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UNITED BANK
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
This Split Dollar Agreement ("Agreement") is entered into by
United Bank
("Bank") and Richard B. Collins ("Insured") on December 20, 2007
("Effective
Date") with respect to certain life insurance policies (the
"Policy" or
"Policies") issued by a duly licensed life insurance company
(the "Insurer") set
forth on Schedule A hereto. Insured is the President and Chief
Executive Officer
of the Bank. The respective rights and duties of the Bank and
Insured in the
Policy are set forth herein and on Schedule A attached hereto.
This Agreement is
intended to be a non-equity, endorsement split dollar agreement,
such that it is
not treated as a impermissible personal loan from the Bank to
the Insured under
Section 402 of the Sarbanes-Oxley Act of 2002. This Agreement
shall continue in
existence only for so long as the Insured remains employed by
the Bank and shall
terminate on the termination of the Insured's employment (other
than due to the
Insured's death).
1. Policy Title and Ownership; Endorsement.
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(a) Policy title and ownership shall reside in the Bank for its
use and for
the use of the Insured, all in accordance with this Agreement.
Such Policy shall
be treated as "bank owned life insurance" ("BOLI") and is held
subject to the
provisions and limitations set forth in the Interagency
Statement on the
Purchase and Risk Management of Life Insurance (OCC 2004-56).
The Bank may, to
the extent of its interest, exercise the right to borrow or
withdraw on the
Policy cash values. Where 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 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.
(b) An endorsement on the form provided by the Insurer must be
completed
and filed with the Insurer for each Policy identified on
Schedule A in order to
implement the rights and obligations set forth in this
Agreement. The parties
agree that the Policy shall be subject to the terms and
conditions of this
Agreement and of the endorsement filed with the Insurer.
(c) The Bank agrees that, except as otherwise provided herein,
it shall not
sell, assign, transfer, surrender or cancel the policy, or
change the
beneficiary designation without the express written consent of
the Employee.
2. 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 Policy proceeds payable upon the death of
the Insured,
subject to any right or interest the Bank may have in such
proceeds, as provided
in this Agreement. The Bank shall not terminate, alter or amend
the Insured's
beneficiary designations without the written consent of the
Insured. The Bank
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shall be the beneficiary of any proceeds remaining under the
Policy after the
payment required under this Agreement has been made to the
Insured's designated
beneficiary.
3. Premium Payment. 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. Notwithstanding the foregoing, the Bank shall
have the absolute
and sole right to terminate and surrender any or all of the
Policies that are
subject to this Agreement and substitute another insurance
policy with a
comparable death benefit.
4. Taxable Benefit. Annually, the Insured will recognize a
taxable benefit
equal to the assumed cost of insurance required by the Internal
Revenue Service
("IRS"), as determined from time to time. The Bank (or its
administrator) will
timely report to the Insured the amount of such imputed income
each year on IRS
Form W-2 or its equivalent. The Bank and the Insured intend that
this Agreement
will be subject to taxation under the "economic benefit regime"
set forth in
Treasury Regulations section 1.61-22(d), such that the Insured
shall have
taxable income equal to the annual cost of the current life
insurance coverage
provided under the Policy.
5. Division of Death Proceeds. Upon the death of the Insured
while employed
by the Bank, the Bank shall cooperate with the Insured's
designated beneficiary
to take whatever action is necessary to collect the death
benefit provided under
the Policy. Subject to Sections 6 and 8 below, the division of
the death
proceeds of the Policy shall be as follows: the Insured's
beneficiary(ies)
designated in accordance with Section 2 shall be entitled to
payment from the
Policy proceeds directly from the Insurer of an amount equal to
the lesser of:
(i) One Million Two Hundred Thousand Dollars ($1,200,000.00);
or
(ii) The Net Death Benefit. The "Net Death Benefit" shall be the
death
benefit payable under the terms of the Policy or Policies
reduced by the
aggregate premiums paid by the Company.
6. Ownership of the Cash Surrender Value of the Policies.
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(a) The Bank shall at all times be entitled to one hundred
percent (100%)
of 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. Such cash value shall be determined as of the date of
surrender or
death, as the case may be.
(b) The Bank may pledge or assign the Policy, subject to the
terms and
conditions of this Agreement, for the sole purposes of securing
a loan from the
Insurer. The amount of such loan, including accumulated interest
thereon, shall
not exceed the lesser or (i) the amount of the premiums on the
Policy paid by
the Bank, or (ii) the cash surrender value of the Policy (as
defined in the
Policy). Interest charges on such loan shall be paid by the
Bank.
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7. Rights of Insured or Assignees. The Insured may not, without
the written
consent of the Ba
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