EX-10.(XIII) 2 dex10xiii.htm AMENDED ENDORSEMENT SPLIT DOLLAR AGREEMENT BANK OF OAK RIDGE AMENDED ENDORSEMENT SPLIT DOLLAR AGREEMENT
Exhibit 10(xiii)
BANK OF OAK RIDGE
AMENDED ENDORSEMENT SPLIT DOLLAR AGREEMENT
This AMENDED ENDORSEMENT SPLIT DOLLAR AGREEMENT (this “Agreement”) is entered into as of this 19th day of December, 2007 by and between Bank of Oak Ridge, a North Carolina-chartered commercial bank (the “Bank”), and Xxxxxx X. Black, its President and Chief Executive Officer (the “Executive”). This Agreement shall append the Split Dollar Policy Endorsement entered into on even date herewith or as subsequently amended, by and between the aforementioned parties.
WHEREAS, to encourage the Executive to remain an employee, the Bank entered into a January 20, 2006 Endorsement Split Dollar Agreement with the Executive, which agreement provides for division of the death proceeds of a life insurance policy or policies on the Executive’s life, and
WHEREAS, the Bank and the Executive intend that this Agreement shall amend and restate in its entirety the January 20, 2006 Endorsement Split Dollar Agreement.
ARTICLE 1
Capitalized terms not otherwise defined in this Agreement are used herein as defined in the January 1, 2006 Salary Continuation Agreement between the Bank and the Executive, as the same may have been amended or may be amended hereafter. 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(a).
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.
1.6 Policy means the specific life insurance policy or policies issued by the Insurers, but the term Policy excludes the Additional Policy referred to in section 2.2(c).
1.7 Salary Continuation Agreement means the January 1, 2006 Salary Continuation Agreement between the Bank and the Executive, as the same may have been amended or may be amended hereafter.
1.8 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 such Executive’s life.
ARTICLE 2
(b) If after a Change in Control the Policy is cancelled, surrendered, terminated, or allowed to lapse, in any such case without replacement, at the Executive’s death the Executive’s beneficiary designated in accordance with the Split Dollar Policy Endorsement shall be entitled to death proceeds payable by the Bank in an amount in cash equal to the sum of (x) the amount specified in paragraph (a) of this section 2.2, measured at the time the Policy is cancelled, surrendered, terminated, or allowed to lapse, plus (y) a tax gross-up payment to compensate for federal and state income taxes imposed on the benefit specified in clause (x) of this section 2.2(b). The tax gross-up payment required under this clause (y) of section 2.2(b) shall be calculated in two steps, first by dividing the total death benefit specified in clause (x) of this section 2.2(b) by one minus the sum of (1) the highest marginal individual federal income tax rate under the Internal Revenue Code at the time of the Executive’s death (offset or reduced to account for the deductibility at the federal level of state income taxes), plus (2) the highest marginal individual state income tax rate under North Carolina law at the time of the Executive’s death. Second, the death benefit specified in clause (x) of this section 2.2(b) shall then be subtracted from the amount calculated in that first step. The difference shall be the additional tax gross-up payment to be made to compensate for taxes, regardless of whether it exceeds or is less than taxes imposed on the Executive’s estate for “income in respect of a decedent.” To illustrate with a simple hypothetical based on an assumed death benefit amount of $100,000 paid directly by the Bank under clause (x) of this section 2.2(b), the additional tax gross-up payment would be calculated as follows if the highest marginal individual income tax rates are 34% (federal) and 8.25% (North Carolina), taking into account the deductibility at the federal level of state income taxes:
2
First Step: | $ 100,000 / divided by (1—((34% + 8.25%)—(34% x 8.25%)) | |||
= | $ 100,000 / divided by (1 minus 39.45%) | |||
= | $ 100,000 / divided by 60.56%, or .6056 | |||
= | $ 165,139 | |||
Second Step: | $ 165,139 minus $ 100,000 | |||
= | $ 65,139, the amount of the additional tax gross-up payment | |||
(c) On the date of this Agreement the Bank is the owner of a life insurance policy or policies (the “Additional Policy”) on the Executive’s life, in addition to the Policy defined in section 1.6 for which a Split Dollar Policy Endorsement is attached to this Agreement. If the Salary Continuation Agreement Normal Retirement Age accrual balance at the Executive’s death exceeds 100% of the Net Death Proceeds at that time, the Bank hereby endorses to the Executive’s beneficiary designated on the Split Dollar Policy Endorsement attached to this Agreement the lesser of (x) the difference between the Normal Retirement Age accrual balance and 100% of the Net Death Proceeds or (y) the net-at-risk amount of the Additional Policy. For this purpose, the net-at-risk amount of the Additional Policy means the total death proceeds of the Additional Policy minus the cash surrender value of the Additional Policy. If the Additional Policy is cancelled, surrendered, terminated, or allowed to lapse, this section 2.2(c) shall be void and of no further force or effect. The Bank has no obligation to provide any death benefit under this section 2.2(c) upon a default by an insurer.
ARTICLE 3
3.1 Premium Payment. The Bank shall pay any premiums due on the Policy.
3
ARTICLE 4
The Executive may irrevocably assign without consideration all of the Executive’s rights and interest 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 rights and interest in this Agreement, all of the Executive’s rights and interest 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
The Insurer shall be bound only by the terms of the Policy. Any payments the Insurer makes or actions it takes in accordance with the Policy shall fully discharge it from all claims, suits and demands of all entities or persons. The Insurer shall not be bound by or be deemed to have notice of the provisions of this Agreement.
ARTICLE 6
4
(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) following an adverse benefit determination on review. |
5
(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
ARTICLE 8
6
8.5 Applicable Law. This Agreement and all rights hereunder shall be governed by and construed according to the laws of the State of North Carolina, except to the extent preempted by the laws of the United States of America.
8.6 Entire Agreement. This Agreement and the Salary Continuation Agreement constitute the entire agreement between the Bank and the Executive as to the subject matter. No rights are granted to the Executive by this Agreement other than those specifically set forth. This Agreement amends and restates in its entirety the January 20, 2006 Endorsement Split Dollar Agreement between the Bank and the Executive.
7
EXECUTIVE: | BANK: | |||||
Bank of Oak Ridge | ||||||
/s/ Xxxxxx X. Black | By: |
| ||||
Xxxxxx X. Black | ||||||
Its: |
|
AGREEMENT TO COOPERATE WITH INSURANCE UNDERWRITING INCIDENT TO
INTERNAL REVENUE CODE SECTION 1035 EXCHANGE
I acknowledge that I have read the Amended 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 Amended 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 Amended Endorsement Split Dollar Agreement.
|
| |||
Witness | Executive |
8
SPLIT DOLLAR POLICY ENDORSEMENT
Insured: Xxxxxx X. Black | Insurer: Security Life of Denver Insurance Company |
Policy No. 1570177
Pursuant to the terms of the Bank of Oak Ridge Amended Endorsement Split Dollar Agreement dated as of December , 2007, the undersigned Owner requests that the above-referenced policy issued by the Insurer provides 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 its 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 right to change the beneficiary for the proceeds payable under this paragraph and to assign all rights and interests granted under this paragraph are hereby granted to the Insured. The sole signature of the Insured shall be sufficient to exercise said 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.
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 being executed.
Signed at , North Carolina, this day of , 200 .
INSURED: | OWNER: | |||||
Bank of Oak Ridge | ||||||
/s/ Xxxxxx X. Black | By: |
| ||||
Xxxxxx X. Black | ||||||
Its: |
|
9
SPLIT DOLLAR POLICY ENDORSEMENT
Insured: Xxxxxx X. Black | Insurer: Midland National Life Insurance Co. |
Policy No. 686799
Pursuant to the terms of the Bank of Oak Ridge Amended Endorsement Split Dollar Agreement dated as of December , 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 its 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 right to change the beneficiary for the proceeds payable under this paragraph and to assign all rights and interests granted under this paragraph are hereby granted to the Insured. The sole signature of the Insured shall be sufficient to exercise said 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.
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 being executed.
Signed at , North Carolina, this day of , 200 .
INSURED: | OWNER: | |||||
Bank of Oak Ridge | ||||||
/s/ Xxxxxx X. Black | By: |
| ||||
Xxxxxx X. Black | ||||||
Its: |
|
10
SPLIT DOLLAR POLICY ENDORSEMENT
Insured: Xxxxxx X. Black | Insurer: New York Life Insurance & Annuity Corporation |
Policy No. 56609817
Pursuant to the terms of the Bank of Oak Ridge Amended Endorsement Split Dollar Agreement dated as of December , 2007, the undersigned Owner requests that the above-referenced Additional Policy issued by New York Life Insurance & Annuity Corporation, as set forth in section 2.2(c) of the Amended Endorsement Split Dollar Agreement, 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 its interest in the Additional 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 right to change the beneficiary for the proceeds payable under this paragraph and to assign all rights and interests granted under this paragraph are hereby granted to the Insured. The sole signature of the Insured shall be sufficient to exercise said 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 Additional 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 Additional Policy.
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 being executed.
Signed at , North Carolina, this day of , 200 .
INSURED: | OWNER: | |||||
Bank of Oak Ridge | ||||||
/s/ Xxxxxx X. Black | By: |
| ||||
Xxxxxx X. Black | ||||||
Its: |
|
11