EXHIBIT 10.5
LIFE INSURANCE ENDORSEMENT METHOD
SPLIT DOLLAR PLAN AGREEMENT
Insurer: Xxxx Xxxxxxx Life Insurance Company (USA)
Policy Number:
Bank: Central Co-Operative Bank
Insured #1: Xxxxxxx X. Xxxxxxxxx
Insured #2: Xxxxx X. Xxxxxxxxx
Relationship of Insured #1 to Bank: Executive - Xxxxxxx X. Xxxxxxxxx
Trust: Rabbi Trust for the Executive Salary Continuation Agreement
and the Life Insurance 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 Salary Continuation Agreement and the Life Insurance
Endorsement Method Split Dollar Plan Agreement for its use and for the
use of the Insured all in accordance with this 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
Agreement, 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. The Insured shall have the
right to name such Beneficiary at any time prior to the Insured's death
and submit it to the Plan Administrator (or Plan Administrator's
representative) on the form provided. Once received and acknowledged by
the Plan Administrator, the form shall be effective. The Insured may
change a Beneficiary designation at any time by submitting a new form
to the Plan Administrator. Any such change shall follow the same rules
as for the original Beneficiary designation and shall automatically
supersede the existing Beneficiary form on file with the Plan
Administrator.
If the Insured dies without a valid Beneficiary designation on file
with the Plan Administrator, death benefits shall be paid to the
Insured's estate.
If the Plan Administrator 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 Plan Administrator may direct distribution of such benefit to the
guardian, legal representative or person having the care or custody of
such minor, incompetent person or incapable person. The Plan
Administrator may require proof of incompetence, minority or
guardianship as it may deem appropriate prior to distribution of the
benefit. Any distribution of a benefit shall be a distribution for the
account of the Insured and the Beneficiary, as the case may be, and
shall be a complete discharge of any liability under the Agreement for
such distribution amount.
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
imputed value of insurance as required by the Internal Revenue Service.
The Bank (or its administrator) 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 #1 and Insured #2, the Insured's
beneficiary(ies), designated in accordance with Paragraph III,
shall be entitled to an amount equal to One Million and
00/100th Dollars ($1,000,000.00).
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.
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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
Should Xxxxxxx X. Xxxxxxxxx be discharged from employment with the Bank
"for cause" at any time, this Agreement shall terminate and all
benefits herein forfeited by the Insured. 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 fraud or dishonesty; (iii) the willful
violation of any law, rule, or regulation; (iv) an intentional failure
to perform stated duties; or (v) a breach of fiduciary duty involving
personal profit.
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
Insured #1 or Insured #2 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 #1, Insured #2 and the Bank or
the Trustee at the direction of the Bank, their heirs, successors,
personal representatives and assigns.
XII. ADMINISTRATIVE AND CLAIMS 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"):
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A. Plan Administrator:
------------------
The "Plan Administrator" of this Life Insurance Endorsement
Method Split Dollar Plan Agreement shall be Central
Co-Operative Bank. As Plan Administrator, the Bank or the
Trustee at the direction of the Bank shall be responsible for
the management, control, and administration of this Life
Insurance Endorsement Method Split Dollar Plan Agreement as
established herein. The Plan Administrator may delegate 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.
B. 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.
C. Claim Procedures:
----------------
Claim forms or claim information as to the subject policy can
be obtained by contacting Renaissance Bank Advisors
(800-544-6079). When the Plan Administrator has a claim which
may be covered under the provisions described in the insurance
policy, they 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 Plan
Administrator 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 Plan Administrator of the denial
pursuant to the requirements under the terms of the policy. If
the Plan Administrator 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 neutral
gender, they shall be read and construed as in the masculine, feminine
or neutral gender, whenever they should so apply.
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
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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 defined as the occurrence of any one of the
following:
a. the acquisition of more than fifty percent (50%) of the value
or voting power of the Bank's stock by a person or group;
b. the acquisition in a period of twelve (12) months or less of
at least thirty-five percent (35%) of the Bank's stock by a
person or group;
c. the replacement of a majority of the Bank's board in a period
of twelve (12) months or less by Directors who were not
endorsed by a majority of the current board members; or
d. the acquisition in a period of twelve (12) months or less of
forty percent (40%) or more of the Bank's assets by an
unrelated entity.
For the purposes of this Agreement, transfers made on account of deaths
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 in Control. Upon a Change
of Control, if Insured #1's employment is subsequently terminated,
except for cause, then Insured #1 shall be one hundred percent (100%)
vested in the benefits promised in this Agreement and, therefore, upon
the death of Insured #1 and Insured #2, the beneficiary(ies)
(designated in accordance with Paragraph III) shall receive the death
benefit provided herein as if Insured #1 had died while employed by the
Bank [see Subparagraph VI (A)].
XVI. AMENDMENT OR REVOCATION, AND EXCHANGE OF POLICY
Subject to the Bank's sole and absolute right to surrender or terminate
any and all life insurance policies that are the subject matter of this
Agreement, it is agreed by and between the parties hereto that, during
the lifetime of Insured #1 and Insured #2, this Agreement may be
amended or revoked at any time or times, in whole or in part, by the
mutual written consent of Insured #1 and the Bank. In the event of the
death of Insured #1, the consent may be made by Insured #2 and the
Bank. The Bank may, however, unilaterally and without the consent of
the Insureds, exchange any life insurance policy(ies) that are the
subject matter of this Agreement, with or without replacing said
policy(ies) and, in the event of a same or similar exchange, the
Insureds expressly agrees to the same.
XVII. EFFECTIVE DATE
The Effective Date of this Agreement shall be December 20, 2007.
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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 overbroad 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 Commonwealth of Massachusetts.
Executed at Somerville, Massachusetts this 20th day of December, 2007.
CENTRAL CO-OPERATIVE BANK
Somerville, MA
/s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxx, Xx.
------------------------------- ------------------------------------------
Witness (Bank Director other than Insured) Title
/s/ Xxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------- ------------------------------------------
Witness Xxxxxxx X. Xxxxxxxxx
/s/ Xxxxxx Xxxxx, Jr. /s/ Xxxxx X. Xxxxxxxxx
------------------------------- ------------------------------------------
Witness Xxxxx X. Xxxxxxxxx
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BENEFICIARY DESIGNATION FORM FOR THE
EXECUTIVE SALARY CONTINUATION AGREEMENT
I. PRIMARY DESIGNATIONS
--------------------
A. Person(s) as a Primary Designation:
----------------------------------
(Please indicate the percentage for each beneficiary.)
1. Name: Relationship: SS#: %
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Address:
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(Street) (City) (State) (Zip)
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2. Name: Relationship: SS#: %
-------------------------------------------------------------------------------------------------------------------
Address:
-------------------------------------------------------------------------------------------------------------------
(Street) (City) (State) (Zip)
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3. Name: Relationship: SS#: %
-------------------------------------------------------------------------------------------------------------------
Address:
-------------------------------------------------------------------------------------------------------------------
(Street) (City) (State) (Zip)
-------------------------------------------------------------------------------------------------------------------
4. Name: Relationship: SS#: %
-------------------------------------------------------------------------------------------------------------------
Address:
-------------------------------------------------------------------------------------------------------------------
(Street) (City) (State) (Zip)
-------------------------------------------------------------------------------------------------------------------
II. ESTATE AND/OR TRUST AS PRIMARY DESIGNATIONS
-------------------------------------------
A. Estate as a Primary Designation:
-------------------------------
An Estate can still be listed even if there is no will.
My Primary Beneficiary is The Estate of as set forth in the Last Will and
---------------------------------
(Insert full name)
Testament dated the day of , 200 and any codicils thereto.
-------- --------------- ---
B. Trust as a Primary Designation:
Name of the Trust:
-------------------------------------------------------------------------------------------------------------------
Execution Date of the Trust: Name of the Trustee:
-------------------------------------------------------------------------------------------------------------------
Beneficiary of the Trust:
(please indicate the percentage for each beneficiary):
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Name(s):
-------------------------------------------------------------------------------------------------------------------
Name(s):
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Is this an Irrevocable Life Insurance Trust? Yes No
----- -----
(If yes and this designation is for a Joint Beneficiary
Designation Agreement, an Assignment of Rights form must be
completed.)
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III. SECONDARY (CONTINGENT) DESIGNATIONS
-----------------------------------
A. Person(s) as a Secondary (Contingent) Designation:
-------------------------------------------------
(Please indicate the percentage for each beneficiary in the event
of the Primary's Death.)
1. Name: Relationship: SS#: %
-------------------------------------------------------------------------------------------------------------------
Address:
-------------------------------------------------------------------------------------------------------------------
(Street) (City) (State) (Zip)
-------------------------------------------------------------------------------------------------------------------
2. Name: Relationship: SS#: %
-------------------------------------------------------------------------------------------------------------------
Address:
-------------------------------------------------------------------------------------------------------------------
(Street) (City) (State) (Zip)
-------------------------------------------------------------------------------------------------------------------
3. Name: Relationship: SS#: %
-------------------------------------------------------------------------------------------------------------------
Address:
-------------------------------------------------------------------------------------------------------------------
(Street) (City) (State) (Zip)
-------------------------------------------------------------------------------------------------------------------
4. Name: Relationship: SS#: %
-------------------------------------------------------------------------------------------------------------------
Address:
-------------------------------------------------------------------------------------------------------------------
(Street) (City) (State) (Zip)
-------------------------------------------------------------------------------------------------------------------
IV. ESTATE AND/OR TRUST AS SECONDARY (CONTINGENT) DESIGNATIONS
----------------------------------------------------------
A. Estate as a Secondary (Contingent) Designation:
----------------------------------------------
My Primary Beneficiary is The Estate of as set forth in the last will and
------------------------------
Testament dated the day of , 200 and any codicils thereto.
--------- --------------------- ----
B. Trust as a Secondary (Contingent) Designation:
---------------------------------------------
Name of the Trust:
-------------------------------------------------------------------------------------------------------------------
Execution Date of the Trust: Name of the Trustee:
-------------------------------------------------------------------------------------------------------------------
Beneficiary of the Trust:
(please indicate the percentage for each beneficiary):
-------------------------------------------------------------------------------------------------------------------
Name(s):
-------------------------------------------------------------------------------------------------------------------
Name(s):
-------------------------------------------------------------------------------------------------------------------
Is this an Irrevocable Life Insurance Trust? Yes No
----- -----
(If yes and this designation is for a Joint Beneficiary
Designation Agreement, an Assignment of Rights form must be
completed.)
V. SIGN AND DATE
-------------
This Beneficiary Designation Form is valid until the Executive notifies
the bank in writing.
------------------------------------ ------------------------------
Xxxxxxx X. Xxxxxxxxx Date
------------------------------------ ------------------------------
Xxxxx X. Xxxxxxxxx Date
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