postage prepaid, to the following addresses or to such other
address as either party may designate by like notice. Unless otherwise changed
by notice, notice shall be properly addressed to the Executive if addressed to
the address of the Executive on the books and records of Southcoast at the time
of the delivery of such notice, and properly addressed to Southcoast if
addressed to the board of directors, Southcoast Financial Corporation, 000
Xxxxxxx Xxxxx Xxxxxxxxx, Xxxxx Xxxxxxxx, Xxxxx Xxxxxxxx 00000.
IN WITNESS WHEREOF, the Executive and a duly authorized representative
of Southcoast have executed this Endorsement Split Dollar Agreement as of the
date first written above.
EXECUTIVE: SOUTHCOAST:
Southcoast Financial Corporation
______________ By: _______________________
Its:
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AGREEMENT TO COOPERATE WITH INSURANCE UNDERWRITING INCIDENT
TO INTERNAL REVENUE CODE SECTION 1035 EXCHANGE
I acknowledge that I have read the Endorsement Split Dollar Agreement
and agree to be bound by its terms, particularly the covenant on my part set
forth in section 2.4 of the Endorsement Split Dollar Agreement to provide
medical information and cooperate with medical insurance-related testing
required by an insurer to issue a comparable insurance policy to cover the
benefit provided under this Endorsement Split Dollar Agreement.
------------------------ -------------------------------------
Witness
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SPLIT DOLLAR POLICY ENDORSEMENT
Insured: ______________
Insurer: Massachusetts Mutual Life Insurance Company
Policy No.: ______________
According to the terms of the Southcoast Financial Corporation
Endorsement Split Dollar Agreement dated as of , 2007, the undersigned Owner
requests that the above-referenced policy issued by the Insurer provide for the
following beneficiary designation and limited contract ownership rights to the
Insured:
1. Upon the death of the Insured, proceeds shall be paid in one sum to
the Owner, its successors or assigns, to the extent of the Owner's interest in
the policy. It is hereby provided that the Insurer may rely solely upon a
statement from the Owner as to the amount of proceeds it is entitled to receive
under this paragraph.
2. Any proceeds at the death of the Insured in excess of the amount
paid under the provisions of the preceding paragraph shall be paid in one sum
to:
--------------------------------------------------------------------------------
PRIMARY BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER
--------------------------------------------------------------------------------
CONTINGENT BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER
The exclusive rights to change the beneficiary for the proceeds payable under
this paragraph and to assign all rights and interests granted under this
paragraph 2 are hereby granted to the Insured. The sole signature of the Insured
shall be sufficient to exercise the rights. The Owner retains all contract
rights not granted to the Insured under this paragraph.
3. It is agreed by the undersigned that this designation and limited
assignment of rights shall be subject in all respects to the contractual terms
of the policy.
4. Any payment directed by the Owner under this endorsement shall be a
full discharge of the Insurer, and such discharge shall be binding on all
parties claiming any interest under the policy.
5. This Split Dollar Policy Endorsement supersedes and replaces all
prior endorsements of the Insured relating to the above-referenced policy issued
by the Insurer.
6. The exercise by the Owner of the right to surrender the policy shall
terminate the rights of the Insured.
7. The Owner of the policy is Southcoast Financial Corporation. The
Owner alone may exercise all policy rights, except that the Owner will not have
the rights specified in paragraph 2 of this Split Dollar Policy Endorsement.
The undersigned for the Owner is signing in a representative capacity
and warrants that he or she has the authority to bind the entity on whose behalf
this document is executed.
Signed at Mt. Pleasant, South Carolina this _______ day of ___________,
2007.
INSURED: OWNER:
Southcoast Financial Corporation
By: ____________________________
___________________________
Its: ____________________________
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SPLIT DOLLAR POLICY ENDORSEMENT
Insured: ______________
Insurer: Security Life of Denver Insurance Company
Policy No.: ______________
According to the terms of the Southcoast Financial Corporation
Endorsement Split Dollar Agreement dated as of , 2007, the undersigned Owner
requests that the above-referenced policy issued by the Insurer provide for the
following beneficiary designation and limited contract ownership rights to the
Insured:
1. Upon the death of the Insured, proceeds shall be paid in one sum to
the Owner, its successors or assigns, to the extent of the Owner's interest in
the policy. It is hereby provided that the Insurer may rely solely upon a
statement from the Owner as to the amount of proceeds it is entitled to receive
under this paragraph.
2. Any proceeds at the death of the Insured in excess of the amount
paid under the provisions of the preceding paragraph shall be paid in one sum
to:
--------------------------------------------------------------------------------
PRIMARY BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER
--------------------------------------------------------------------------------
CONTINGENT BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER
The exclusive rights to change the beneficiary for the proceeds payable under
this paragraph and to assign all rights and interests granted under this
paragraph 2 are hereby granted to the Insured. The sole signature of the Insured
shall be sufficient to exercise the rights. The Owner retains all contract
rights not granted to the Insured under this paragraph.
3. It is agreed by the undersigned that this designation and limited
assignment of rights shall be subject in all respects to the contractual terms
of the policy.
4. Any payment directed by the Owner under this endorsement shall be a
full discharge of the Insurer, and such discharge shall be binding on all
parties claiming any interest under the policy.
5. This Split Dollar Policy Endorsement supersedes and replaces all
prior endorsements of the Insured relating to the above-referenced policy issued
by the Insurer.
6. The exercise by the Owner of the right to surrender the policy shall
terminate the rights of the Insured.
7. The Owner of the policy is Southcoast Financial Corporation. The
Owner alone may exercise all policy rights, except that the Owner will not have
the rights specified in paragraph 2 of this Split Dollar Policy Endorsement.
The undersigned for the Owner is signing in a representative capacity
and warrants that he or she has the authority to bind the entity on whose behalf
this document is executed.
Signed at Mt. Pleasant, South Carolina this ____ day of __________,
2007.
INSURED: OWNER:
Southcoast Financial Corporation
By: ____________________________
_____________________________
Its: ____________________________
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SPLIT DOLLAR POLICY ENDORSEMENT
Insured: ______________
Insurer: New York Life Insurance Company
Policy No.: ______________
According to the terms of the Southcoast Financial Corporation
Endorsement Split Dollar Agreement dated as of , 2007, the undersigned Owner
requests that the above-referenced policy issued by the Insurer provide for the
following beneficiary designation and limited contract ownership rights to the
Insured:
1. Upon the death of the Insured, proceeds shall be paid in one sum to
the Owner, its successors or assigns, to the extent of the Owner's interest in
the policy. It is hereby provided that the Insurer may rely solely upon a
statement from the Owner as to the amount of proceeds it is entitled to receive
under this paragraph.
2. Any proceeds at the death of the Insured in excess of the amount
paid under the provisions of the preceding paragraph shall be paid in one sum
to:
--------------------------------------------------------------------------------
PRIMARY BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER
--------------------------------------------------------------------------------
CONTINGENT BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER
The exclusive rights to change the beneficiary for the proceeds payable under
this paragraph and to assign all rights and interests granted under this
paragraph 2 are hereby granted to the Insured. The sole signature of the Insured
shall be sufficient to exercise the rights. The Owner retains all contract
rights not granted to the Insured under this paragraph.
3. It is agreed by the undersigned that this designation and limited
assignment of rights shall be subject in all respects to the contractual terms
of the policy.
4. Any payment directed by the Owner under this endorsement shall be a
full discharge of the Insurer, and such discharge shall be binding on all
parties claiming any interest under the policy.
5. This Split Dollar Policy Endorsement supersedes and replaces all
prior endorsements of the Insured relating to the above-referenced policy issued
by the Insurer.
6. The exercise by the Owner of the right to surrender the policy shall
terminate the rights of the Insured.
7. The Owner of the policy is Southcoast Financial Corporation. The
Owner alone may exercise all policy rights, except that the Owner will not have
the rights specified in paragraph 2 of this Split Dollar Policy Endorsement.
The undersigned for the Owner is signing in a representative capacity
and warrants that he or she has the authority to bind the entity on whose behalf
this document is executed.
Signed at Mt. Pleasant, South Carolina this ___ day of ____________,
2007.
INSURED: OWNER:
Southcoast Financial Corporation
By: ____________________________
_____________________________ Its: ____________________________
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SPLIT DOLLAR POLICY ENDORSEMENT
Insured: ______________
Insurer: West Coast Life Insurance Company
Policy No.: ______________
According to the terms of the Southcoast Financial Corporation
Endorsement Split Dollar Agreement dated as of , 2007, the undersigned Owner
requests that the above-referenced policy issued by the Insurer provide for the
following beneficiary designation and limited contract ownership rights to the
Insured:
1. Upon the death of the Insured, proceeds shall be paid in one sum to
the Owner, its successors or assigns, to the extent of the Owner's interest in
the policy. It is hereby provided that the Insurer may rely solely upon a
statement from the Owner as to the amount of proceeds it is entitled to receive
under this paragraph.
2. Any proceeds at the death of the Insured in excess of the amount
paid under the provisions of the preceding paragraph shall be paid in one sum
to:
--------------------------------------------------------------------------------
PRIMARY BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER
--------------------------------------------------------------------------------
CONTINGENT BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER
The exclusive rights to change the beneficiary for the proceeds payable under
this paragraph and to assign all rights and interests granted under this
paragraph 2 are hereby granted to the Insured. The sole signature of the Insured
shall be sufficient to exercise the rights. The Owner retains all contract
rights not granted to the Insured under this paragraph.
3. It is agreed by the undersigned that this designation and limited
assignment of rights shall be subject in all respects to the contractual terms
of the policy.
4. Any payment directed by the Owner under this endorsement shall be a
full discharge of the Insurer, and such discharge shall be binding on all
parties claiming any interest under the policy.
5. This Split Dollar Policy Endorsement supersedes and replaces all
prior endorsements of the Insured relating to the above-referenced policy issued
by the Insurer.
6. The exercise by the Owner of the right to surrender the policy shall
terminate the rights of the Insured.
7. The Owner of the policy is Southcoast Financial Corporation. The
Owner alone may exercise all policy rights, except that the Owner will not have
the rights specified in paragraph 2 of this Split Dollar Policy Endorsement.
The undersigned for the Owner is signing in a representative capacity
and warrants that he or she has the authority to bind the entity on whose behalf
this document is executed.
Signed at Mt. Pleasant, South Carolina this ___ day of __________,
2007.
INSURED: OWNER:
Southcoast Financial Corporation
By: ____________________________
______________________________ Its: ____________________________
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