Exhibit 10.5 Split Dollar Endorsement Agreement dated as of April 1,
2004 between Heartland Community Bank and Xxxxxxx X. Xxxxx.
HEARTLAND COMMUNITY BANK
AMENDMENT TO
SPLIT DOLLAR ENDORSEMENT AGREEMENT
EFFECTIVE April 1, 2004.
AMENDMENT TO
HEARTLAND COMMUNITY BANK
SPLIT DOLLAR ENDORSEMENT AGREEMENT
THIS SPLIT DOLLAR ENDORSEMENT AGREEMENT, adopted this first day of April,
2004 is an amendment and restatement of the Split Dollar Endorsement Agreement
adopted January 1, 2001, by and between HEARTLAND COMMUNITY BANK, an state
Corporation located in Franklin, Indiana (the "Company") and Xxxxxxx X. Xxxxx
(the "Executive").
The purpose of this Agreement is to retain and reward the Executive, by
dividing the death proceeds of certain life insurance policies which are owned
by the Company on the life of the Executive with the designated beneficiary of
the Executive. The Company will pay the life insurance premiums from its general
assets.
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following terms shall have the
meanings specified:
1.1 "Beneficiary" means each designated person, or the estate of the deceased
Executive, entitled to benefits, if any, upon the death of the Executive.
1.2 "Beneficiary Designation Form" means the form established from time to
time by the Plan Administrator that the Executive completes, signs and
returns to the Plan Administrator to designate one or more Beneficiaries.
1.3 "Board" means the Board of Directors of the Company as from time to time
constituted.
1.4 "Company's Interest" means the benefit set forth in Section 3.2.
1.5 "Compensation" means the total base annual salary of the Executive as of
the first day of January preceding the Employee's date of death.
1.6 "Executive's Interest" means the benefit set forth in Section 3.1.
1.7 "Insured" means the Executive.
1.8 "Insurer" means the insurance company issuing the life insurance policy on
the life of the Insured.
1.9 "Net Death Proceeds" means the total death proceeds of the Policy minus
the cash surrender value.
1.10 "Policy" means the individual insurance policy or policies adopted
by the Company for purposes of insuring the Executive's life
under this Agreement.
1.11 "Termination of Employment" means the termination of Executive's
service for reasons other than death.
ARTICLE 2
PARTICIPATION
The Executive's rights under this Agreement shall automatically cease
and his or her participation in this Agreement shall automatically
terminate at the Executive's Termination of Employment. In the event
that the Company decides to maintain the Policy after the Executive's
termination of participation in the Agreement, the Company shall be
the direct beneficiary of the entire death proceeds of the Policy.
ARTICLE 3
POLICY OWNERSHIP/INTERESTS
3.1 Executive's Interest. The Executive, or the Executive's assignee, shall
have the right to designate the Beneficiary of an amount of death
proceeds equal to three (3) times Compensation, not to exceed the
Net Death Proceeds, subject to:
(a) Forfeiture of Executive's rights upon Termination of
Employment; and
(b) Termination of the Agreement and the corresponding
forfeiture of rights for the Executives in accordance
with Section 9.1 hereof.
3.2 Company's Interest. The Company shall own the Policy and shall have the
right to exercise all incidents of ownership except that the Company shall
not sell, surrender or transfer ownership of a Policy so long as the
Executive has an interest in the Policy as described in Section 3.1.
However, the Company may replace the Policy with a policy that provides
comparable death benefits to cover the benefit provided under this
Agreement. This provision shall not impair the right of the Company,
subject to Article 9, to terminate this Agreement. The Company shall be the
beneficiary of the remaining death proceeds of the Policy after the
Executive's Interest is determined according to Section 3.1.
ARTICLE 4
PREMIUMS
4.1 Premium Payment. The Company shall pay all premiums due on all Policies.
4.2 Economic Benefit. The Company shall determine the economic benefit
attributable to the Executive based on the amount of the current term rate
for the Executive's age multiplied by the aggregate death benefit payable
to the Executive's Beneficiary. The "current term rate" is the minimum
amount required to be imputed under Internal Revenue Notice 2002-8, or any
subsequent applicable authority.
4.3 Imputed Income. The Company shall impute the economic benefit to the
Executive on an annual basis, by adding the economic benefit to the
Executive's W-2, or if applicable, Form 1099.
ARTICLE 5
BENEFICIARIES
5.1 Beneficiary. The Executive shall have the right, at any time, to designate
a Beneficiary(ies) to receive any benefits payable under the Agreement to a
beneficiary upon the death of the Executive. The Beneficiary designated
under this Agreement may be the same as or different from the Beneficiary
designation under any other Agreement of the Company in which the Executive
participates.
5.2 Beneficiary Designation; Change. The Executive shall designate a
Beneficiary by completing and signing the Beneficiary Designation
Form, and delivering it to the Company or its designated agent.
The Executive's beneficiary designation shall be deemed
automatically revoked if the Beneficiary predeceases the
Executive or if the Executive names a spouse as Beneficiary and
the marriage is subsequently dissolved. The Executive shall have
the right to change a Beneficiary by completing, signing and
otherwise complying with the terms of the Beneficiary Designation
Form and the Company's rules and procedures, as in effect from
time to time. Upon the acceptance by the Company of a new
Beneficiary Designation Form, all Beneficiary designations
previously filed shall be cancelled. The Company shall be
entitled to rely on the last Beneficiary Designation Form filed
by the Executive and accepted by the Company prior to the
Executive's death.
5.3 Acknowledgment. No designation or change in designation of a
Beneficiary shall be effective until received, accepted and
acknowledged in writing by the Company or its designated agent.
5.4 No Beneficiary Designation. If the Executive dies without a valid
designation of beneficiary, or if all designated Beneficiaries
predecease the Executive, then the Executive's surviving spouse
shall be the designated Beneficiary. If the Executive has no
surviving spouse, the benefits shall be made payable to the
personal representative of the Executive's estate.
5.5 Facility of Payment. If the Company determines in its discretion
that a benefit is to be paid to a minor, to a person declared
incompetent, or to a person incapable of handling the disposition
of that person's property, the Company may direct payment of such
benefit to the guardian, legal representative or person having
the care or custody of such minor, incompetent person or
incapable person. The Company may require proof of incompetence,
minority or guardianship as it may deem appropriate prior to
distribution of the benefit. Any payment of a benefit shall be a
payment for the account of the Executive and the Executive's
Beneficiary, as the case may be, and shall be a complete
discharge of any liability under the Agreement for such payment
amount.
ARTICLE 6
ASSIGNMENT
The Executive may irrevocably assign without consideration all or
part of the Executive's Interest in this Agreement to any person, entity
or trust. In the event the Executive shall transfer all or part of the
Executive's Interest, then all or part of the Executive's Interest in
this 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 7
INSURER
The Insurer shall be bound only by the terms of its given Policy.
The Insurer shall not be bound by or deemed to have notice of the
provisions of this Agreement. The Insurer shall have the right to rely
on the Company's representations with regard to any definitions,
interpretations or Policy interests as specified under this Agreement.
ARTICLE 8
CLAIMS AND REVIEW PROCEDURE
8.1 Claims Procedure. The Executive or Beneficiary ("claimant") who
has not received benefits under the Agreement that he or she
believes should be paid shall make a claim for such benefits as
follows:
8.1.1 Initiation - Written Claim. The claimant initiates a claim
by submitting to the Company a written claim for the
benefits.
8.1.2 Timing of Company Response. The Company shall respond to
such claimant within 90 days after receiving the claim. If
the Company determines that special circumstances require
additional time for processing the claim, the Company 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 Company expects to
render its decision.
8.1.3 Notice of Decision. If the Company denies part or all of the
claim, the Company shall notify the claimant in writing of
such denial. The Company shall write the notification in a
manner calculated to be understood by the claimant. The
notification shall set forth:
(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 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.
8.2 Review Procedure. If the Company denies part or all of the claim,
the claimant shall have the opportunity for a full and fair review
by the Company of the denial, as follows:
8.2.1 Initiation - Written Request. To initiate the review, the
claimant, within 60 days after receiving the Company's
notice of denial, must file with the Company a written
request for review.
8.2.2 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 Company 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.
8.2.3 Considerations on Review. In considering the review, the
Company 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.
8.2.4 Timing of Company's Response. The Company shall respond in
writing to such claimant within 60 days after receiving the
request for review. If the Company determines that special
circumstances require additional time for processing the
claim, the Company 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 Company expects to render its decision.
8.2.5 Notice of Decision. The Company shall notify the claimant in
writing of its decision on review. The Company shall write
the notification in a manner calculated to be understood by
the claimant. The notification shall set forth:
(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 9
AMENDMENTS AND TERMINATION
9.1 Amendment or Termination of Agreement.
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The Company may amend or terminate this
Agreement at any time prior to the
Executive's death. Such amendment or
termination shall be by written notice to
the Executive. In the event that the
Company decides to maintain the Policy
after the termination of the Agreement,
the Company shall be the direct
beneficiary of the entire death proceeds
of the Policy.
9.2 Option to Purchase Upon Termination. If
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the Company exercises the right to
terminate the Agreement, the Company
shall not sell, surrender or transfer
ownership of a Policy without first
giving the Executive or the Executive's
transferee the option to purchase the
Policy for a period of sixty (60) days
from written notice of such intention.
The purchase price shall be an amount
equal to the cash surrender value of the
Policy.
ARTICLE 10
ADMINISTRATION
10.1 Company Duties. This Agreement shall be administered by the
Company which shall consist of the Board, or such committee or
persons as the Board may choose. The Company shall also have the
discretion and authority to (i) make, amend, interpret and
enforce all appropriate rules and regulations for the
administration of this Agreement and (ii) decide or resolve
any and all questions including interpretations of this
Agreement, as may arise in connection with this Agreement.
10.2 Agents. In the administration of this
Agreement, the Company may employ agents
and delegate to them such administrative
duties as it sees fit, (including acting
through a duly appointed representative),
and may from time to time consult with
counsel who may be counsel to the Company.
10.3 Binding Effect of Decisions. The
decision or action of the Company with
respect to any question arising out of or
in connection with the administration,
interpretation and application of this
Agreement and the rules and regulations
promulgated hereunder shall be final and
conclusive and binding upon all persons
having any interest in this Agreement.
10.4 Indemnity of Company. The Company shall
indemnify and hold harmless the members
of the Company against any and all
claims, losses, damages, expenses or
liabilities arising from any action or
failure to act with respect to this
Agreement, except in the case of willful
misconduct by the Company or any of its
members.
ARTICLE 11
MISCELLANEOUS
11.1 Binding Effect. This Agreement shall bind the Executive and the
Company, their beneficiaries, survivors, executors, administrators
and transferees and any Beneficiary.
11.2 No Guarantee of Employment. This Agreement is not an
employment policy or contract. It does not give the Executive
the right to remain an Executive of the Company, nor does it
interfere with the Company's right to discharge the
Executive. It also does not require the Executive to remain
an Executive nor interfere with the Executive's right to
terminate employment at any time.
11.3 Applicable Law. The Agreement and all rights hereunder shall be
governed by and construed according to the laws of the State of
Indiana, except to the extent preempted by the laws of the United
States of America.
11.4 Reorganization. The Company shall not merge or consolidate
into or with another company, or reorganize, or sell
substantially all of its assets to another company,
firm or person unless such succeeding or continuing company,
firm or person agrees to assume and discharge the
obligations of the Company under this Agreement. Upon
the occurrence of such event, the term "Company" as used
in this Agreement shall be deemed to refer to the successor
or survivor company.
11.5 Notice. Any notice or filing required or permitted to be given to
the Company under this Agreement shall be sufficient if in writing
and hand-delivered, or sent by registered or certified mail, to
the address below:
Heartland Community Bank
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark or the
receipt for registration or certification.
Any notice or filing required or permitted to be given to the Executive
under this Agreement shall be sufficient if in writing and hand-delivered,
or sent by mail, to the last known address of the Executive.
11.6 Entire Agreement. This Agreement, along with the Executive's Beneficiary
Designation Form constitute the entire agreement between the Company and
the Executive as to the subject matter hereof. No rights are granted to
the Executive under this Agreement other than those specifically set forth
herein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
indicated above.
EXECUTIVE: HEARTLAND COMMUNITY BANK
________________________________ By ______________________________________
Xxxxxxx X. Xxxxx
Title ____________________________________
I designate the following as Beneficiary of benefits under this Agreement
payable following my death.
Primary: ____________________________________________________________________
Contingent: __________________________________________________________________
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Note: To name a trust as Beneficiary, please provide the name of the
trustee(s) and the exact name and date of the trust agreement.
I understand that I may change these designations of beneficiary by filing a new
written designation with the Company. I further understand that the designations
will be automatically revoked if the Beneficiary predeceases me, or, if I have
named my spouse as beneficiary and our marriage is subsequently dissolved.
Printed Name: Xxxxxxx X. Xxxxx
Signature: ______________________________
Date: _____________
Acknowledged by the Company this ________ day of ___________________, 2004.
By _________________________________
Title ________________________________
