EXHIBIT 10.27
ADDENDUM A
THE CORTLAND SAVINGS AND BANKING COMPANY
AMENDED SPLIT DOLLAR AGREEMENT
THIS AMENDED SPLIT DOLLAR AGREEMENT is made and entered into as of this
_____ day of ______________, 2002, by and between The Cortland Savings and
Banking Company, an Ohio-chartered, FDIC-insured member bank with its main
offices in Cortland, Ohio (the "Bank") and Xxxxxxx Xxxxx (the "Executive"). This
Amended Split Dollar Agreement shall append the Split Dollar Endorsement entered
into on even date herewith, or as subsequently amended, by and between the
aforementioned parties.
WHEREAS, the Executive has contributed substantially to the success of the
Bank and its parent company, Cortland Bancorp, an Ohio corporation, and the Bank
desires that the Executive continue in its employ,
WHEREAS, to encourage the Executive to remain an employee of the Bank, the
Bank is willing to divide the death proceeds of a life insurance policy on the
Executive's life to be effective until the Executive's Normal Retirement Age of
65. The Bank will pay life insurance premiums from its general assets,
WHEREAS, the Bank and the Executive entered into a Salary Continuation
Agreement dated as of March 1, 2001, providing for specified retirement benefits
for the Executive after termination of her employment, and a Split Dollar
Agreement attached thereto as Addendum A, providing for division of the death
proceeds of a life insurance policy on the Executive's life to be effective
until the Executive's Normal Retirement Age of 65,
WHEREAS, regulations promulgated under ERISA (the Employees Retirement
Income Security Act) that became effective on January 1, 2002 govern the
regulation of claims procedures contained in the Executive's form of Salary
Continuation Agreement and Split Dollar Agreement attached thereto as Addendum
A,
WHEREAS, the Bank and the Executive have negotiated and agreed to
miscellaneous changes in the terms and conditions of the March 1, 2001 Salary
Continuation Agreement and the Split Dollar Agreement attached thereto as
Addendum A, including but not limited to revision of the definition of
"disability" and updating of the claims and review provisions of Article 6,
WHEREAS, the revised definition of disability, as well as the revised
Claims and Review Procedure in Article 6, were drafted by ERISA counsel retained
by Xxxxx/Xxxxxx Consulting, and
WHEREAS, the Bank and the Executive are entering into an Amended Salary
Continuation Agreement effective as of the date hereof, superseding and
replacing in its entirety the March 1, 2001 Salary Continuation Agreement, and
the Bank and the Executive intend that this Amended Split Dollar Agreement shall
be attached as Addendum A to the Amended Salary Continuation Agreement,
superseding and replacing in its entirety the Split Dollar Agreement attached as
Addendum A to the March 1, 2001 Salary Continuation Agreement.
NOW THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
GENERAL DEFINITIONS
Capitalized terms not otherwise defined in this Amended Split Dollar
Agreement shall have the same meaning as defined in the Amended Salary
Continuation Agreement of even date herewith. The following terms shall have the
meanings specified --
1.1 "Insurer" means Great-West Life & Annuity Insurance Company.
1.2 "Policy" means insurance policy no. 85998034 issued by the Insurer.
1.3 "Insured" means the Executive.
ARTICLE 2
POLICY OWNERSHIP / INTERESTS
2.1 Bank Ownership. The Bank is the sole owner of the Policy and shall have
the right to exercise all incidents of ownership. The Bank shall be the
beneficiary of any death proceeds remaining after the Executive's interest has
been paid pursuant to Article 2.2 below.
2.2 Executive's Interest. The Executive shall have the right to designate
the beneficiary of death proceeds in the amount of $109,001. The Executive shall
also have the right to elect and change settlement options specified in the
Policy that may be permitted. However, the Executive, the Executive's transferee
or the Executive's beneficiary shall have no rights or interests in the Policy
with respect to that portion of the death proceeds designated in this Section
2.2 if the Executive is not in the full-time employment of the Bank at the time
of death, except for reason of a leave of absence approved by the Bank.
2.3 Option to Purchase. The Bank shall not sell, surrender or transfer
ownership of the Policy while this Amended Split Dollar Agreement is in effect
without first giving the Executive or the Executive's transferee a right of
first refusal to purchase the Policy for the Policy's interpolated terminal
reserve value. Such right of first refusal to purchase the Policy must be
exercised within 60 days from the date the Bank gives written notice of the
Bank's intention to sell, surrender or transfer ownership of the Policy. This
provision shall not impair the right of the Bank to terminate this Amended Split
Dollar Agreement.
2.4 Comparable Coverage. Upon execution of this Amended Split Dollar
Agreement, the Bank shall maintain the Policy in full force and effect and in no
event shall the Bank amend, terminate or otherwise abrogate the Executive's
interest in the Policy, unless the Bank replaces the Policy with a comparable
insurance policy to cover the benefit provided under this Amended Split Dollar
Agreement and executes a new split dollar agreement and endorsement for said
comparable insurance policy. The Policy or any comparable policy shall be
subject to the claims of the Bank's creditors.
ARTICLE 3
PREMIUMS
3.1 Premium Payment. The Bank shall pay any premiums due on the Policy.
3.2 Imputed Income. The Bank shall impute income to the Executive in an
amount equal to the current term rate for the Executive's age multiplied by the
net death benefit payable to the Executive's beneficiary. The "current term
rate" is the minimum amount required to be imputed under Revenue Rulings 64-328
and 66-110, or any subsequent applicable authority.
ARTICLE 4
ASSIGNMENT
The Executive may assign without consideration all interests in the Policy
and in this Amended Split Dollar Agreement to any person, entity or trust. In
the event the Executive transfers all of the Executive's interest in the Policy,
then all of the Executive's interest in the Policy and in the Amended Split
Dollar 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 the Policy or in this Amended Split Dollar Agreement.
ARTICLE 5
INSURER
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 Amended Split Dollar Agreement.
ARTICLE 6
CLAIMS PROCEDURE
6.1 Claims Procedure. A person or beneficiary ("claimant") who has not
received benefits under this Amended Split Dollar Agreement that he or she
believes should be paid shall make a claim for such benefits as follows:
6.1.1 Initiation - Written Claim. The claimant initiates a claim by
submitting to the Bank a written claim for the benefits.
6.1.2 Timing of Bank Response. The Bank shall respond to such claimant
within 90 days after receiving the claim. If the Bank determines that
special circumstances require additional time for processing the
claim, the Bank can extend the response period by an additional 90
days by notifying the claimant in writing, prior to the end of the
initial 90-day period, that an additional period is required. The
notice of extension must set forth the special circumstances and the
date by which the Bank expects to render its decision.
6.1.3 Notice of Decision. If the Bank denies part or all of the claim, the
Bank shall notify the claimant in writing of such denial. The Bank
shall write the notification in a manner calculated to be understood
by the claimant. The notification shall set forth:
6.1.3.1 The specific reasons for the denial,
6.1.3.2 A reference to the specific provisions of this Amended Split
Dollar Agreement on which the denial is based,
6.1.3.3 A description of any additional information or material
necessary for the claimant to perfect the claim and an
explanation of why it is needed,
6.1.3.4 An explanation of this Amended Split Dollar Agreement's review
procedures and the time limits applicable to such procedures, and
6.1.3.5 A statement of the claimant's right to bring a civil action
under ERISA (Employees Retirement Income Security Act) Section
502(a) following an adverse benefit determination on review.
6.2 Review Procedure. If the Bank denies part or all of the claim, the
claimant shall have the opportunity for a full and fair review by the Bank of
the denial, as follows:
6.2.1 Initiation - Written Request. To initiate the review, the claimant,
within 60 days after receiving the Bank's notice of denial, must file
with the Bank a written request for review.
6.2.2 Additional Submissions - Information Access. The claimant shall then
have the opportunity to submit written comments, documents, records
and other information relating to the claim. The Bank shall also
provide the claimant, 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.
6.2.3 Considerations on Review. In considering the review, the Bank shall
take into account all materials and information the claimant submits
relating to the claim, without regard to whether such information was
submitted or considered in the initial benefit determination.
6.2.4 Timing of Bank Response. The Bank shall respond in writing to such
claimant within 60 days after receiving the request for review. If the
Bank determines that special circumstances require additional time for
processing the claim, the Bank can extend the response period by an
additional 60 days by notifying the claimant in writing, prior to the
end of the initial 60-day period, that an additional period is
required. The notice of extension must set forth the special
circumstances and the date by which the Bank expects to render its
decision.
6.2.5 Notice of Decision. The Bank shall notify the claimant in writing of
its decision on review. The Bank shall write the notification in a
manner calculated to be understood by the claimant. The notification
shall set forth:
6.2.5.1 The specific reason for the denial,
6.2.5.2 A reference to the specific provisions of this Amended Split
Dollar Agreement on which the denial is based,
6.2.5.3 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
6.2.5.4 A statement of the claimant's right to bring a civil action
under ERISA Section 502(a).
ARTICLE 7
MISCELLANEOUS
7.1 Amendment and Termination. This Amended Split Dollar Agreement may be
amended or terminated only by a written agreement signed by the Bank and the
Executive. However, unless otherwise agreed to by the Bank and the Executive,
this Amended Split Dollar Agreement will automatically terminate upon the
Executive's 65th birthday.
7.2 Binding Effect. This Amended Split Dollar Agreement shall bind the
Executive and the Bank and their beneficiaries, survivors, executors,
administrators and transferees, and any Policy beneficiary.
7.3 No Guarantee of Employment. This Amended Split Dollar Agreement is not
an employment policy or contract. It does not give the Executive the right to
remain an employee of the Bank, nor does it interfere with the Bank's right to
discharge the Executive. It also does not require the Executive to remain an
employee nor interfere with the Executive's right to terminate employment at any
time.
7.4 Successors; Binding Agreement. The Bank will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Bank, by an
assumption agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Amended Split Dollar Agreement in the
same manner and to the same extent that the Bank would be required to perform
this Amended Split Dollar Agreement if no such succession had taken place.
Failure of the Bank to obtain such assumption agreement prior to the
effectiveness of any such succession shall be a breach of the Amended Split
Dollar Agreement and shall entitle the Executive to the Change-in-Control
benefit provided in Section 2.4 of the Amended Salary Continuation Agreement
between the Bank and the Executive of even date herewith.
7.5 Applicable Law. This Amended Split Dollar Agreement and all rights
hereunder shall be governed by and construed according to the laws of the State
of Ohio, except to the extent preempted by the laws of the United States of
America.
7.6 Entire Agreement. This Amended Split Dollar Agreement constitutes the
entire split dollar agreement between the Bank and the Executive as to the
subject matter hereof. No rights are granted to the Executive by virtue of this
Amended Split Dollar Agreement other than those specifically set forth herein.
7.7 Administration. The Bank shall have powers which are necessary to
administer this Amended Split Dollar Agreement, including but not limited to --
(a) interpreting the provisions of this Amended Split Dollar Agreement,
(b) establishing and revising the method of accounting for this Amended
Split Dollar Agreement,
(c) maintaining a record of benefit payments, and
(d) establishing rules and prescribing any forms necessary or desirable to
administer this Amended Split Dollar Agreement.
7.8 Named Fiduciary. The Bank shall be the named fiduciary and plan
administrator under this Amended Split Dollar Agreement. It may delegate to
others certain aspects of the management and operational responsibilities
including the employment of advisors and the delegation of ministerial duties to
qualified individuals.
7.9 Severability. If for any reason, any provision of this Amended Split
Dollar Agreement is held invalid, such invalidity shall not affect any other
provision of this Amended Split Dollar Agreement not held invalid, and to the
full extent consistent with law each such other provision shall continue in full
force and effect. If any provision of this Amended Split Dollar Agreement is
held invalid in part, such invalidity shall not affect the remainder of such
provision not held invalid, and to the full extent consistent with law the
remainder of such provision, together with all other provisions of this Amended
Split Dollar Agreement, shall continue in full force and effect.
7.10 Headings. The headings of sections herein are included solely for
convenience of reference and shall not affect the meaning or interpretation of
any provision of this Amended Split Dollar Agreement.
7.11 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed, certified or registered mail, return receipt
requested, with postage prepaid, to the following addresses or to such other
address as either party may designate by like notice.
(a) If to the Bank, to --
Board of Directors
The Cortland Savings and Banking Company
000 Xxxx Xxxx Xxxxxx
X.X. Xxx 00
Xxxxxxxx, Xxxx 00000-0000
(b) If to the Executive, to --
Xxxxxxx Xxxxx
000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
and to such other or additional person or persons as either party shall have
designated to the other party in writing by like notice.
IN WITNESS WHEREOF, the Bank has caused this Amended Split Dollar Agreement
to be executed by its duly authorized officer and the Executive has hereunto set
his/her hand as of the date and year first above written.
EXECUTIVE: BANK:
THE CORTLAND SAVINGS AND BANKING COMPANY
By:
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Xxxxxxx Xxxxx Xxxxxx X. Xxxxx
Its: President, Chairman of the Board
and Chief Executive Officer
SPLIT DOLLAR POLICY ENDORSEMENT
THE CORTLAND SAVINGS AND BANKING COMPANY
AMENDED SPLIT DOLLAR AGREEMENT
Policy No. 85998034 Insured: Xxxxxxx Xxxxx
Supplementing and amending the application for insurance to Great-West Life &
Annuity Insurance Company ("Insurer") on January 9, 2001 (the application date),
the applicant requests and directs that:
BENEFICIARIES
1. The Cortland Savings and Banking Company, located in Cortland, Ohio (the
"Bank"), shall be the beneficiary of any death proceeds remaining after the
Insured's interest has been paid pursuant to paragraph (2) below.
2. The Insured or the Insured's transferee shall designate the beneficiary
of death proceeds in the amount of $109,001, subject to the provisions of
paragraph (5) below.
OWNERSHIP
3. The Owner of the Policy shall be the Bank. The Owner shall have all
ownership rights in the Policy except as may be specifically granted to the
Insured or the Insured's transferee in paragraph (4) of this endorsement.
4. The Insured or the Insured's transferee shall have the right to assign
his or her rights and interests in the Policy with respect to that portion of
the death proceeds designated in paragraph (2) of this endorsement, and to
exercise all settlement options with respect to such death proceeds.
5. Notwithstanding the provisions of paragraph (4) above, the Insured, the
Insured's transferee or the Insured's beneficiary shall have no rights or
interests in the Policy with respect to that portion of the death proceeds
designated in paragraph (2) of this endorsement if the Insured is not in the
full-time employment of the Bank at the time of death, except for reason of a
leave of absence approved by the Bank.
MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY
6. Upon the death of the Insured, the interest of any collateral assignee
of the Owner of the Policy designated in (3) above shall be limited to the
portion of the proceeds described in paragraph (1) above.
OWNER'S AUTHORITY
7. The Insurer is hereby authorized to recognize the Owner's claim to
rights hereunder without investigating the reason for any action taken by the
Owner, including the Owner's statement of the amount of premiums the Owner has
paid on the Policy. The signature of the Owner shall be sufficient for the
exercise of any rights under this Endorsement and the receipt of the Owner for
any sums received by it shall be a full discharge and release therefore to the
Insurer. The Insurer may rely on a sworn statement in form satisfactory to it
furnished by the Owner, its successors or assigns, as to their interest and any
payments made pursuant to such statement shall discharge the Bank accordingly.
8. Any transferee's rights shall be subject to this Split Dollar
Endorsement.
9. The Owner accepts and agrees to this Split Dollar Endorsement.
10. The undersigned 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 Cortland, Ohio, this _____ day of ___________, 2002.
THE CORTLAND SAVINGS AND BANKING COMPANY
By:
------------------------------------
Xxxxxx X. Xxxxx
Its: President, Chairman of the Board
and Chief Executive Officer
The Insured accepts and agrees to the foregoing and, subject to the rights
of the Owner as stated above, designates _____________________________________,
(relationship: ____________________) as primary beneficiary(s) and
________________________________________________ (relationship: ____________) as
secondary beneficiary of the portion of the proceeds described in (2) above.
Signed at _______________, Ohio, this _______ day of __________, 2002.
THE INSURED
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Xxxxxxx Xxxxx
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