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SPLIT DOLLAR LIFE INSURANCE AGREEMENT

Life Insurance Split Dollar Agreement

SPLIT DOLLAR LIFE INSURANCE AGREEMENT | Document Parties: VENTURE FINANCIAL GROUP INC | SPLIT DOLLAR LIFE INSURANCE You are currently viewing:
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VENTURE FINANCIAL GROUP INC | SPLIT DOLLAR LIFE INSURANCE

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Title: SPLIT DOLLAR LIFE INSURANCE AGREEMENT
Date: 12/20/2007

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EXHIBIT 10.1

SPLIT DOLLAR LIFE INSURANCE AGREEMENT

 


 

Policy Number:


Policy Owner:                                                    Venture Bank 

Insured:                                                            

Relationship of Insured to Bank:                          Executive Officer

Effective Date:                                                     , 2007

          THIS AGREEMENT is adopted this ________ day of _______, 200__, by and between Venture Financial Group, Inc. and Venture Bank (hereinafter the “Employer”), and ___________________ (the "Executive").

                    INTRODUCTION

         To encourage the Executive to remain an employee of the Employer, the Employer is willing to divide the death proceeds of a life insurance policy (hereinafter “Policy(ies)”) on the Executive's life. The Employer will pay life insurance premiums from its general assets.

 

AGREEMENT


        The Employer and the Executive hereby agree that the respective rights and duties of the Executive and the Employer in the above referenced Policy(ies) and any Replacement Policy(ies) (defined below) shall be pursuant to the terms set forth below.

 

Article 1
General Definitions

 

  The following terms shall have the meanings specified:


          1.1       “ Beneficiary ” means each designated person, or the estate of the deceased Executive, entitled to benefits, if any, upon the death of the Executive determined pursuant to Article 4.

1.2       “ Beneficiary Designation Form ” means the form established from time to time by the Employer that

 

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the Executive completes, signs, and returns to the Employer to designate one or more Beneficiaries.

        1.3      “Cash Value” has the meaning given in the Policy agreement.
 
        1.4      “Change in Control”. For the purpose of this Agreement, a Change in Control shall include any of the following (and for the purposes of this provision, the term "corporation" shall mean both Venture Bank and/or Venture Financial Group)



                        A.      Change in the Ownership of a Corporation . A change in the ownership of the corporation occurs on the date that any one person or persons acting as a group (as defined in IRC 409A), acquires ownership of stock of the corporation that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of such corporation. The acquisition of additional stock by the same person or group is not considered to cause a change in the ownership of the corporation.
 
  B.      Change in the Effective Control of the Corporation. A change in the effective control of the corporation shall be deemed to occur on either of the following dates:
 
    (i)      The date any one person, or persons acting as a group acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or group) ownership of stock of the corporation possessing thirty percent (30%) or more of the total voting power of the stock of such corporation; or
 
    (ii)      The date a majority of members of the corporation’s board of directors is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the corporation’s board of directors before the date of the appointment or election.
 
  C.      Change in the Ownership of a Substantial Portion of the Corporation’s Assets . A change in the ownership of a substantial portion of a corporation’s assets shall be deemed to occur on the date that any one person or group acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the corporation that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the corporation immediately before such acquisition or acquisitions. No Change in Control shall result if the assets are transferred to certain entities controlled directly or indirectly by the shareholders of the transferring corporation.
 

 

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            For the purpose 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 Employer shall not be considered in determining whether there has been a Change in Control.

 
        1.5         “Early Retirement” means the Executive’s Termination of Employment, for any reason other than for Cause, on or after attaining the age of fifty-five (55) and after completing at least ten (10) Years of Service.

        1.6        “ Existing Policies” means those life insurance policies specifically referenced in this Agreement.

        1.7        “ Insurer ” means each life insurance carrier referenced above or a Replacement Policy carrier.

        1.8         “Net-at-Risk Proceeds” (hereinafter “NAR”) means the amount which equals the total proceeds of the Policy paid on the insured’s death minus the Cash Value of the Policy.

        1.9         “Normal Retirement” means the Executive’s Termination of Employment, for any reason other than for Cause, on or after attaining the age of sixty-five (65).

        1.10       “Plan Administrator” is defined in Paragraph 13.1.

        1.11       Policy ” means the Existing Policies and Replacement Policies.

        1.12       “Replacement Policy(ies)” means life insurance policies issued in exchange for Existing Policies.

        1.13        “ Termination of Employment ”. The term Termination of Employment shall be interpreted in accordance with the provisions of IRC 409A as it applies to the term “Separation From Service”. Whether a termination of employment has occurred is determined based on whether the facts and circumstances indicate that the Bank and the Executive reasonably anticipate that no further services will be performed after a certain date or that the level of bona fide services the employee will perform after such date (whether as an employee or as an independent contractor) will permanently decrease to no more than twenty (20%) percent of the average level of bona fide services performed (as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the employer if the employee has been providing services to the employer less than 36 months). There shall be no Termination of Employment while the Executive is on military leave, sick leave or other bona fide leave of absence, as long as such leave does not exceed six months, or if longer, so long as the individual retains a right to re-employment with the service recipient under an applicable statute or by contract.

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        1.14       Years of Service . The term “Years of Service” means the total number of years in which the Executive has been employed by or in the service of Employer. For the purposes of this Plan, a year of employment or service shall be a three-hundred and sixty-five (365) day period (or 366 day period in the case of a leap year) that for the first year of employment, commences on the Participant’s date of hire (or engagement) and that, for any subsequent year, commences on an anniversary of that hiring date.

Article 2
Policy Title, Ownership and Exchange or Replacement of Policies

        2.1     Title and Ownership . Title and ownership of the Policy shall reside in the Employer for its benefit and for the benefit of the Executive all in accordance with this Agreement. The Employer alone may, to the extent of its interest, exercise the right to borrow or withdraw on the Policy’s Cash Value. If the Employer and the Executive (or assignee, with the consent of the Executive) mutually agree to exercise the right to increase the coverage under the 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.

        2.2     Exchange or Replacement of Policies. Replacement Policies will be accorded the same treatment under the Agreement as Existing Policies and shall, in all respects relating to this Agreement replace the Existing Policies for which they were exchanged. The Executive shall cooperate with Employer in all exchanges requested by the Employer by providing and promptly returning signatures as requested by the Employer or Plan Administrator.

Article 3
Division of Death Proceeds

        Subject to Paragraphs 11.1 and 18.1, the division of the death proceeds of the policy shall be as follows:

        3.1     Death of Participant Prior to Termination of Employment. In the event the Executive dies prior to Terminating Employment with Employer, then the Executive’s Beneficiary(ies), designated in accordance with the terms of this Agreement, hall be entitled to receive death proceeds equal to the lesser of $ ______ Dollars ($) or One Hundred Percent (100%) of the NAR.

            The Employer shall be entitled to the remainder of such proceeds, and the Employer and the Executive (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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        3.2     Death Following Early or Normal Retirement. In the event the Executive dies after Early or Normal Retirement, then the Executive’s Beneficiary(ies), designated in accordance with the terms of this Agreement, shall be entitled to receive death
proceeds equal to the lesser of $ ________ Dollars ($) or One Hundred Percent (100%) of the NAR.

            The Employer shall be entitled to the remainder of such proceeds, and the Employer and the Executive (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.

        3.3     Death following Termination of Employment. In the event the Executive dies after Terminating his Employment with the Employer for any reason, then Executive’s Beneficiary(ies) shall not be entitled to receive any death benefit pursuant to the terms of this Agreement.

Article 4
Premium Payment Method

        Subject to the Employer’s absolute right to surrender or terminate the Policy at any time and for any reason subject to Article 11, prior to a Change in Control, the Employer shall pay an amount equal to the planned premiums and any other premium payments that might become necessary to keep the Policy in force.

 

Article 5
Taxable Benefit


        Annually the Executive will receive a taxable benefit equal to the assumed cost of insurance as required by the Internal Revenue Service. The Employer (or its administrator) will report to the Executive the amount of imputed income each year on Form W-2 or its equivalent.

 

Article 6
Assignment


        The Executive may not, without the written consent of the Employer, 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.

 

Article 7
Beneficiaries


        7.1 Beneficiary. The Executive shall have the right, at any time, to designate a Beneficiary(ies) to receive any benefits payable under the Agreement to a Beneficiary upon the death of the Executive. The Beneficiary designated under this Agreement may be the same as or different from the beneficiary designation under any other agreement of

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the Employer in which the Executive participates.

        7.2 Beneficiary Designation and Changes Thereto . The Executive shall designate a Beneficiary by completing and signing the Beneficiary Designation Form, and delivering it to the Employer or its designated agent. The Executive shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Employer’s rules and procedures, as in effect from time to time. Upon the acceptance by the Employer of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled. The Employer shall be entitled to rely on the last Beneficiary Designation Form filed by the Executive and accepted by the Employer prior to the Executive’s death.

        7.3 Acknowledgment . No designation or change in designation of a Beneficiary shall be effective until received, accepted and acknowledged in writing by the Employer or its designated agent.

        7.4 No Beneficiary Designation. If the Executive dies without a valid designation of Beneficiary, or if all designated Beneficiaries predecease the Executive, then the Executive’s surviving spouse s
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