Exhibit 10.3
M OUNTAIN 1 ST B ANK & T RUST C OMPANY
A MENDED E NDORSEMENT S PLIT D OLLAR A GREEMENT
This A MENDED E NDORSEMENT S PLIT D OLLAR A GREEMENT (this “Agreement”) is entered into
as of this 30th day of January, 2009 by and between Mountain 1st
Bank & Trust Company, a North Carolina-chartered bank (the
“Bank”), and Gregory L. Gibson, 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.
W HEREAS , to encourage the Executive to remain a Bank
employee, the Bank desires to enter this Agreement providing for
division of the death proceeds of a life insurance policy on the
Executive’s life, to be effective until the Executive’s
employment terminates, and
W HEREAS , the Bank and the Executive intend that this
Agreement shall supersede and replace in its entirety the
December 24, 2007 Endorsement Split Dollar Agreement between
the Executive and the Bank.
N OW T HEREFORE , 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.
A RTICLE 1
G ENERAL D EFINITIONS
Capitalized terms not otherwise
defined in this Agreement are used herein as defined in the Salary
Continuation Agreement. The following terms shall have the meanings
specified.
1.1 “ Administrator ” means the
administrator described in Article 7.
1.2 “ Code ” means the Internal
Revenue Code of 1986, as amended, and rules, regulations, and
guidance of general application issued thereunder by the Department
of the Treasury.
1.3 “ Executive’s Interest
” means the benefit set forth in section 2.2.
1.4 “ Insured ” means the
Executive.
1.5 “ Insurer ” means each life
insurance carrier for which there is a Split Dollar Policy
Endorsement attached to this Agreement.
1.6 “ Net Death Proceeds ” means
the total death proceeds of the Policy minus the cash surrender
value.
1.7 “ Normal Retirement Age ”
means the Executive’s full retirement age as defined at 20
C.F.R. 404.409 under the Social Security Act.
1.8 “ Policy ” means the specific
life insurance policy or policies issued by the Insurer.
1.9 “ Salary Continuation Agreement
” means the March 26, 2008 Salary Continuation Agreement
between the Executive and the Bank, as the same may be amended from
time to time.
1.10 “ Separation from Service ”
means a separation from service as defined in Code section 409A,
including termination of the Executive’s service as an
executive and independent contractor to the Bank and any member of
a controlled group, as defined in Code section 414, for any reason
other than because of a leave of absence approved by the Bank or
the Executive’s death.
1.11 “ 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.
A RTICLE 2
P OLICY O WNERSHIP /I NTERESTS
2.1 Bank Ownership
. The Bank is the sole owner of the
Policy and shall have the right to exercise all incidents of
ownership, except that the Bank shall not sell, surrender, or
transfer ownership of a Policy without the Insured’s consent
so long as the Insured has an interest in the Policy as described
in section 2.2. 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 both before the Executive’s Separation from
Service and before the Executive attains Normal Retirement Age, at
the Executive’s death the Executive’s beneficiary
designated in accordance with the Split Dollar Policy Endorsement
shall be entitled to Policy proceeds in an amount equal to the
lesser of ( x ) 100% of the Net Death Proceeds or (
y ) $1,250,000 (the “Executive’s
Interest”). The Executive shall have the right to designate
the beneficiary of the Executive’s Interest. On the earlier
of the date of the Executive’s Separation from Service or the
date on which the Executive attains Normal Retirement Age, the
Executive’s Interest shall be extinguished, this Agreement
shall terminate, and the Executive’s beneficiary shall be
entitled to no benefits under this Agreement for the
Executive’s death occurring thereafter.
2.3 Option to Purchase
. The Bank shall not sell,
surrender, or transfer ownership of the Policy before the earlier
of the date of the Executive’s Separation from Service or the
date on which the Executive attains Normal Retirement Age without
first giving the Executive or the Executive’s transferee the
option for a period of 60 days to purchase the Policy. The purchase
price shall be an amount equal to the Policy cash surrender value.
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 Bank’s rights
to terminate this Agreement.
2.4 Comparable
Coverage . The Bank shall
maintain the Policy in full force and effect. The Bank may not
amend, terminate, or otherwise abrogate the Executive’s
interest in the Policy before the earlier of the date of the
Executive’s Separation from Service or the date on which the
Executive attains Normal Retirement Age unless the Bank replaces
the Policy with a comparable insurance policy to cover the benefit
provided under this Agreement and executes a new split dollar
agreement and endorsement for the comparable insurance policy. The
Policy or any comparable policy shall be subject to claims of the
Bank’s creditors.
2.5 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
2
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.
A RTICLE 3
P REMIUMS
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 Form 1099, as
appropriate.
A RTICLE 4
A SSIGNMENT
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, 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.
A RTICLE 5
I NSURER
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.
A RTICLE 6
C LAIMS AND R EVIEW P ROCEDURES
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.
3
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
