Exhibit 10.2
SPLIT-DOLLAR AGREEMENT
THIS AGREEMENT, made as of the 20th day of July, 2000, by and between Ipswich
Savings Bank, a Massachusetts savings bank (hereinafter referred to as the
"Employer"), and Francis Kenney of North Andover, Massachusetts (hereinafter
referred to as the "Employee").
WITNESSETH THAT:
WHEREAS, the Employee is employed by the Employer; and
WHEREAS, the Employer is desirous of retaining the services of the Employee and
of assisting the Employee in paying for life insurance on his own life; and
WHEREAS, the Employer has determined that this assistance can be provided under
a split dollar life insurance arrangement; and
WHEREAS, the Employee has applied for, and is the owner of the insurance policy
or policies listed in the attached schedule hereto, hereinafter referred to as
the "Policy"; and
WHEREAS, the Employer and the Employee agree to make the Policy subject to this
Agreement; and
WHEREAS, the Employee has assigned the Policy to the Employer as collateral for
amounts to be advanced by the Employer under this Agreement by an instrument of
assignment filed with the Insurer (hereinafter referred to as the "Assignment");
NOW, THEREFORE, in consideration of the promises and of the mutual covenants
herein contained, the Parties hereto hereby agree as follows:
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1. The Parties hereto agree that the Policy shall be subject to the
terms and conditions of this Agreement and of the Assignment
filed with the Insurer relating to the Policy. The Employee shall
be the sole and absolute owner of the Policy and may exercise all
ownership rights granted to the owner thereof by the terms of the
Policy, except as may be otherwise provided herein and in the
Assignment.
2. The premiums for the Policy in the annual amount of $10,000 will
be paid by the Employer during the Employee's employment and for
any period of time that it may have an obligation to provide
continuing fringe benefits thereafter. The premiums will be
allocated between the Employee and the Employer as follows. The
Employee's share of the premium ("Employee's Share") shall be an
amount equal to the value of the personal death benefit as
determined under Internal Revenue Service Rules and shall be paid
by the Employer as agent for the Employee and charged to the
Employee as cash compensation. For all purposes, including the
Assignment, the Employee's share shall be deemed cash
compensation and not Employer paid premium. The remaining amount
of the premium shall be deemed Employer paid premium and shall be
allocated to the Employer ("Employer's Share").
3. The Assignment shall not be terminated, altered or amended by the
Employee without the express written consent of the Employer. The
Parties hereto agree to take reasonable action to cause such
Assignment to conform to the provisions of this Agreement.
4. a. Except as otherwise provided herein, the Employee shall not
sell, assign, transfer, borrow against, surrender or cancel the
Policy without the express written consent of the Employer.
Notwithstanding the foregoing, the Employee may, without the
approval of the Board of Directors, change the beneficiary
designation and borrow against or withdraw from the Policy the
amount, if any, by which the cash surrender value of the Policy
exceeds the Net Premium (as defined in Section 5.b.). However, if
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Policy loan interest accruing on any such transaction would
reduce the cash surrender value of the Policy below the Net
Premium, Employee will pay such Policy loan interest in cash to
the Insurer.
b. The Employer shall not borrow against the Policy without the
express written consent of the Employee.
c. Upon the Employee's termination of employment, the Employee
shall have the right to take any action with regard to the
amount, if any, by which the cash surrender value of the Policy
exceeds the Net Premium (as defined in Section 5.b.).
5. a. Upon the death of the Employee, the Employer shall promptly
take all action necessary to obtain its share of the death
benefit collaterally assigned to it under the Policy.
b. The Employer shall have the unqualified right to receive a
portion of such death benefit equal to the "Net Premium" defined
as the total amount of the premiums paid by the Employer
hereunder less the Employee's Share ( i.e., the portion of such
premium allocated to the Employee pursuant to paragraph 2 hereof)
and less the amount, if any, paid by Employee to Employer
pursuant to Section 8.a. hereunder. The balance of the death
benefit provided under the Policy, if any, shall be paid directly
by the Insurer to the beneficiary or beneficiaries and in the
manner designated by the Employee. No amount shall be paid from
such death benefit to the beneficiary or beneficiaries designated
by the Employee until the Employer or Insurer acknowledges in
writing that the full amount due to the Employer hereunder has
been paid. The Parties hereto agree that the beneficiary
designation provision of the Policy shall conform to the
provisions hereof.
6. The Employer shall not merge or consolidate into or with another
organization, or reorganize, or sell substantially all of its
assets to another organization, firm or person ("change in
control") unless and until such succeeding or continuing
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organization, firm or person agrees to assume and discharge the
obligations of the Employer under this Agreement. Upon the
occurrence of such event, the term "Employer" as used in this
Agreement shall be deemed to refer to such successor or survivor
organization.
7. This Agreement shall terminate (a) upon the Employee's death and
the payment of proceeds pursuant to Section 5 of this Agreement
or (b) pursuant to Section 8.b. or 8.d. of this Agreement.
8. a. If the Employee ceases to be employed by the Employer prior to
age sixty-five (65), the Employer shall have the right to recover
and the Employee shall pay to the Employer a portion of its
cumulative Net Premium (but in no event more than the total cash
surrender value of the Policy) forty (40) days following
termination pursuant to the following schedule.
Date of Termination Percent Recoverable
------------------- -------------------
Before 10/2/2001 75%
After 10/1/2001 and
Before 10/2/2002 50%
After 10/1/202 and
Before 10/2/2003 25%
After 10/2/2003 0%
Any such payment will reduce the Employer's Net Premium for all purposes
hereunder, including without limitation the determination of Employer's portion
of the Death Benefit under the Policy.
b. If the Employer terminates the Employee's employment for
Cause, notwithstanding the foregoing Section 8.a., the Employer
shall have the right to recover and the Employee shall pay 100%
of the cumulative Net Premium (but in no event more than the
total cash surrender value of the Policy) forty (40) days
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following such termination. For purposes of this agreement,
"Cause" shall mean (a) conviction of a crime associated with the
Employer's business or, (b) determination by a vote of
seventy-five (75) percent of the Employer's Board of Directors
that the Employee has willfully failed to perform reasonably
assigned tasks. Upon receipt of such payment, the Employer shall
release the collateral assignment of the Policy, and anything in
this Agreement to the contrary notwithstanding, this Agreement
shall terminate.
c. The Employer's right to recover a portion of the Net Premium
pursuant to Section 8.a. shall terminate upon a change in control
of the Employer.
d. In lieu of paying the recoverable amount pursuant to Section
8.a., the Employee may elect within thirty (30) days after the
date of termination of his employment with the Employer for any
reason to pay to the Employer an amount equal to 100% of its
cumulative Net Premium, reduced by any outstanding indebtedness
of the Employer to the Insurer that is secured by the policy and
remains outstanding as of the date of such payment (including any
interest due thereon). Upon receipt of such payment, the Employer
shall release the collateral assignment of the Policy, and
anything in this Agreement to the contrary notwithstanding, this
Agreement shall terminate.
9. The Parties hereto agree that this Agreement shall take
precedence over any provisions of the Assignment. The Employer
agrees not to exercise any right possessed by it under the
Assignment except in conformity with this Agreement.
10. This Agreement may not be amended, altered or modified except by
a written instrument signed by both of the Parties hereto and may
not be otherwise terminated except as provided herein.
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11. This Agreement shall be binding upon and inure to the benefit of
the Employer and its successors and assignees and the Employee
and his successors, assignees, heirs, executors, administrators
and beneficiaries.
12. This Agreement, and the rights of the Parties hereunder, shall be
governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the Employer has caused this Agreement to be executed by its
officer thereunto duly authorized and the Employee has hereunto set his hand and
seal, all as of the day and year first above written.
Ipswich Savings Bank
/s/ Mariell Lyons By: /s/ David L. Grey
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Witness Title:President
/s/ Mariell Lyons /s/ Francis Kenney
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Witness Francis Kenney
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SCHEDULE A
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Insurance Carrier Policy No. Face Amount
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Jefferson Pilot 506053581 $592,672
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