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EXHIBIT 10.12
XXXXXX X. XXXXXXXX
SPLIT DOLLAR AGREEMENT
This Agreement made is effective September 26, 1994, by and
between FIRST NATIONAL BANK OF REIDSVILLE or its successor (herein called the
"Company"), a North Carolina corporation having its principal office in
Reidsville, North Carolina (hereinafter called the "Company") and XXXXXX X.
XXXXXXXX (hereinafter called the "Employee");
RECITALS:
The Employee is a valued employee of the Company, and the
Company desires to retain him in its employ. As an inducement to such continued
employment, the Company wishes to assist the Employee with his personal life
insurance program. The Company has initiated a program to purchase a policy of
insurance on the lives of certain key employees. The Employee wishes to
participate in the program provided by the Company as described herein.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. POLICY OF INSURANCE
The life insurance policy subject to this Agreement is Policy Number
_______ (hereinafter referred to as "the Policy") issued by ________________
Life Insurance Company (hereinafter called the "Insurer") on the life of the
Employee in the face amount of $200,000. Exhibit A is attached to this Agreement
which projected the estimated future values of this Policy.
SECTION 2. OWNERSHIP OF INSURANCE:
The Employee shall be the owner of the Policy, but as a condition of
the Agreement agrees to make a "collateral assignment" to the Company in an
amount equal to the sum of the cumulative annual premiums paid by the Company.
The Employee may exercise all rights of ownership with respect to the Policy,
except as otherwise hereinafter provided. It is the express intention of the
parties to reserve to the Employee certain rights in and to the Policy granted
to it by the terms of the Policy, but excluding the right to designate and
change the beneficiary of that portion of the proceeds to which the Company is
entitled under Section 5 hereunder.
SECTION 3. PAYMENT OF PREMIUMS ON POLICY AND ANNUAL POLICY DIVIDENDS:
All premiums on the Policy shall be paid by the Company each year,
until the later of (i) the Policy anniversary date following Employee's 65th
birthday, or (ii) the fifteenth (15th) anniversary date of the policy. The
Company shall pay each annual premium on or before the premium date, or within
the grace period allowed by the Policy for the payment of the premium.
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Any annual dividend paid by the Insurer under the Policy shall be used to
purchase paid-up annual additions, which shall be used to increase the face
amount of the Policy.
SECTION 4. LOAN AND SURRENDER OF POLICY:
The Employee shall have the right at his discretion to borrow on the
cash value, subject to the collateral assignment in Section 2. In addition,
subject to Section 6 of this Agreement, the Employee may surrender the Policy
and receive the entire cash surrender value thereof, subject to the collateral
assignment in Section 2.
SECTION 5. DEATH CLAIMS:
(a) Company's Proceeds: When the Employee dies, the Company shall be
entitled to receive from the Insurer that amount from the death benefit provided
under the Policy which is equal to the sum of the total premiums paid by the
Company, reduced by any Policy indebtedness under the collateral assignment
(policy loan) of the Company to the Insurer;
(b) Employee's Proceeds: When the Employee dies, the beneficiary or
beneficiaries named by the Employee shall be entitled to receive the balance of
the death benefit provided under the Policy in excess of the amount payable to
the Company under Section 5 (a) above. This amount shall be paid under the
settlement option elected by the Employee or the Employee's beneficiary. If the
Employee has not named a beneficiary by the time of his death, or is no
beneficiary named by the Employee shall be living at the death of the Employee,
the Beneficiary shall be the Employee's Estate.
SECTION 6. TERMINATION OF AGREEMENT PRIOR TO DEATH OF EMPLOYEE:
This Agreement and Policy may not be terminated by the Company (or its
successor entity) prior to the death of the Employee, except in the event of
bankruptcy of the Company, or the mutual written agreement between the parties.
Retirement of Employee shall not terminate this Agreement or Policy, but this
Agreement and Policy shall remain in effect until the death of the Employee.
SECTION 7. DISPOSITION OF POLICY ON TERMINATION OF AGREEMENT:
If the Agreement is terminated under the provisions of Section 6, the
Employee shall have sixty days in which to pay the Company the amount which the
Company would be entitled to receive, said amount being the lesser of (i) the
cash surrender value of the policy, or (ii) the cumulative premiums paid by the
Employer under Section 5 (if the Employee's death had occurred at that time).
Upon receipt of this amount, the Company shall cancel any collateral assignment
made to it as a security interest in the Policy. If the Employee does not pay
such amount to the Company within sixty days, the Company may enforce any
security interest it has through the collateral assignment which it has under
the Policy.
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SECTION 8. INSURANCE COMPANY NOT A PARTY:
The Insurer shall not be deemed to be a party to this Agreement for any
purpose and is not in any way responsible for its validity; shall not be
obligated to inquire as to the distribution of any monies payable or paid by it
under the Policy of the Employee's life acquired pursuant to the terms of the
Agreement; and shall be fully discharged from any and all liability under the
terms of any Policy issued by it upon payment or other performance of its
obligations in accordance with the terms of such Policy.
SECTION 9. AMENDMENT OF AGREEMENT:
This Agreement shall not be modified or amended except by mutual
written agreement a signed by the Company (or its successor) and the Employee.
This Agreement shall be binding upon the heirs, administrators or executors, and
the successors and assigns of each party to the Agreement.
SECTION 10. MERGER, ACQUISITION, OR CHANGE OF CONTROL
In the event that the Company is acquired by, merged with, or otherwise
has a "change in control" (change of 25% or more in its outstanding voting
shares of common stock), the successor entity shall be obligated to continue
this Agreement, unless otherwise mutually agreed in writing by the Employee and
the successor entity.
SECTION 11. APPLICABLE LAW:
The Agreement shall be subject to and shall be construed under the laws
of the State of North Carolina.
IN WITNESS WHEREOF, the parties hereto have executed the Agreement as
of this 26th day of September, 1994.
ATTEST: FIRST NATIONAL BANK OF REIDSVILLE
/s/ Xxxxxx Xxxxx BY: /s/ Xxxxxx X. Xxxxxx
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Secretary President/CEO
[Corporate Seal]
EMPLOYEE
BY: /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
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