LIFE INSURANCE
ENDORSEMENT METHOD SPLIT DOLLAR PLAN
AGREEMENT
Insurer: Jefferson Pilot Life Insurance Company
Mass Mutual Life Insurance Company
Policy Number: JP5221298
0000000
Bank: The East Carolina Bank
Insured: X. Xxxxxx Xxxxx, Xx.
Relationship of Insured to Bank: Executive
Trust: Rabbi Trust for the Executive Supplemental
Retirement Plan Agreement, Director
Supplemental Retirement Plan Agreement, and
the Endorsement Method Split Dollar Plan
Agreement
The respective rights and duties of the Bank and the Insured in the
above-referenced policy shall be pursuant to the terms set forth below:
I. DEFINITIONS
Refer to the policy contract for the definition of any terms in this
Agreement that are not defined herein. If a definition of a term in the
policy is inconsistent with the definition of a term in this Agreement,
then the definition of the term as set forth in this Agreement shall
supersede and replace the definition of the terms as set forth in the
policy.
II. POLICY TITLE AND OWNERSHIP
Title and ownership shall reside in the Trustee for the Rabbi Trust for the
Executive Supplemental Retirement Plan Agreement, Director Supplemental
Retirement Plan Agreement, and the Endorsement Method Split Dollar Plan
Agreement for its use and for the use of the Insured all in accordance with
this Agreement. The Trustee at the direction of the Bank may, to the extent
of the
Bank's interest, exercise the right to borrow or withdraw on the policy
cash values. Where the Trustee at the direction of 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 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 or beneficiaries to receive the Insured's share of the proceeds
of the policy payable upon the death of the Insured, and to elect and
change a payment option for such beneficiary, subject to any right or
interest of the Bank or the Trust may have in such proceeds, as provided in
this Agreement. Any such designation by the Insured shall be made in
writing in the form attached hereto as Exhibit A and incorporated herein by
reference. Any such designation or change therein shall be effective three
(3) business days from delivery of said written notice by Insured to the
Bank.
IV. PREMIUM PAYMENT METHOD
Subject to Subparagraph IX (B), the Bank or the Trustee at the direction of
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.
V. TAXABLE BENEFIT
Annually the Insured will receive a taxable benefit equal to the value of
the insurance protection as required by the Internal Revenue Service. The
Bank or the Trustee at the direction of the Bank will report to the Insured
the amount of imputed income each year on Form W-2 or its equivalent.
VI. DIVISION OF DEATH PROCEEDS
Subject to Paragraphs VII and IX herein, the division of the death proceeds
of the policy is as follows:
A. At the time of the Insured's death, should the Insured be employed by
the Bank, retired from the Bank, or have had his or her employment
terminated from the Bank due to disability*, the Insured's
beneficiary(ies), designated in accordance with Paragraph III or the
Insured's estate if no beneficiary has been so designated, shall be
entitled to an amount equal to eighty percent (80%) 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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B. Should the Insured not be employed by the Bank at the time of his or
her death for reasons other than disability* or retirement, the
Insured's beneficiary(ies), designated in accordance with Paragraph
III or the Insured's estate if no beneficiary has been so designated,
shall be entitled to the percentage as set forth hereinbelow of the
proceeds described in Subparagraph VI (A) above.
Date of Hire 10% for each full year of service
from the date of first service
to a maximum of 80%
PLUS
If Insured is at least 62
years of age on his or her
date of death 20%
For a maximum total of 100%
*Subject to the Bank's obligations and Insured's rights under Title I
of the Americans with Disabilities Act and the Family and Medical
Leave Act, if applicable, and any other applicable federal or state
laws, for purposes of this Agreement, disability shall be defined as
the Insured not being able to perform the duties of the Insured's own
job and shall be as further defined in the Bank's long term disability
policy in effect at the time of said disability. If no such policy
exists at the time of the disability, then disability shall be defined
as a physical or mental impairment of Insured which renders Insured
incapable of performing Insured's normal and regular essential
employment duties and which shall be medically determined to be of
permanent duration as the same is construed for purposes of disability
benefits under the federal Social Security laws and regulations.
C. The Bank shall be entitled to the remainder of such proceeds of the
policy, including but not limited to the cash surrender value as
provided in Paragraph VII herein.
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 or the Trust, in the discretion of 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
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contract, less any policy loans and unpaid interest or cash withdrawals
previously incurred by the Bank or the Trustee at the direction of the Bank
and any applicable surrender charges. Such cash value shall be determined
as of the date of surrender or death of the Insured as the case may be.
VIII. RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY ELECTION EXISTS
In the event the policy involves an endowment or annuity element, the
Bank's or the Trust'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 death proceeds for the purposes of division under this
Agreement.
IX. TERMINATION OF AGREEMENT
This Agreement shall terminate upon the occurrence of any one of the
following:
A. The Insured is terminated by the Bank with cause. For purposes of this
Agreement, the term "with cause" shall have the same meaning as the
Employment Agreement between the Bank and the Insured. If no such
employment agreement exists at the time of termination, the term "with
cause" shall be deemed to mean, but is not limited to, personal
dishonesty, incompetence, willful material misconduct, breach of
fiduciary duty, failure to perform the obligations of the Insured as
stated herein, willful violation of any law, rule, or regulation
(other than minor traffic infractions), or, any material breach of any
provision of this agreement.
X. Xxxxxxxxx, lapse, or other termination of the Policy by the Bank.
Upon such termination, the Insured (or assignee) shall have a fifteen (15)
day option, which period shall begin to run on the date of termination of
the policy, to receive from the Bank or the Trustee at the direction of the
Bank an absolute assignment of the policy in consideration of a cash
payment to the Bank or the Trustee at the direction of the Bank, whereupon
this Agreement shall terminate. Such cash payment referred to hereinabove
shall be the greater of:
1) The Bank's or the Trust's share of the cash value of the policy on the
date of such assignment, as defined in this Agreement; or
2) The amount of the premiums which have been paid by the Bank or the
Trustee at the direction of the Bank prior to the date of such
assignment.
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If, within said fifteen (15) day period, the Insured fails to exercise said
option, fails to procure the entire aforestated cash payment, or dies, then
the option shall terminate and the Insured (or assignee) agrees that all of
the Insured's rights, interest and claims in the policy shall terminate as
of the date of the termination of this Agreement.
The Insured expressly agrees that this Agreement shall constitute
sufficient written notice to the Insured of the Insured's option to receive
an absolute assignment of the policy as set forth herein.
Except as provided above, this Agreement shall terminate upon distribution
of the death benefit proceeds in accordance with Paragraph VI above.
X. 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.
XI. AGREEMENT BINDING UPON THE PARTIES
This Agreement shall bind the Insured and the Bank or the Trustee, their
heirs, successors, personal representatives and assigns.
XII. ERISA PROVISIONS
The following provisions are part of this Agreement and are intended to
meet the requirements of the Employee Retirement Income Security Act of
1974 ("ERISA"):
A. Named Fiduciary and Plan Administrator.
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The "Named Fiduciary and Plan Administrator" of this Endorsement
Method Split Dollar Agreement shall be The East Carolina Bank until
its resignation or removal by the Board of Directors. As Named
Fiduciary and Plan Administrator, the Bank or the Trustee at the
direction of the Bank shall be responsible for the management,
control, and administration of this Split Dollar Plan as established
herein. The Named Fiduciary may delegate 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.
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B. Funding Policy.
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Subject to Subparagraph IX (B), the funding policy for this Split
Dollar Plan shall be to maintain the subject policy in force by
paying, when due, all premiums required.
C. Basis of Payment of Benefits.
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Direct payment by the Insurer 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.
D. Claim Procedures.
----------------
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 insurance policy, they 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 in accordance with the terms of this
Agreement.
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, they should contact the office named above and they will
assist in making an 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.
E. Notices.
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All notices required or permitted to be given pursuant to this
Agreement shall be in writing, unless otherwise specified, and shall
be delivered personally, deposited in the United States mail,
registered or certified and postage prepaid with return receipt
requested, or deposited with a reputable overnight courier which
provides a day and time stamped receipt, addressed to the Executive,
Bank or Trustee, as applicable, at the address set forth herein or to
such other address as hereafter may be furnished to the other parties
in writing pursuant to this paragraph. All notices so given shall be
deemed effective and received upon the earlier of (i) actual receipt,
(ii) receipt and refusal; or (iii) five (5) days from (1) the
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postmark date, if deposited with the United States Postal Service, or
(2) the date of deposit, if deposited with an overnight courier,
unless otherwise provided herein.
Bank: The East Carolina Bank
Hwy. 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Trustee: Xxxxxx X. Xxxxxxxx
Eastern Bank & Trust Co.
0 Xxxxx Xxxxx, XX00
Xxxxxx, XX 00000-7456
Executive: X. Xxxxxx Xxxxx, Xx.
------------------------
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XIII. 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.
XIV. 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 from any and all
liability.
XV. CHANGE OF CONTROL
Change of Control shall mean the direct or indirect acquisition by another
person, firm or corporation, by merger, share exchange, consolidation,
purchase or otherwise, all or substantially all of the assets or stock of
the Bank or its parent company. Upon a Change of Control, if the Insured's
employment is subsequently terminated, except for cause, then the Insured
shall be one hundred percent (100%) vested in the benefits promised in this
Agreement and, therefore, upon the death of the Insured, the Insured's
beneficiary(ies) (designated in accordance with Paragraph III) shall
receive the death benefit provided herein as if the Insured had died while
employed by the Bank (See Subparagraph VI [A]).
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XVI. AMENDMENT OR REVOCATION
It is agreed by and between the parties hereto that, during the lifetime of
the Insured, this Agreement may be amended or revoked at any time or times,
in whole or in part, by the mutual written consent of the Insured and the
Bank.
XVII. EFFECTIVE DATE
The Effective Date of this Agreement shall be November 5, 2001.
XVIII. SEVERABILITY AND INTERPRETATION
If a provision of this Agreement is held to be invalid or unenforceable,
the remaining provisions shall nonetheless be enforceable according to
their terms. Further, in the event that any provision is held to be over
broad as written, such provision shall be deemed amended to narrow its
application to the extent necessary to make the provision enforceable
according to law and enforced as amended.
XIX. APPLICABLE LAW
The validity and interpretation of this Agreement shall be governed by the
laws of the State of North Carolina.
Executed at Engelhard, North Carolina this 22nd day of January, 2002.
THE EAST CAROLINA BANK
Engelhard, North Carolina
By:
------------------------ ----------------------------
Witness Title
/s/ X. Xxxxxx Xxxxx, Xx.
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Witness X. Xxxxxx Xxxxx, Xx.
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EXHIBIT A
BENEFICIARY DESIGNATION FORM
FOR LIFE INSURANCE ENDORSEMENT METHOD
SPLIT DOLLAR PLAN AGREEMENT
PRIMARY DESIGNATION:
Name Address Relationship
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SECONDARY (CONTINGENT) DESIGNATION:
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All sums payable under the Life Insurance Endorsement Method Split Dollar Plan
Agreement by reason of my death shall be paid to the Primary Beneficiary, if he
or she survives me, and if no Primary Beneficiary shall survive me, then to the
Secondary (Contingent) Beneficiary.
/s/ X. Xxxxxx Xxxxx, Xx. 1-25-02
------------------------- Date
X. Xxxxxx Xxxxx, Xx.
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