This Life Insurance Split Dollar Agreement involves
Title: UNITED BANK SPLIT DOLLAR LIFE INSURANCE AGREEMENT
Governing Law: Massachusetts Date: 12/27/2007
Industry: Consumer Financial Services Sector: Financial
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
This Split Dollar Agreement ("Agreement") is entered into by United Bank
("Bank") and Keith E. Harvey ("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 Executive Vice President, Operations
and Retail 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.
(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
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
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) Six Hundred Thousand Dollars ($600,000.00); 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.
(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.
7. Rights of Insured or Assignees. The Insured may not, without the
written consent of the Bank, 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.
8. Termination of Agreement.
(a) This Agreement shall terminate upon the occurrence of any one of the
(1) The Insured's termination of employment for any reason; or
(2) Surrender, lapse or other termination of the Policy by the Bank.
The Policy (and all rights of the Insured and his beneficiary(ies)) will also
terminate if any regulatory agency requires the Bank to sever its relationship
with the Insured, if the Bank is subjected to banking regulatory restrictions
limiting its ability to pay such compensation to the Insur