Southern Community Bank and Trust Endorsement Split Dollar Agreement
EXHIBIT
10.25
Addendum
A
Southern
Community Bank and Trust
This
Endorsement
Split Dollar Agreement
(this
“Agreement”) is entered into as of this 14th
day
of
March
,
2007 by
and between Southern Community Bank and Trust, a North Carolina-chartered bank
(the “Bank”), and ▇▇▇▇ ▇. ▇▇▇▇▇, an executive of the Bank (the “Executive”).
This Agreement shall append the Split Dollar Policy Endorsement entered into
on
even date herewith or as subsequently amended, by and between the aforementioned
parties.
Whereas,
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
if the Executive dies while employed by the Bank, and
Whereas,
the
Bank will pay life insurance premiums from its general assets.
Now
Therefore,
in
consideration of the foregoing premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties hereto agree as follows.
Article
1
General
Definitions
Capitalized
terms not otherwise defined in this Agreement are used herein as defined in
the
Amended Salary Continuation Agreement dated as of the date of this Agreement
between the Bank and the Executive. The following terms shall have the meanings
specified.
1.1 “Administrator”
means
the administrator described in Article 7.
1.2 “Executive’s
Interest”
means
the benefit set forth in section 2.2.
1.3 “Insured”
means
the Executive.
1.4 “Insurer”
means
each life insurance carrier for which there is a Split Dollar Policy Endorsement
attached to this Agreement.
1.5 “Net
Death Proceeds”
means
the total death proceeds of the Policy minus the cash surrender
value.
1.6 “Policy”
means
the specific life insurance policy or policies issued by the
Insurer.
1.7 “Split
Dollar Policy Endorsement”
means
the form required by the Administrator or the Insurer to indicate the
Executive’s interest, if any, in a Policy on the Executive’s life.
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 Executive’s interest is paid according to
section 2.2 below.
2.2 Death
Benefit.
Provided the Executive’s death occurs before the Executive’s Separation from
Service, at the Executive’s death the Executive’s beneficiary designated in
accordance with the Split Dollar Policy Endorsement shall be entitled to
87
%
of the
Net Death Proceeds (the “Executive’s Interest”). The Executive shall have the
right to designate the beneficiary of the Executive’s Interest. The Executive’s
Interest shall be extinguished when the Executive’s Separation from Service
occurs and the Executive’s beneficiary shall be entitled to no benefits under
this Agreement thereafter.
2.3 Option
to Purchase.
Prior
to the Executive’s Separation from Service, the Bank shall not sell, surrender,
or transfer ownership of the Policy while this Agreement is in effect without
first giving the Executive or the Executive’s transferee the option to purchase
the Policy for a period of 60 days from written notice of such intention. The
purchase price shall be an amount equal to the cash surrender value of the
Policy. The option to purchase the Policy shall lapse if not exercised within
60
days after the date the Bank gives written notice of the
Bank’s
intention to sell, surrender, or transfer ownership of the Policy. This
provision shall not impair the right of the Bank to terminate this
Agreement.
2.4 Internal
Revenue Code Section 1035 Exchanges.
The
Executive recognizes and agrees that the Bank may after this Agreement is
adopted wish to exchange the Policy of life insurance on the Executive’s life
for another contract of life insurance insuring the Executive’s life. Provided
that the Policy is replaced (or intended to be replaced) with a comparable
policy of life insurance, the Executive agrees to provide medical information
and cooperate with medical insurance-related testing required by a prospective
insurer for implementing the Policy or, if necessary, for modifying or updating
to a comparable insurer.
Article
3
Premiums
3.1 Premium
Payment.
The
Bank shall pay any premiums due on the Policy.
3.2 Economic
Benefit.
The
Administrator shall annually 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 Executive’s
beneficiary. The “life insurance premium factor” is the minimum factor
applicable under guidance published pursuant to Treasury Reg. section
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 W-2, or if applicable, Form
1099.
Article
4
Assignment
The
Executive may irrevocably assign without consideration all of the Executive’s
interest in the Policy and in this Agreement to any person, entity, or trust
established by the Executive or the Executive’s spouse. If 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 this Agreement.
Article
5
Insurer
The
Insurer shall be bound by the terms of the Policy only. 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 this Agreement that he
or
she believes should be paid (the “claimant”) shall make a claim for benefits as
follows -
6.1.1 Initiation
- written claim.
The
claimant initiates a claim by submitting to the Administrator a written claim
for the benefits. If the claim relates to the contents of a notice received
by
the claimant, the claim must be made within 60 days after the notice was
received by the claimant. All other claims must be made within 180 days after
the date of the event that caused the claim to arise. The claim must state
with
particularity the determination desired by the claimant.
6.1.2 Timing
of Administrator response.
The
Administrator shall respond to the claimant within 90 days after receiving
the
claim. If the Administrator determines that special circumstances require
additional time for processing the claim, the Administrator can extend the
response period by an additional 90 days by notifying the claimant in writing,
before 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 Administrator expects to render its decision.
6.1.3 Notice
of decision.
If the
Administrator denies part or all of the claim, the Administrator shall notify
the claimant in writing of the denial. The Administrator 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 this Agreement 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 Agreement’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) after an adverse benefit determination on
review.
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6.2 Review
Procedure.
If the
Administrator denies part or all of the claim, the claimant shall have the
opportunity for a full and fair review by the Administrator of the denial,
as
follows -
6.2.1 Initiation
- written request.
To
initiate the review, the claimant must file with the Administrator a written
request for review within 60 days after receiving the Administrator’s notice of
denial.
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. Upon request and free
of
charge, the Administrator shall also provide the claimant 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 Administrator shall take into account all materials
and information the claimant submits relating to the claim, without regard
to
whether the information was submitted or considered in the initial benefit
determination.
6.2.4 Timing
of Administrator response.
The
Administrator shall respond in writing to the claimant within 60 days after
receiving the request for review. If the Administrator determines that special
circumstances require additional time for processing the claim, the
Administrator can extend the response period by an additional 60 days by
notifying the claimant in writing before 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 Administrator expects to
render its decision.
6.2.5 Notice
of decision.
The
Administrator shall notify the claimant in writing of its decision on review.
The Administrator 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 Agreement 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
Administration
of Agreement
7.1 Administrator
Duties.
This
Agreement shall be administered by an Administrator, which shall consist of
the
Board or such committee as the Board shall appoint. The Executive may be a
member of the Administrator. The Administrator shall also have the discretion
and authority to (x)
make,
amend, interpret, and enforce all appropriate rules and regulations for the
administration of this Agreement and (y)
decide
or resolve any and all questions, including interpretations of this Agreement,
as may arise in connection with the Agreement.
7.2 Agents.
In the
administration of this Agreement, the Administrator 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 Bank.
7.3 Binding
Effect of Decisions.
The
decision or action of the Administrator 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 the
Agreement.
7.4 Indemnity
of Administrator.
The
Bank shall indemnify and hold harmless the members of the Administrator 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 Administrator or any of its members.
7.5 Information.
To
enable the Administrator to perform its functions, the Bank shall supply full
and timely information to the Administrator on all matters relating to the
date
and circumstances of the retirement, death, or Separation From Service of the
Executive, and such other pertinent information as the Administrator may
reasonably require.
Article
8
Miscellaneous
8.1 Amendment
and Termination of Agreement.
This
Agreement may be amended or terminated solely by a written agreement signed
by
the Bank and the Executive. However, this Agreement shall terminate upon the
first to occur of (w)
the
Executive’s Separation from Service, (x)
distribution of the death benefit proceeds in accordance with section 2.2 above,
(y)
termination of the Amended Salary Continuation Agreement or termination of
the
Executive’s entitlement to Amended Salary Continuation Agreement death benefits
under Articles 3 or 5 of the Amended Salary Continuation Agreement, or
(z)
provided the Bank first gives notice to the Executive or the Executive’s
transferee of the option, exercisable for a period of 60 days, to purchase
the
Policy under section 2.3, the Bank’s sale, surrender, or transfer of ownership
of the Policy.
8.2 Binding
Effect.
This
Agreement shall bind the Executive and the Bank and their beneficiaries,
survivors, executors, administrators, and transferees, and any Policy
beneficiary.
8.3 No
Guarantee of Employment.
This
Agreement is not an employment policy or contract. It does not give the
Executive the right to remain an employee of the Bank nor does it interfere
with
the Bank’s right to discharge the Executive. It also does not require the
Executive to remain an employee nor interfere with the Executive’s right to
terminate employment at any time.
8.4 Successors;
Binding Agreement.
By an
assumption agreement in form and substance satisfactory to the Executive, the
Bank shall require any successor (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the business
or assets of the Bank to expressly assume and agree to perform this Agreement
in
the same manner and to the same extent that the Bank would be required to
perform this Agreement if no succession had occurred.
8.5 Applicable
Law.
This
Agreement and all rights hereunder shall be governed by and construed according
to the laws of the State of North Carolina, except to the extent preempted
by
the laws of the United States of America.
8.6 Entire
Agreement.
This
Agreement and the Amended Salary Continuation Agreement constitute the entire
agreement between the Bank and the Executive concerning the subject matter.
No
rights are granted to the Executive under this Agreement other than those
specifically set forth.
8.7 Severability.
If any
provision of this Agreement is held invalid, such invalidity shall not affect
any other provision of this Agreement not held invalid, and each such other
provision shall continue in full force and effect to the full extent consistent
with law. If any provision of this Agreement is held invalid in part, such
invalidity shall not affect the remainder of the provision not held invalid,
and
the remainder of the provision together with all other provisions of this
Agreement shall continue in full force and effect to the full extent consistent
with law.
8.8 Headings.
Headings and subheadings herein are included solely for convenience of reference
and shall not affect the meaning or interpretation of any provision of this
Agreement.
8.9 Notices.
All
notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed, certified or registered mail, return
receipt
requested, with postage prepaid, to the following addresses or to such other
address as either party may designate by like notice. Unless otherwise changed
by notice, notice shall be properly addressed to the Executive if addressed
to
the address of the Executive on the books and records of the Bank at the time
of
the delivery of such notice, and properly addressed to the Bank if addressed
to
the board of directors, Southern Community Bank and Trust, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇-▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
In
Witness Whereof,
the
Executive and a duly authorized representative of the Bank have executed this
Agreement as of the date first written above.
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Executive:
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Bank: | ||
| Southern Community Bank and Trust | |||
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/s/
▇▇▇▇ ▇. ▇▇▇▇▇
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By:
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/s/
F. ▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇
▇. ▇▇▇▇▇
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F.
▇▇▇▇▇ ▇▇▇▇▇
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Its:
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Chief
Executive Officer
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Agreement
to Cooperate with Insurance Underwriting Incident to Internal Revenue Code
section 1035 Exchange
I
acknowledge that I have read the Endorsement Split Dollar Agreement and agree
to
be bound by its terms, particularly the covenant on my part set forth in section
2.4 of the Endorsement Split Dollar Agreement to provide medical information
and
cooperate with medical insurance-related testing required by an insurer to
issue
a comparable insurance policy to cover the benefit provided under this
Endorsement Split Dollar Agreement.
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/s/
F. ▇▇▇▇▇ ▇▇▇▇▇
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/s/
▇▇▇▇ ▇. ▇▇▇▇▇
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Witness
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▇▇▇▇
▇. ▇▇▇▇▇
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