EXHIBIT 10.6
Split-Dollar Endorsement Agreement
THIS AGREEMENT, made and entered into this 1st day of January, 2001, by
and between the Heartland Community Bank, (hereinafter referred to as the
"Corporation"), a Corporation organized and existing under the laws of the State
of Indiana, and Xxxxxxx X. Xxxxx (hereinafter referred to as the "Employee").
WHEREAS, the Employee has performed his duties in an efficient and
capable manner; and
WHEREAS, the Corporation is desirous of retaining the services of the
Employee; and
WHEREAS, the Corporation is desirous of assisting the Employee in
paying for life insurance on his own life; and
WHEREAS, the Corporation has determined that this assistance can best
be provided under a "split-dollar" arrangement; and
WHEREAS, the Corporation and the Employee have applied for Insurance
Policy No. 1Y200102 (the "Policy") issued by the New England Financial Life
Insurance Company ("New England Financial") on the Employee's life; and
WHEREAS, it is now understood and agreed that this split-dollar agreement
is to be effective as of the date on which the Policy was issued by "New England
Financial".
NOW, THEREFORE, for value received and in consideration of the mutual
covenants contained herein, the parties agree as follows:
ARTICLE I
"Definitions"
For purposes of this Agreement, the following terms will have the meanings set
forth below:
1. "Cash Surrender Value of the Policy" will mean the Cash Value of the
Policy; plus any dividends and/or earnings added hereto; and less any Policy
Loan Balance.
2. "Cash Value of the Policy" will mean the cash value as calculated
according to the provisions of the Policy.
3. "Corporation's Interest in the Policy" will be defined in Articles IV
and V.
4. "Current Loan Value of the Policy" will mean the Loan Value of the
Policy reduced by any outstanding Policy Loan Balance.
5. "Loan Value of the Policy" will mean the amount which with loan
interest and Monthly Deductions for the Cost of Insurance, plus any applicable
Surrender Charge, will equal the Cash Value of the Policy on the next loan
interest due date.
6. "Policy Loan Balance" at any time will mean policy loans outstanding
plus interest accrued to date.
ARTICLE II
"Allocation of Gross Premium"
The Corporation will pay all premiums on the Policy when due, according to the
Schedule of Premiums in the Policy.
ARTICLE III
"Payment of Premiums"
Any premium or portion thereof which is payable by the Employee under any
Article of the Agreement may at the election of the Employee be deducted from
the cash compensation otherwise payable to him and the Corporation agrees to
transmit that premium or portion, along with any premium or portion thereof
payable by it, to the Insurance Company on or before the premium due date.
ARTICLE IV
"Rights in the Policy"
The Employee will have the sole right to designate the beneficiary for a
specified amount of the death proceeds of the Policy. The Corporation will have
and may exercise, except as limited hereinafter, all ownership rights in the
Policy. The Corporation will not without the written consent of the Employee
assign its rights in the Policy, other than for the purpose of obtaining a loan
against the Policy, to anyone other than the Employee. The Corporation will not
take any action in dealing with the Insurance Company that would impair any
right or interest of the Employee in the Policy. The Corporation will have the
right to borrow from the Insurance Company, and to secure that loan by the
Policy, an amount which together with the unpaid interest accrued thereon, will
at no time exceed the lesser of (a) the Corporation's Interest in the Policy and
(b) the Loan Value of the Policy.
During the Employee's life time "The Corporation's Interest In The Policy" will
mean, at any time at which the value of such interest is to be determined under
this Agreement, the Cash Value of the Policy at such time, reduced by any then
outstanding Policy Loan Balance with respect to any loans made or charged
automatically against the Policy by the Corporation.
ARTICLE V
"Rights to the Proceeds at Death"
Upon the death of the Employee while this Agreement is in force, the Employee's
beneficiary as named in the policy will be entitled to receive from the Policy
proceeds an amount equal to three (3) times the Employee's base salary as of the
first day of January preceding the Employee's date of death. The remainder of
the Policy Proceeds will be paid to the Corporation. Within 60 days after the
death of the Employee, the Corporation will provide to "New England Financial" a
written statement indicating the amount of the Policy proceeds the Employee's
beneficiary is entitled to receive.
ARTICLE VI
"Termination of Agreement"
This Agreement may be terminated at any time while the Employee is living by
written notice thereof by either the Corporation or the Employee to the other;
and, in any event, this Agreement will terminate upon termination of the
Employee's employment.
ARTICLE VII
"Plan Management"
For purposes of the Employee Retirement Income Security Act of 1974, the
Corporation will be the "Named Fiduciary" and Plan Administrator of the
split-dollar life insurance plan for which this Agreement is hereby designated
the written plan instrument. The Corporation's board of directors may authorize
a person or group of persons to fulfill the responsibilities of the Corporation
as Plan Administrator. The Named Fiduciary or the Plan Administrator may employ
others to render advice with regard to its responsibilities under this Plan. The
Named Fiduciary may also allocate fiduciary responsibilities to others and may
exercise any other powers necessary for the discharge of its duties to the
extent not in conflict with the Employee Retirement Income Security Act of 1974.
ARTICLE VIII
"Claims Procedure"
(1) Filing claims. Any insured, beneficiary or other individual (hereinafter
"Claimant") entitled to benefits under the Plan or under the Policy will file a
Claim request with the Plan Administrator with respect to benefits under the
Plan and with "New England Financial", with respect to benefits under the
Policy. The Plan Administrator will, upon written request of a Claimant, make
available copies of any claim forms or instructions provided by "New England
Financial" or advise the Claimant where such forms or instructions may be
obtained.
(2) Notification to Claimant. If a claim request is wholly or
partially denied, the Plan Administrator will furnish to the Claimant a notice
of the decision within 90 days in writing and in a manner calculated to the
understood by the Claimant, which notice will contain the following information:
(a) The specific reason or reasons for the denial;
(b) Specific reference to the pertinent Plan provisions upon which the denial
is based;
(c) A description of any additional material or information necessary for the
Claimant to perfect the Claim and an explanation of why such material or
information is necessary; and
(d) An explanation of the Plan's claims review procedure describing the steps
to be taken by a Claimant who wishes to submit his claim for review.
(3) Review Procedure. A Claimant or his authorized representative may with
respect to any denied claim:
(a) Request a review upon written application filed within 60 days after
receipt by the Claimant of notice of the denial of his claim;
(b) Review pertinent documents; and
(c) Submit issues and comments in writing.
Any request or submission will be in writing and will be directed to the
Named Fiduciary (or his designee). The Named Fiduciary (or its designee)
will have sole responsibility for the review of any denied claim and will
take all steps appropriate in the light of its findings.
(4) Decision on Review. The Named Fiduciary (or its designee)
will render a decision upon review of a denied claim within 60 days after
receipt of a request for review. If special circumstances warrant
additional time, the decision will be rendered as soon as possible, but not
later than 120 days after receipt of request for review. Written notice of
any such extension will be furnished to the Claimant prior to the
commencement of the Extension. The decision on review will be in writing
and will include specific reasons for the decision, written in a manner
calculated to be understood by the Claimant, as will as specific references
to the pertinent provisions of the Plan on which the decision is based. If
the decision on review is not furnished to the Claimant within the time
limits prescribed above, the claim will be deemed denied on review.
ARTICLE IX
"Satisfaction of Claim"
The Employee rights and interests, and rights and interests of any person taking
under or through him, will be completely satisfied upon compliance by the
Corporation with the provisions of the Agreement.
ARTICLE X
"Amendment and Assignment"
This Agreement may be altered, amended or modified, including the addition of
any extra policy provisions, by a written instrument signed by the Corporation
and the Employee. Either party may, subject to the limitations of Article IV,
assign its interest and obligations under this Agreement, provided, however,
that any assignment will be subject to the terms of this Agreement.
ARTICLE XI
"Possession of Policy"
The Corporation will keep possession of the Policy. The Corporation agrees from
time to time to make the policy available to the Employee or to "New England
Financial" for the purpose of endorsing or filing any change of beneficiary on
the Policy but the Policy will promptly be returned to the Corporation.
ARTICLE XII
"Governing Law"
This Agreement sets forth the entire Agreement of the parties hereto, and any
and all prior agreements, to the extent inconsistent herewith, are hereby
superseded. This Agreement will be governed by the laws of the State of Indiana.
ARTICLE XIII
"Interpretation"
Where appropriate in this Agreement, words used in the singular will include the
plural and words used in the masculine will include the feminine.
IN WITNESS WHEREOF, the parties have hereunto set their hand and seals,
the Corporation by its duly authorized officer, on the day and year first above
written.
---------------------------------------------
Employee
---------------------------------------------
Officer
