EXHIBIT 10.6
LIFE INSURANCE
ENDORSEMENT METHOD SPLIT DOLLAR PLAN
AGREEMENT
Insurer: Xxxxxxxxx Xxxxxxxx Life Insurance
Policy Number: 0010201695
Bank: Xxxxxxx Merchants Bank
Insured: Xxxxx Xxxxx
Relationship of Insured to Bank: Executive
The respective rights and duties of the Bank and the Insured in the subject
policy shall be as defined in the following:
I. DEFINITIONS
Refer to the policy contract for the definition of all terms in this
Agreement.
II. POLICY TITLE AND OWNERSHIP
Title and ownership shall reside in the Bank for its use and for the use
of the Insured all in accordance with this Agreement. The Bank alone may,
to the extent of its interest, exercise the right to borrow or withdraw on
the policy cash values. Where 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 his 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 Bank may have
in such proceeds, as provided in this Agreement.
IV. PREMIUM PAYMENT METHOD
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 its administrator) will report to the Employee the amount of imputed
income received each year on Form W-2 or its equivalent.
VI. DIVISION OF DEATH PROCEEDS
Subject to Paragraph VII herein, the division of the death proceeds of the
policy is as follows:
A. 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.
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 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 and any applicable surrender charges. Such cash value shall be
determined as of the date of surrender or death as the case may be.
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VIII. PREMIUM WAIVER
If the policy contains a premium waiver provision, such waived amounts
shall be considered for all purposes of this Agreement as having been paid
by the Bank.
IX. RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY ELECTION EXISTS
In the event the policy involves an endowment or annuity element, the
Bank's 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.
X. TERMINATION OF AGREEMENT
This Agreement shall terminate at the option of the Bank following thirty
(30) days written notice to the Insured upon the happening of any one of
the following:
1. The Insured shall be in violation of the terms and conditions of that
certain Executive Supplemental Retirement Plan Agreement dated the 26th
of June, 1997, or
2. The Insured shall be discharged from service with the Bank for cause.
The term "for cause" shall mean the commission of a felony or gross-
misdemeanor involving moral turpitude, fraud, dishonesty or willful
violation of any law that results in an adverse effect on the Bank.
Upon such termination, the Insured (or assignee) shall have a ninety (90)
day option to receive from the Bank an absolute assignment of the policy
in consideration of a cash payment to the Bank, whereupon this Agreement
shall terminate. Such cash payment shall be the greater of:
1. The Bank's share of the cash value of the policy on the date of such
assignment, as defined in this Agreement.
2. The amount of the premiums which have been paid by the Bank prior to
the date of such assignment.
Should the Insured (or assignee) fail to exercise this option within the
prescribed ninety (90) day period, the Insured (or assignee) agrees that
all of his rights, interest
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and claims in the policy shall terminate as of the date of the termination
of this Agreement.
Except as provided above, this Agreement shall terminate upon distribution
of the death benefit proceeds in accordance with Paragraph VI above.
XI. INSURED'S OR ASSIGNEE'S ASSIGNMENT RIGHTS
The Insured may not, without the written consent 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.
XII. AGREEMENT BINDING UPON THE PARTIES
This Agreement shall bind the Insured and the Bank, their heirs,
successors, personal representatives and assigns.
XIII. NAMED XXXXXXXXX AND PLAN ADMINISTRATOR
Xxxxxxx Merchants Bank is hereby designated the "Named Fiduciary" until
resignation or removal by the board of directors. As Named Fiduciary, the
bank shall be responsible for the management, control, and administration
of this Split Dollar Plan as established herein. The Named Fiduciary may
allocate to others certain aspects of the management and operation
responsibilities of the plan, including the employment of advisors and the
delegation of any ministerial duties to qualified individuals.
XIV. FUNDING POLICY
The funding policy for this Split Dollar Plan shall be to maintain the
subject policy in force by paying, when due, all premiums required.
XV. CLAIM PROCEDURES FOR LIFE INSURANCE POLICY AND SPLIT DOLLAR PLAN
Claim forms or claim information as to the subject policy can be obtained
by contacting The Benefit Marketing Group, Inc. (770-952-1529). When the
Named Fiduciary has a claim which may be covered under the provisions
described in the insurance policy, he 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 to the Named Fiduciary.
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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, he should
contact the office named above and they will assist in making 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.
XVI. 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.
XVII. 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
for any and all liability.
Executed at Bangor, Maine this 26th day of June, 1997.
XXXXXXX MERCHANTS BANK
/s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx Xxxxxx CFO
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Witness Title
/s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxx
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Witness Xxxxx Xxxxx
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BENEFICIARY DESIGNATION FORM
PRIMARY DESIGNATION:
Name Relationship
---- ------------
Xxxx X. Xxxxx Wife
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CONTINGENT DESIGNATION:
Xxxxxx Xxxx 50% Daughter
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Xxxxxx Xxxxxx 50% Daughter
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/s/ Xxxxx Xxxxx 6/26/97
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Xxxxx Xxxxx Date
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