EXHIBIT 10(xii)
LIFE INSURANCE
ENDORSEMENT METHOD SPLIT DOLLAR PLAN
AGREEMENT
Insurer: Mass Mutual Life Insurance Company
New York Life Insurance Company
Policy Number: __________
Bank: Home Savings Bank of Albemarle, SSB
Insured: R. Xxxxxx Xxxxxxx
Relationship of Insured to Bank: Director
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 the 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
Suppleemntal 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
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Agreement. The Trustee at the direction of the Bank may, to the extent
of its 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 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 or beneficiaries to receive the Insured's 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 Trustee at the direction of the Bank or the Trust may have in such
proceeds, as provided in this Agreement.
IV. PREMIUM PAYMENT METHOD
Subject to the Bank's absolute right to surrender or terminate the
policy at any time and for any reason, 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 assumed
cost of insurance 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. Upon the death of the Insured, the Insured's beneficiary(ies),
designated in accordance with Paragraph III, 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.
B. The Bank shall be entitled to the remainder of such proceeds.
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C. 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 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 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 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' 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.
IX. TERMINATION OF AGREEMENT
This Agreement shall terminate upon the occurrence of any one of the
following:
A. The Insured shall be discharged from service with the Bank for
cause. The term "for cause" shall mean any of the following that
result in an adverse effect on the Bank: (i) gross negligence or
gross neglect; (ii) the commission of a felony or gross
misdemeanor involving moral turpitude, fraud, or dishonesty;
(iii) the willful violation of any law, rule, or regulation
(other than a traffic violation or similar offense); (iv) an
intentional failure to perform stated duties; or (v) a breach of
fiduciary duty involving personal profit; or
B. Surrender, lapse, or other termination of the Policy by the
Bank.
Upon such termination, the Insured (or assignee) shall have a fifteen
(15) day option 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:
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A. 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
B. 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.
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 right, interest and claim 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 or the
Trustee at the direction 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 at the
direction of the Bank, 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.
The "Named Fiduciary and Plan Administrator" of this Endorsement
Method Split Dollar Agreement shall be Home Savings Bank of
Albemarle, SSB 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
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management and operation responsibilities of the Plan, including
the employment of advisors and the delegation of any ministerial
duties to qualified individuals.
B. Funding Policy.
Subject to the Bank's absolute right to surrender or terminate
the policy at any time and for any reason, 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.
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, it 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.
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.
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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 be deemed to be the cumulative transfer of more
than fifty percent (50%) of the voting stock of the Bank from the date
of this Agreement. For the purposes of this Agreement, transfers on
account of death or gifts, transfers between family members, or
transfers to a qualified retirement plan maintained by the Bank shall
not be considered in determining whether there has been a Change of
Control. Upon a Change of Control, if the Insured's service is
subsequently terminated, except for cause, then the Insured shall be one
hundred percent (100%) vested in the benefits promised in this
Agreement.
XVI. AMENDMENT OR REVOCATION
Subject to the Bank's absolute right to surrender or terminate the
policy at any time and for any reason, 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 February 18, 2003.
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 Albemarle, North Carolina this ________day of ___________, 2003.
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HOME SAVINGS BANK OF
ALBEMARLE, SSB
Albemarle, North Carolina
By:
-------------------------------- --------------------------------
Witness Title
-------------------------------- --------------------------------
Witness R. Xxxxxx Xxxxxxx
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BENEFICIARY DESIGNATION FORM
FOR LIFE INSURANCE ENDORSEMENT METHOD
SPLIT DOLLAR PLAN AGREEMENT
I. PRIMARY DESIGNATION
(You may refer to the beneficiary designation information prior
to completion.)
A. PERSON(S) AS A PRIMARY DESIGNATION:
(Please indicate the percentage for each beneficiary.)
Name______________________ Relationship___________________ / _______%
Address:_______________________________________________________________
(Street) (City) (State) (Zip)
Name______________________ Relationship___________________ / _______%
Address:_______________________________________________________________
(Street) (City) (State) (Zip)
Name______________________ Relationship___________________ / _______%
Address:_______________________________________________________________
(Street) (City) (State) (Zip)
Name______________________ Relationship___________________ / _______%
Address:_______________________________________________________________
(Street) (City) (State) (Zip)
B. ESTATE AS A PRIMARY DESIGNATION:
My Primary Beneficiary is The Estate of ______________________________
_____ as set forth in the last will and testament dated the _____ day of
_____________, _______ and any codicils thereto.
C. TRUST AS A PRIMARY DESIGNATION:
Name of the Trust: ____________________________________________________
Execution Date of the Trust: _____ / _____ / _________
Name of the Trustee: ___________________________________________________
Beneficiary(ies) of the Trust (please indicate the percentage for each
beneficiary):
________________________________________________________________________
________________________________________________________________________
Is this an Irrevocable Life Insurance Trust? ________ Yes ________ No
(If yes and this designation is for a Split Dollar agreement, an
Assignment of Rights form should be completed.)
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II. SECONDARY (CONTINGENT) DESIGNATION
A. PERSON(S) AS A SECONDARY (CONTINGENT) DESIGNATION:
(Please indicate the percentage for each beneficiary.)
Name______________________ Relationship___________________ / _______%
Address:_______________________________________________________________
(Street) (City) (State) (Zip)
Name______________________ Relationship___________________ / _______%
Address:_______________________________________________________________
(Street) (City) (State) (Zip)
Name______________________ Relationship___________________ / _______%
Address:_______________________________________________________________
(Street) (City) (State) (Zip)
Name______________________ Relationship___________________ / _______%
Address:_______________________________________________________________
(Street) (City) (State) (Zip)
B. ESTATE AS A SECONDARY (CONTINGENT) DESIGNATION:
My Secondary Beneficiary is The Estate of ____________________________
______ as set forth in my last will and testament dated the _____ day of
_____________, _______ and any codicils thereto.
C. TRUST AS A SECONDARY (CONTINGENT) DESIGNATION:
Name of the Trust: ____________________________________________________
Execution Date of the Trust: _____ / _____ / _________
Name of the Trustee: ___________________________________________________
Beneficiary(ies) of the Trust (please indicate the percentage for each
beneficiary):
________________________________________________________________________
________________________________________________________________________
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(ies), if he or she survives me, and if no Primary
Beneficiary(ies) shall survive me, then to the Secondary (Contingent)
Beneficiary(ies). This beneficiary designation is valid until the
participant notifies the bank in writing.
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R Xxxxxx Xxxxxxx Date
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