Exhibit 10.4

 

LIFE INSURANCE

 

ENDORSEMENT METHOD SPLIT DOLLAR PLAN

 

AGREEMENT

 

Insurer:    The Northwestern Mutual Life Insurance Company Policy Number:     
Bank:    The Old Point National Bank of Phoebus Insured:      Relationship of
Insured to Bank:    Executive

 

The respective rights and duties of the Bank and the Insured in the
above-referenced policy shall be pursuant to the terms set forth below:

 

I. DEFINITIONS

 

  A. Disability

 

Disability shall be defined in the same manner as the Bank’s long-term
disability policy in effect at the time of said disability. If the Bank has no
long-term disability policy, then disability shall be defined in the same manner
as applied by Social Security to determine qualification for disability
benefits.

 

  B. Retirement

 

Retirement shall be any termination of employment by the Insured, for reasons
other than a Discharge for Cause, following the date in which the Insured’s
whole number of years of service with the Bank, including service with
subsidiaries or parent entities of the bank, plus the Insured’s age as of the
Insured’s most recent birthday, equals or exceeds seventy (70). For purposes of
this Subparagraph, years of service shall mean any calendar year in which the
Insured is credited with at least 1,000 hours of service. Accordingly, it is not
necessary that the Insured be employed for the full calendar year in order to
earn a year of service.

--------------------------------------------------------------------------------

  C. Scheduled Insurance Benefit

 

The Scheduled Insurance Benefit shall initially be equal to $XXX,XXX. The
Scheduled Insurance Benefit shall increase by 4.0% on each January 1st until the
Insured’s 65th birthday, as long as the Insured is employed by the Bank, or has
and continues to qualify for Disability. Upon the earlier of Retirement or the
Insured’s 65th birthday, the Scheduled Insurance Benefit shall be reduced to
fifty percent (50%) of the Scheduled Insurance Benefit in effect immediately
preceding the above date.

 

  D. Discharge For Cause

 

Discharge for Cause means termination resulting from the following:

 

  i. willful misconduct or gross negligence of Executive in connection with the
performance of his duties. This includes the willful non-performance of assigned
duties and, without limitation, misappropriation of funds or property of the
Bank or any of its affiliates or securing or attempting to secure personally any
profit in connection with any transaction entered into on behalf of the bank; or

 

  ii. gross violations including any gross misconduct as referred to in the
Bank’s policy manuals, employee handbooks or any other human resource policies
set forth by Bank including, without limitation, policies relating to sexual
harassment, race, sex or age discrimination, or any other forms of
discrimination; or

 

  iii. the entry of any legal order which has the effect of precluding Executive
from performing his duties for more than 30 consecutive days.

 

Refer to the policy contract for the definition of all other terms in this
Agreement.

 

II. POLICY TITLE AND OWNERSHIP

 

Title and ownership shall reside in the Bank for its use and for the use of the
Insured all in accordance with this Agreement. The Bank alone 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
subject Split Dollar 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

--------------------------------------------------------------------------------

III. 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 proceeds
payable upon the death of the Insured, and to elect and change a payment option
for such beneficiary, subject to any right or interest the Bank may have in such
proceeds, as provided in this Agreement.

 

IV. PREMIUM PAYMENT METHOD

 

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.

 

V. TAXABLE BENEFIT

 

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

 

VI. DIVISION OF DEATH PROCEEDS

 

Subject to Paragraphs VII and IX herein, the division of the death proceeds of
the policy is as follows:

 

  A. Should the Insured be employed by the Bank, or have qualified for
Retirement, or be terminated from the Bank due to continued Disability, the
Insured’s beneficiary(ies), designated in accordance with Paragraph III, shall
be entitled to the Scheduled Insurance Benefit, or one hundred percent (100%) of
the net-at-risk insurance portion of the proceeds, whichever amount is less. The
net-at-risk insurance portion is the total proceeds less the cash value of the
policy.

 

  B. The Bank shall be entitled to the remainder of such proceeds.

 

  C. The Bank and the Insured (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

--------------------------------------------------------------------------------

VII. DIVISION OF THE CASH SURRENDER VALUE OF THE POLICY

 

The Bank shall at all times be entitled to an amount equal to 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 and any
applicable surrender charges. Such cash value shall be determined as of the date
of surrender or death as the case may be.

 

VIII. TERMINATION OF AGREEMENT

 

This Agreement shall terminate upon the occurrence of any one of the following:

 

  A. The Insured shall leave the employment of the Bank voluntarily or
involuntarily (Discharge for Cause) at any time for reasons other than
Retirement or Disability; or

 

  B. Surrender, lapse, or other termination of the Policy by the Bank.

 

In the event of a surrender, lapse, or other termination of the Policy by the
Bank, the Insured (or assignee) shall have a fifteen (15) day option to receive
from the Bank an absolute assignment of the policy in consideration of a cash
payment to the Bank, whereupon this Agreement shall terminate. Such cash payment
referred to hereinabove shall be the greater of:

 

  1. The Bank’s share of the cash value of the policy on the date of such
assignment, as defined in this Agreement; or

 

  2. The amount of the premiums that have been paid by the Bank prior to the
date of such assignment.

 

If, within said fifteen (15) day period, the Insured fails to exercise said
option, fails to procure the entire aforestated cash payment, or dies, then the
option shall terminate and the Insured (or assignee) agrees that all of the
Insured’s rights, interest and claims in the policy shall terminate as of the
date of the termination of this Agreement.

 

The Insured expressly agrees that this Agreement shall constitute sufficient
written notice to the Insured of the Insured’s option to receive an absolute
assignment of the policy as set forth herein.

 

Except as provided above, this Agreement shall terminate upon distribution of
the death benefit proceeds in accordance with Paragraph VI above.

 

4

--------------------------------------------------------------------------------

IX. INSURED’S OR ASSIGNEE’S ASSIGNMENT RIGHTS

 

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.

 

X. AGREEMENT BINDING UPON THE PARTIES

 

This Agreement shall bind the Insured and the Bank, their heirs, successors,
personal representatives and assigns.

 

XI. ERISA PROVISIONS

 

The following provisions are part of this Agreement and are intended to meet the
requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”):

 

  A. Named Fiduciary and Plan Administrator.

 

The “Named Fiduciary and Plan Administrator” of this Endorsement Method Split
Dollar Agreement shall be the Executive Committee of the Board of Directors of
the Bank. As Named Fiduciary and Plan Administrator, the Bank shall be
responsible for the management, control, and administration of this Split Dollar
Plan as established herein. The Named Fiduciary may delegate to others certain
aspects of the management and operation responsibilities of the Plan, including
the employment of advisors and the delegation of any ministerial duties to
qualified individuals.

 

  B. Funding Policy.

 

The funding policy for this Split Dollar Plan shall be to maintain the subject
policy in force by paying, when due, all premiums required.

 

  C. Basis of Payment of Benefits.

 

Direct payment by the Insurer is the basis of payment of benefits under this
Agreement, with those benefits in turn being based on the payment of premiums as
provided in this Agreement.

 

5

--------------------------------------------------------------------------------

  D. Claim Procedures.

 

Claim forms or claim information as to the subject policy can be obtained by
contacting Vero Consulting, LLC (804-288-7000). When the Named Fiduciary has a
claim which may be covered under the provisions described in the insurance
policy, they should contact the office named above, and they will either
complete a claim form and forward it to an authorized representative of the
Insurer or advise the named Fiduciary what further requirements are necessary.
The Insurer will evaluate and make a decision as to payment. If the claim is
payable, a benefit check will be issued in accordance with the terms of this
Agreement.

 

In the event that a claim is not eligible under the policy, the Insurer will
notify the Named Fiduciary of the denial pursuant to the requirements under the
terms of the policy. If the Named Fiduciary is dissatisfied with the denial of
the claim and wishes to contest such claim denial, they should contact the
office named above and they will assist in making an inquiry to the Insurer. All
objections to the Insurer’s actions should be in writing and submitted to the
office named above for transmittal to the Insurer.

 

XII. GENDER

 

Whenever in this Agreement words are used in the masculine or neuter gender,
they shall be read and construed as in the masculine, feminine or neuter gender,
whenever they should so apply.

 

XIII. INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT

 

The Insurer shall not be deemed a party to this Agreement, but will respect the
rights of the parties as herein developed upon receiving an executed copy of
this Agreement. Payment or other performance in accordance with the policy
provisions shall fully discharge the Insurer from any and all liability.

 

6

--------------------------------------------------------------------------------

XIV. CHANGE OF CONTROL

 

“Change of Control” means (i) the merger of the Bank with any other corporations
or entity as a result of which the holders of the voting securities of the Bank
outstanding immediately prior to such event would receive or retain less than
fifty percent (50%) of the outstanding voting securities of the resulting or
surviving entity of such merger; (ii) the acquisition of more than twenty
percent (20%) of the outstanding voting securities of the Bank (calculated on a
fully diluted basis) by any person; or (iii) the sale of more than fifty percent
(50%) in value of the assets of the Bank. For the purpose of this Executive
Plan, transfers on account of deaths or gifts, transfers between family members
or transfers of a qualified retirement plan maintained by the Bank shall not be
considered in determining whether there has been a Change of Control.

 

For the purposes of this Subparagraph XIV, the term “Bank” shall also include
Old Point Financial Corporation and Old Point Trust and Financial Services, N.A.
For the purposes of this Subparagraph XIV, a “person” shall mean (i) an
individual or a corporation, partnership (limited or general), trust, limited
liability company, business trust, association (mutual or stock, and including a
mutual holding company), joint venture, pool, syndicate, unincorporated
organization or any other form of entity; and (ii) any Affiliate of any
individual or entity listed in item (i). “Affiliate” shall mean any person who
controls, is under common control with, or is controlled by the person to whom
reference is being made; and for the purposes of this definition of Affiliate,
control shall be deemed to exist in a person who beneficially owns ten percent
(10%) or more of the outstanding equity interests (or options, warrants, or
other rights to acquire such equity interests) of another person.

 

Upon a Change of Control, if the Insured’s employment is subsequently
terminated, except for cause, then the Insured shall be deemed for purposes of
the Agreement to continue to be employed until the later of the earliest date in
which the Insured would have qualified for Retirement, or age 65 and, therefore,
upon the death of the Insured, the Insured’s beneficiary(ies) (designated in
accordance with Paragraph III) shall receive the death benefit provided herein
as if the Insured had died while employed by the Bank (see Paragraph VI).

 

XV. AMENDMENT OR REVOCATION

 

It is agreed by and between the parties hereto that, during the lifetime of the
Insured, this Agreement may be amended or revoked at any time or times, in whole
or in part, by the mutual written consent of the Insured and the Bank.

 

7

--------------------------------------------------------------------------------

XVI. EFFECTIVE DATE

 

The Effective Date of this Agreement shall be (enter date).

 

XVII. SEVERABILITY AND INTERPRETATION

 

If a provision of this Agreement is held to be invalid or unenforceable, the
remaining provisions shall nonetheless be enforceable according to their terms.
Further, in the event that any provision is held to be overbroad as written,
such provision shall be deemed amended to narrow its application to the extent
necessary to make the provision enforceable according to law and enforced as
amended.

 

XIII. APPLICABLE LAW

 

The validity and interpretation of this Agreement shall be governed by the laws
of the State of Virginia.

 

Executed at Hampton, Virginia this              day of                     ,
        .

 

THE OLD POINT NATIONAL BANK

of PHOEBUS

Hampton,Virginia

 

 

--------------------------------------------------------------------------------

     

By:

 

 

--------------------------------------------------------------------------------

   

Witness

      Title        

--------------------------------------------------------------------------------

     

--------------------------------------------------------------------------------

   

Witness

      Insured        

 

8

--------------------------------------------------------------------------------

BENEFICIARY DESIGNATION FORM

FOR LIFE INSURANCE ENDORSEMENT METHOD

SPLIT DOLLAR PLAN AGREEMENT

 

PRIMARY DESIGNATION:

 

Name

--------------------------------------------------------------------------------

 

Address

--------------------------------------------------------------------------------

 

Relationship

--------------------------------------------------------------------------------

 

                                                                               
                                        
                                        
                                                       

 

                                                                               
                                        
                                        
                                                       

 

                                                                               
                                        
                                        
                                                       

 

 

SECONDARY (CONTINGENT) DESIGNATION:

 

                                                                               
                                        
                                        
                                                       

 

                                                                               
                                        
                                        
                                                       

 

                                                                               
                                        
                                        
                                                       

 

All sums payable under the Life Insurance Endorsement Method Split Dollar Plan
Agreement by reason of my death shall be paid to the Primary Beneficiary, if he
or she survives me, and if no Primary Beneficiary shall survive me, then to the
Secondary (Contingent) Beneficiary.

 

--------------------------------------------------------------------------------

     

--------------------------------------------------------------------------------

Signature of Insured       Date

 

9