TEMECULA VALLEY BANK SPLIT DOLLAR AGREEMENT
EXHIBIT
10.51
TEMECULA
VALLEY BANK
THIS
AGREEMENT is entered into this 29th
day of
December 2006, by and between TEMECULA VALLEY BANK, a bank located in Temecula
Valley, California, and organized under the laws of the State of California
(“Bank”), and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. (the "Executive"). This Agreement shall append
the Split Dollar Endorsement entered into on even date herewith or as
subsequently amended, by and between the aforementioned parties.
INTRODUCTION
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.
The Bank will pay life insurance premiums from its general assets.
AGREEMENT
The
Bank
and the Executive agree as follows:
Article
1
General
Definitions
The
following terms shall have the meanings specified:
1.1 “Insured”
means
the Executive.
1.2 “Insurer”
means
each life insurance carrier in which there is a Split Dollar Policy Endorsement
attached to this Agreement.
1.3 “Policy”
means
the specific life insurance policy issued by the Insurer.
1.4 “Salary
Continuation Agreement”
means
the Salary Continuation Agreement between the Company and the Executive, entered
into on even date herewith.
1.5 “Change
in Control”
means:
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(a)
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A
change in the ownership of the capital stock of the Company, whereby
another corporation, person, or group acting in concert (hereinafter
this
Agreement shall collectively refer to any combination of these three
[another corporation, person, or group acting in concert] as a “Person”)
as described in Section 14(d)(2) of the Securities Exchange Act of
1934,
as amended (the “Exchange Act”), acquires, directly or indirectly,
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under
the Exchange Act) of a number of shares of capital stock of the Company
which constitutes twenty-five percent (25%) or more of the combined
voting
power of the Company’s then outstanding capital stock then entitled to
vote generally in the election of directors; or
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(b)
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The
persons who were members of the Board of Directors of the Company
immediately prior to a tender offer, exchange offer, contested election
or
any combination of the foregoing, cease to constitute a majority
of the
Board of Directors; or
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(c)
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The
adoption by the Board of Directors of the Company of a merger,
consolidation or reorganization plan involving the Company in which
the
Company is not the surviving entity, or a sale of all or substantially
all
of the assets of the Company. For purposes of this Agreement, a sale
of
all or substantially all of the assets of the Company shall be deemed
to
occur if any Person acquires (or during the 12-month period ending
on the
date of the most recent acquisition by such Person, has acquired)
gross
assets of the Company that have an aggregate fair market value equal
to
twenty-five percent (25%) or more of the fair market value of all
of the
respective gross assets of the Company immediately prior to such
acquisition or acquisitions; or
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(d)
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A
tender offer or exchange offer is made by any Person which results
in such
Person beneficially owning (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) either twenty-five percent (25%) or more
of the
Company’s outstanding shares of Common Stock or shares of capital stock
having twenty-five (25%) or more the combined voting power of the
Company’s then outstanding capital stock (other than an offer made by the
Company), and sufficient shares are acquired under the offer to cause
such
person to own twenty-five (25%) or more of the voting power;
or
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(e)
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Any
other transactions or series of related transactions occurring which
have
substantially the same effect as the transactions specified in any
of the
preceding clauses of this Section
1.5.
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Notwithstanding
the above, certain transfers are permitted within Section 318 of the Code and
such transfers shall not be deemed a Change in Control under this Section 1.5.
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 the remaining
death
proceeds of the Policy after the Interest of the Executive or the Executive’s
transferee has been paid according to Section 2.2 below.
2.2 Executive's
Interest.
Executive shall have the right to designate the beneficiary of the death
proceeds of the Policy. The Executive shall also have the right to elect and
change settlement options that may be permitted. Upon
the
termination of this Agreement pursuant to Article 7, the Executive, the
Executive’s transferee or the Executive’s beneficiary shall have no rights or
interests in the Policy and no death benefit shall be paid under this Section
2.2.
2.2.1 Death
During Active Service.
If the Executive dies while in the Active service of the Bank, the Executive’s
beneficiary shall receive Nine Hundred Ninety-two Thousand Four Hundred
Sixty-seven dollars ($992,467).
2.2.2 Death
During Payment of a Benefit Under the Salary Continuation
Agreement.
If the Executive Dies after any benefit payments have commenced under Article
2
of the Salary Continuation Agreement but before receiving all such payments,
the
Bank shall cease paying the remaining Salary Continuation benefit, if any,
and
the Executive’s beneficiary shall receive a Split Dollar benefit equal to the
remaining Accrued Liability Balance, as defined in the Salary Continuation
Agreement.
2.2.3 Death
After Termination of Employment but Before Commencement of Payment under the
Salary Continuation Agreement.
If the Executive is entitled to a benefit under Article 2 of the Salary
Continuation Agreement, but dies prior to the commencement of said benefit
payments, the Bank shall pay no benefit under the Salary Continuation Agreement
and the Executive’s beneficiary shall receive the split dollar death benefit
described in Section 2.2.1 of this Agreement.
2.2.4 Death
After Payment of all Benefits Under the Salary Continuation
Agreement.
If the Executive Dies after all benefit payments have been made under Article
2
of the Salary Continuation Agreement, no benefits shall be paid under this
Agreement.
2.3 Comparable
Coverage upon Change in Control.
Upon a
Change in Control, the Company shall not amend, terminate or otherwise abrogate
the Executive’s Interest in the Policy unless the Company replaces the Policy
with a comparable insurance policy to cover the benefit provided under this
Agreement and the Company and the Executive execute a new Split Dollar Policy
Endorsement for said comparable insurance policy. The Policy or any comparable
policy shall be subject to the claims of the Company’s creditors.
Article
3
Premiums
3.1 Premium
Payment.
The
Bank shall pay any premiums due on the Policy.
3.2 Economic
Benefit.
The
Bank shall determine the economic benefit attributable to the Executive based
on
the life insurance premium factor for the Executive's age multiplied by the
aggregate death benefit payable to the Beneficiary. The "life insurance premium
factor" is the minimum factor applicable under guidance published pursuant to
Treasury Reg. § 1.61-22(d)(3)(ii) or any subsequent authority.
3.3 Imputed
Income.
The
Bank shall impute the economic benefit to the Executive on an annual basis,
by
adding the economic benefit to the Executive’s Form W-2.
Article
4
Assignment
The
Executive may assign without consideration all of the Executive’s interests in
the Policy and in this 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 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
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
Agreement.
Article 6
Claims
and Review Procedures
6.1 Claims
Procedure.
Any
person or entity who has not received benefits under the Plan that he or she
believes should be paid (the “claimant”) 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:
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(a)
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The
specific reasons for the denial,
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(b)
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A
reference to the specific provisions of the Plan on which the denial
is
based,
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(c)
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A
description of any additional information or material necessary
for the
claimant to perfect the claim and an explanation of why it is needed,
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(d)
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An
explanation of the Plan’s review procedures and the time limits applicable
to such procedures, and
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(e)
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A
statement of the claimant’s right to bring a civil action under ERISA
Section 502(a) following an adverse benefit determination on review.
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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:
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(a)
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The
specific reasons for the denial,
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(b)
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A
reference to the specific provisions of the Plan on which the denial
is
based,
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(c)
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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
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(d)
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A
statement of the claimant’s right to bring a civil action under ERISA
Section 502(a).
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Article
7
Amendments
and Termination
This
Agreement may be amended or terminated only by a written agreement signed by
the
Bank and the Executive.
Article
8
General
Limitations
8.1 Suicide
or Misstatement.
No
benefits shall be payable if the Executive commits suicide within two years
after the date of this Agreement, or if the insurance company denies coverage
for material misstatements of fact made by the Executive on any job application
or on any application for life insurance purchased by the Bank.
Article
9
Miscellaneous
9.1 Binding
Effect.
This
Agreement shall bind the Executive and the Bank and their beneficiaries,
survivors, executors, administrators and transferees, and any Policy
beneficiary.
9.2
Applicable Law.
The
Agreement and all rights hereunder shall be governed by and construed according
to the laws of the State of California, except to the extent preempted by the
laws of the United States of America.
9.3 Reorganization.
The Bank
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 Bank.
9.4 Notice.
Any
notice, consent or demand required or permitted to be given under the provisions
of this Split Dollar Agreement by one party to another shall be in writing,
shall be signed by the party giving or making the same, and may be given either
by delivering the same to such other party personally, or by mailing the same,
by United States certified mail, postage prepaid, to such party, addressed
to
his or her last known address as shown on the records of the Bank. The date
of
such mailing shall be deemed the date of such mailed notice, consent or
demand.
9.5 Entire
Agreement. This
Agreement constitutes the entire agreement between the Bank and the Executive
as
to the subject matter hereof. No rights are granted to the Executive by virtue
of this Agreement other than those specifically set forth herein.
9.6 Administration.
The
Bank
shall have powers which are necessary to administer this Agreement, including
but not limited to:
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(a)
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Interpreting
the provisions of this Agreement;
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(b)
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Establishing
and revising the method of accounting for this
Agreement;
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(c)
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Maintaining
a record of benefit payments; and
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(d)
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Establishing
rules and prescribing any forms necessary or desirable to administer
this
Agreement.
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9.7 Named
Fiduciary. The
Bank
shall be the named fiduciary and plan administrator under the Agreement. The
named fiduciary may delegate to others certain aspects of the management and
operation responsibilities of the plan including the employment of advisors
and
the delegation of ministerial duties to qualified individuals.
IN
WITNESS WHEREOF, the parties have executed this Agreement the day and year
first
above written.
EXECUTIVE: BANK:
TEMECULA
VALLEY BANK
| By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇. | By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | ||
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Executive
Vice President and Chief
Financial
Officer
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