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EXHIBIT 10.9
FLEXIBLE PREMIUM LIFE INSURANCE
ENDORSEMENT METHOD SPLIT DOLLAR PLAN AGREEMENT
Insurer: Security Life of Denver
Policy Number: 001079232
Bank: Heritage Bank
Insured: Xxxxxx X. Xxxxxxxx
Relationship of Bank to Insured: Employer
The respective rights and duties of the Bank and the Insured in the
subject policy shall be as defined in the following:
I. DEFINITIONS
Refer to the policy contract for the definition of all terms in this
Agreement.
II. POLICY TITLE AND OWNERSHIP
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 on the
policy cash values. Where the Bank and the Insured (or assignee, 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.
III. BENEFICIARY DESIGNATION RIGHTS
The Insured (or assignee) shall have the right and power to designate a
beneficiary(ies) 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.
IV. PREMIUM PAYMENT METHOD
The Bank shall pay an amount equal to the planned premiums and any
other premium payments that might become necessary to keep the policy in force.
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V. TAXABLE BENEFIT
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 Employee the amount of imputed income
received each year on Form W2 or its equivalent.
VI. DIVISION OF DEATH PROCEEDS
Subject to Paragraph VII herein, the division of the death proceeds of
the policy is as follows:
A. The Insured's beneficiary(ies), designated in accordance with
Paragraph III, shall be entitled to an amount equal to seventy
five percent (75%) 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.
B. Should the Insured not be employed by the Bank at the time of
his or her death, the Insured's beneficiary(ies), designated
in accordance with Paragraph III, shall be entitled to the
following percentage of the proceeds described in subparagraph
VI(A) hereinabove that corresponds to the year of service the
Insured served with the Bank:
Total Years
of Employment
with the Bank Vested
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1 10%
2 20%
3 30%
4 40%
5 50%
6 60%
7 70%
8 80%
9 90%
10 100%
C. The Bank shall be entitled to the remainder of such proceeds.
D. The Bank and the Insured (or assignees) shall share in any
interest due on the death proceeds on a pro rata basis as the
proceeds due each respectively bears to the total proceeds,
excluding any such interest.
VII. DIVISION OF THE CASH SURRENDER VALUE OF THE POLICY
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 contract, less any
policy loans and unpaid interest or cash
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withdrawals previously incurred by the Bank and any applicable surrender
charges. Such cash value shall be determined as of the date of surrender or
death as the case may be.
VIII. PREMIUM WAIVER
If the policy contains a premiums waiver provision, such waived amounts
shall be considered for all purposes of this Agreement as having been paid by
the Bank.
IX. RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY
ELECTION EXISTS
In the event the policy involves an endowment or annuity element, the
Bank's right and interest in any endowment proceeds or annuity benefits, on
expiration of the deferment period, 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 considered to be like death proceeds for the purposes
of division under this Agreement.
X. TERMINATION OF AGREEMENT
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:
A. The Insured shall leave the employ of the Bank (voluntarily or
involuntarily) prior to 10 years of service with the Bank
subject to limited death benefit as described in section
VI(B), or
B. The Insured shall be discharged from employment with the Bank
for cause. Termination of Employment with cause ("Cause")
shall mean the Bank may terminate employment of a Participant
for the following reasons:
1. Engaging in willful misconduct that is materially
injurious to Bank;
2. Embezzlement or misappropriation of funds or property
of Bank by a Participant or the conviction of a
Participant of a felony or the entrance of a plea of
guilty by a Participant to a felony;
3. Failure or refusal by a Participant to devote his or
her frill business time and attention to the
performance of his or her duties and responsibilities
if such breach has not been cured by such Participant
within thirty (30) days after notice has been given
to a Participant; and
4. Any Federal or state statutes or regulations which
require Bank, upon direction of the appropriate
regulatory agency, to prohibit employment of a
Participant in the business of banking or to require
Bank to file a
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suspicious activities report because such Participant
has been convicted of or suspected of a crime
involving fraud, dishonesty, moral turpitude or
breach of trust.
Upon such termination, the Insured (or assignee) 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:
A. The Bank's share of the cash value of the policy on the date
of such assignment, as defined in this Agreement.
B. The amount of the premiums which have been paid by the Bank
prior to the date of such assignment.
Should the Insured (or assignee) fail to exercise this option within
the prescribed ninety (90) day period, the Insured (or assignee) agrees that all
of his 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.
XI. INSURED'S OR ASSIGNEE'S ASSIGNMENT RIGHTS
The Insured may not, without the written consent of the Bank, assign to
any individual, trust or other organization, any right, title or interest in the
subject policy nor any rights, options, privileges or duties created under this
Agreement.
XII. AGREEMENT BINDING UPON THE PARTIES
This Agreement shall bind the Insured and the Bank, their heirs,
successors, personal representatives and assigns.
XIII. NAMED XXXXXXXXX AND PLAN ADMINISTRATOR
Xxxxxx X. Xxxxxxxx is hereby designated the "Named Fiduciary" until
resignation or removal by the Board of Directors. As Named Fiduciary, Xxxxxx X.
Xxxxxxxx shall be responsible for the management, control, and administration of
this Split Dollar Plan as established herein. The Named Fiduciary may allocate
to others certain aspects of the management and operation responsibilities of
the plan, including the employment of advisors and the delegation of any
ministerial duties to qualified individuals.
XIV. FUNDING POLICY
The funding policy for this Split Dollar Plan shall be to maintain the
subject policy in force by paying, when due, all premiums required.
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XV. CLAIMS PROCEDURE FOR LIFE INSURANCE POLICY AND SPLIT DOLLAR PLAN
Claim forms or claim information as to the subject policy can be
obtained by contacting Executive Benefit Administrators, Ltd. (303-758-2340).
When the Named Fiduciary has a claim which may be covered under the provisions
described in the insurance policy, he 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, he 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.
XVI. GENDER
Whenever in this Agreement words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine, feminine or neuter
gender, whenever they should so apply.
XVII. INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT
The Insurer shall not be deemed a party to this Agreement, but will
respect the rights of the parties as herein developed upon receiving an executed
copy of this Agreement. Payment or other performance in accordance with the
policy provisions shall fully discharge the Insurer for any and all liability.
Executed at Lafayette, CO this 28 day of July, 1999.
Heritage Bank
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxx X. Xxxx
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Witness Title: Chief Operating Officer
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
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Witness Xxxxxx X. Xxxxxxxx
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