Exhibit 10(1)
DEATH BENEFIT ONLY AGREEMENT
THIS AGREEMENT (the "Agreement") is made effective as of the 1st day of January,
2004, by and between the following parties: City Savings Bank, a chartered
thrift of Indiana (the "Bank") and Xxxxx X. Xxxxxxx (the "Executive").
This Agreement between the Bank and the Executive sets forth the terms under
which the Bank will purchase and own a life insurance policy (the "Policy")
insuring the life of the Executive and the death proceeds of the Policy will be
divided between the Bank and the beneficiary designated by the Executive. This
Agreement is made in consideration of the mutual promises contained herein and
other good and valuable consideration, the receipt and adequacy of which hereby
are acknowledged.
I. POLICY TITLE AND OWNERSHIP
The Bank has applied for one or more life insurance policies, hereinafter
collectively referred to as the "Policy," insuring the life of the
Executive. Schedule A, which is attached hereto and incorporated herein by
reference as if fully rewritten, provides the following information with
regard to the Policy: the issuer thereof (the "Insurer"), the death benefit
amount, the policy number, and such other information as therein set forth.
The Bank and the Executive agree to take all necessary action to cause the
Insurer to issue the Policy and to cause the Policy to conform to the
provisions of this Agreement. The Bank and the Executive further agree that
the Policy shall be subject to the terms and conditions of this Agreement.
If the Bank and the Executive mutually agree to increase the coverage under
the Policy, the rights, duties, and benefits of the parties to such
increased coverage shall continue to be subject to the terms of this
Agreement.
The Bank shall be the sole and absolute owner of and shall possess all
incidents of ownership in the Policy and may exercise all ownership rights
granted to the owner thereof by the terms of the Policy except as may be
otherwise provided in this Agreement.
The Bank alone may, to the extent of its interest, exercise the right to
borrow from or withdraw the Policy cash values. The amount of such loans
and withdrawals and any unpaid interest thereon shall at no time exceed the
Part One Share of the Bank as defined in Section VI of this Agreement. The
interest due on any such Policy loans shall be a debt of the Bank owed to
the Insurer.
This Agreement is effective as to a Policy upon execution of this Agreement
or upon issuance of such Policy, whichever is later. The Bank shall be
responsible for safeguarding the Policy.
II. BENEFICIARY DESIGNATION RIGHTS
The Executive shall have the right and power to instruct the Bank from time
to time to designate a beneficiary or beneficiaries (collectively referred
to herein as the "Executive's Beneficiary") to receive the Part One Share
of the proceeds payable under this Agreement upon the death of the
Executive, and to elect a payment option for such Executive's Beneficiary,
subject to any right or interest the Bank may have in such proceeds, as
provided in this Agreement. The Bank agrees to designate the Executive's
Beneficiary for the Part Two Share in such Policy in accordance with the
written direction of the Executive. The parties to this Agreement shall
execute and forward promptly and without unreasonable delay, changes in
beneficiary designation forms and documents, including the Policy, as
required by the Insurer, to effectuate the exercise of any rights of the
parties hereto.
1
III. PREMIUM PAYMENT METHOD
The Bank shall pay amounts equal to the planned premiums and any other
premium payments that might become necessary to keep the Policy in force.
IV. USE OF DIVIDENDS
Dividends declared on the Policy shall be applied as the Bank elects on the
Policy application.
V. DIVISION OF DEATH PROCEEDS
Upon the death of the Executive, the Bank shall cooperate with the
Executive's Beneficiary to take whatever action is necessary to collect the
death benefit provided under the Policy. Subject to Section VII of this
Agreement, the death proceeds of the Policy shall be divided as follows and
paid in the following order to the extent that such proceeds permit. All
payments of proceeds under the Part Two Share will be reduced by
outstanding policy loans or withdrawals made to or by the Bank. When such
death benefit has been collected and paid as provided herein, this
Agreement shall thereupon terminate.
A. Part One Share. First, the Executive's Beneficiary shall be entitled
to an amount known herein as the "Part One Share" which is equal to
three (3) times the previous 12 months W-2 income, as reported to the
Internal Revenue Service.
i) Should the executive continue under uninterrupted full-time
employment with the Bank until normal retirement age of 65, the
Bank shall provide $100,000 of death benefit for the executive's
lifetime
ii) Part Two Share. Second, the Bank shall be entitled to an amount
known herein as the "Part Two Share" which is equal to the
remainder of the proceeds.
VI. OTHER DISPOSITION OF THE POLICY
The Bank may surrender or cancel its portion of the Policy for its share of
the cash surrender value and retain all such value. If the Bank exercises
this option, it must do so in a manner that provides the Executive with the
designated death benefit as outlined in Section V. A.
VII. PREMIUM WAIVER
If the Policy contains a premium waiver provision and such waiver becomes
operative, such waived premium amounts shall be considered for all purposes
of this Agreement as having been paid by the Bank.
VIII. TERMINATION OF AGREEMENT
This Agreement shall terminate upon the final payment of death benefits as
provided under Section V hereof. This Agreement also shall terminate upon
the following:
The Executive shall be discharged from employment with the Bank for cause.
Solely for purposes of this Agreement, "cause" shall mean (a) personal
dishonesty, (b) incompetence, (c) material misconduct, (d) breach of
fiduciary duty involving personal profit, (e) failure to perform duties
required by his employment or failure to perform duties of his position,
(f) willful violation
2
of any law, rule, or regulation (other than traffic violations or similar
offenses) or final cease-and-desist order, or (g) violation of any rule,
prescription or requirement set out in Bank's Personnel Policy, if said
Personnel Policy provides for termination of employment.
If the Executive's employment is terminated for cause, this Agreement shall
terminate as of the date of termination of employment and neither the
Executive nor any person claiming for or through him shall have any further
rights under this Agreement or under the Policy.
The Executive's employment is terminated by voluntary resignation prior to
normal retirement age of 65, this Agreement shall terminate as of the date
of termination of employment and neither the Executive nor any person
claiming for or through him shall have any further rights under this
Agreement or under the Policy.
IX. ASSIGNMENT
Notwithstanding any provision hereof to the contrary, the Executive may,
with the Bank's written consent, absolutely and irrevocably assign by gift
all of his or her 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 Bank of a written assignment, on a form prepared or
approved by the Bank. Upon the Bank's consent to such written assignment
executed by the Executive and duly accepted by the assignee thereof, the
Bank shall indicate its consent thereto in writing and shall thereafter
treat the Executive's assignee as the sole owner of all of the Executive'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. Notwithstanding the foregoing, the
provisions of Section V(A)(i) and (ii) shall be applied by determining the
employment status and/or pension eligibility of the Executive (the
assignor), not the assignee.
The Bank may pledge or assign the Policy, subject to the terms and
conditions of this Agreement, for the sole purpose of securing a loan from
the Insurer or from a third party. The amount of such loan together with
accumulated interest thereon shall not exceed the lesser of the amount of
premiums paid by the Bank on the Policy or the cash surrender value of the
Policy.
X. AGREEMENT BINDING
This Agreement shall be binding upon and inure to the benefit of the Bank
and its successors and assigns, and the Executive and his or her heirs,
successors, personal representatives, executors, administrators, assigns,
and beneficiaries.
XI. NAMED FIDUCIARY AND PLAN ADMINISTRATOR
The Bank is hereby designated the "Named Fiduciary" under this Agreement.
As Named Fiduciary, the Bank shall be responsible for the management,
control, and administration of the split dollar life insurance plan
established herein. The Named Fiduciary may allocate to others certain
aspects of the management and operational responsibilities of the plan
including the employment of advisors and the delegation of any ministerial
duties to qualified individuals.
XII. CLAIMS PROCEDURE
The Named Fiduciary will establish a claims procedure which is consistent
with the requirements of Section 503 of the Employee Retirement Income
Security Act ("ERISA") and the Executive or
3
any Beneficiary claiming any benefit under this Agreement must exhaust such
claims procedure before commencing action in any judicial or administrative
forum.
XIII. GOVERNING LAW
The law of the State of Indiana shall govern this Agreement.
XIV. AMENDMENT OF AGREEMENT
This Agreement may be altered, amended, or modified only by a written
agreement signed by the Bank and the Executive. It shall be the obligation
of the Bank to notify the Insurer of any amendments or changes to this
Agreement.
XV. INTERPRETATION OF AGREEMENT
The Bank, as the Named Fiduciary, shall have sole discretion to interpret
each and all provisions of this Agreement and to determine the eligibility
of any person for benefits under this Agreement. All such determinations of
the Bank shall be binding on all persons concerned. Where appropriate in
this Agreement, words used in the singular shall include the plural and
works used in the masculine shall include the feminine and vice versa.
XVI. INSURER NOT A PARTY TO THIS AGREEMENT
The Insurer shall not be deemed a party to this Agreement. The Insurer
shall be fully discharged from its obligations under the Policy by payment
of the Policy death benefit to the beneficiary or beneficiaries named in
the Policy, subject to the terms and conditions of the Policy. No provision
of this Agreement or any amendment or modification thereto shall in any way
be construed as enlarging, changing, varying, or in any other way affecting
the obligations of the Insurer except insofar as the provisions hereof are
made a part of the Policy by the beneficiary designation executed by the
Bank and filed with the Insurer in connection herewith.
Executed at Michigan City, Indiana this 1st day of January, 2004
City Savings Bank
Witness: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx Xxxxxxx
--------------------------- ---------------------------------
Title: President
------------------------------
Xxxxx X. Xxxxxxx
Witness: /s/ Xxxxxx X. Xxxxx Signed: /s/ Xxxxx X. Xxxxxxx
--------------------------- -----------------------------
4
DEATH BENEFIT ONLY AGREEMENT
SCHEDULE A
Insurer: New York Life & Mass Mutual
Policy Number:
Bank: City Savings Bank
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
Executive: Xxxxx X. Xxxxxxx
Relationship of
Bank to Executive: Employer
Agent: Xxxxxxx X. Xxxxxxxx, CLU
First Financial Resources
000 XX Xxxxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Ph. 503-224-1335
Toll Free: 000-000-0000
Fax. 000-000-0000
xx@xxxxxxxxxxxx.xxx
Xxx Xxxxx, MBA, CLU, ChFC
000 Xxxx Xxxxxx Xxxxxxxxxx,
XX 00000
Ph. 219-548-3292
Toll Free: 000-000-0000
Fax. 000-000-0000
xxxxxxx@xxxxxxx.xxx
5
DEATH BENEFIT AGREEMENT
BENEFICIARY DESIGNATION FORM
The Executive hereby directs the Bank to designate the following person(s) as
his or her beneficiaries for purposes of the Agreement:
Primary Beneficiary:
Percentage
Name: Relationship of Proceeds
-------------------------------- ------------------------ ----------
-------------------------------- ------------------------ ----------
-------------------------------- ------------------------ ----------
-------------------------------- ------------------------ ----------
Contingent Beneficiary:
Percentage
(a) Name Relationship of Proceeds
-------------------------------- ------------------------- ----------
-------------------------------- ------------------------- ----------
-------------------------------- ------------------------- ----------
---------------------------------------------- ---------------------
Signature of Executive Date
