Exhibit 10.6 Split Dollar Life Insurance Agreement with William R. Kitchen

 

SPLIT DOLLAR LIFE INSURANCE AGREEMENT

THIS SPLIT DOLLAR AGREEMENT (this “Agreement”) is adopted this 16th day of
November, 2011, by and between Valley Business Bank, a California corporation
(hereinafter referred to as the “Employer”), and Bill Kitchen (hereinafter
referred to as the “Executive”), effective as of the 16th day of November, 2011,
formalizes the agreements and understanding between the Employer and the
Executive.

WITNESSETH:

WHEREAS, the Executive is employed by the Employer;

WHEREAS, the Employer recognizes the valuable services the Executive has
performed for the Employer and wishes to encourage the Executive’s continued
employment and to provide the Executive with additional incentive to achieve
corporate objectives;

WHEREAS, the Employer wishes to provide the terms and conditions upon which the
Employer shall share the death proceeds of certain life insurance policies with
the Executive’s designated beneficiary;

NOW THEREFORE, in consideration of the premises and of the mutual promises
herein contained, the Employer and the Executive agree as follows:

ARTICLE 1

DEFINITIONS

Whenever used in this Agreement, the following terms shall have the meanings
specified:

1.1              “Accrued Benefit” means the dollar value of the liability that
should be accrued by the Employer, under Generally Accepted Accounting
Principles, for the Employer’s obligation to the Executive under Salary
Continuation Agreement, calculated by applying by applying Accounting Standards
Codification 710-10 and the Discount Rate.

1.2              “Administrator” means the Board or its designee.

1.3              “Beneficiary” means each designated person, or the estate of
the deceased Executive, entitled to benefits upon the death of the Executive.

1.4              “Beneficiary Designation Form” means the form established from
time to time by the Administrator that the Executive completes, signs and
returns to the Administrator to designate one or more Beneficiaries.

1.5              “Board” means the Board of Directors of the Employer.

1.6              “Code” means the Internal Revenue Code of 1986, as amended.

1.7              “Insurer” means the insurance company issuing the Policy.

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1.8              “Net Death Proceeds” means the total death proceeds of the
Policy minus the greater of (i) the Policy’s cash surrender value or (ii) the
aggregate premiums paid on the Policy by the Employer.

1.9              “Policy” means the individual insurance policy or policies
adopted by the Employer for purposes of insuring the Executive’s life under this
Agreement.

1.10          “Salary Continuation Agreement” means the Salary Continuation
Agreement executed on or about the same date as this Agreement, as such
agreement may be amended from time to time, which provides post-employment
benefits to the Executive during the Executive’s life.

1.11          “Separation from Service” means a termination of the Executive’s
employment with the Employer for reasons other than death. A Separation from
Service may occur as of a specified date for purposes of the Agreement even if
the Executive continues to provide some services for the Employer after that
date, provided that the facts and circumstances indicate that the Employer and
the Executive reasonably anticipated at that date that either no further
services would be performed after that date, or that the level of bona fide
services the Executive would perform after such date (whether as an employee or
as an independent contractor) would permanently decrease to no more than twenty
percent (20%) of the average level of bona fide services performed over the
immediately preceding thirty-six (36) month period (or the full period during
which the Executive performed services for the Employer, if that is less than
thirty-six (36) months). A Separation from Service will not be deemed to have
occurred while the Executive is on military leave, sick leave, or other bona
fide leave of absence if the period of such leave does not exceed six (6) months
or, if longer, the period for which a statute or contract provides the Executive
with the right to reemployment with the Employer. If the Executive’s leave
exceeds six (6) months but the Executive is not entitled to reemployment under a
statute or contract, the Executive incurs a Separation of Service on the next
day following the expiration of such six (6) month period. The Administrator
shall have full and final authority, to determine conclusively whether a
Separation from Service occurs, and the date of such Separation from Service.

ARTICLE 2

POLICY OWNERSHIP/INTERESTS

2.1 Employer’s Interest. The Employer shall own the Policy and shall have the
right to exercise all incidents of ownership and the Employer may terminate a
Policy without the consent of the Executive. The Employer shall be the
beneficiary of the remaining death proceeds of the Policy after the Executive’s
interest is determined according to Section 2.2 below.

2.2 Executive’s Interest. The Executive, or the Executive’s assignee, shall have
the right to designate the Beneficiary of an amount of death proceeds as
specified in this Section 2.2. The Executive shall also have the right to elect
and change settlement options with respect to the Executive’s interest by
providing written notice to the Employer and the Insurer.

2.2.1 Death Prior to Separation from Service. If the Executive dies prior to
Separation from Service, the Beneficiary shall be entitled to the lesser of (i)
Eight Hundred Thousand Dollars ($800,000) or (ii) the Net Death Proceeds.

2.2.2 Death After Separation from Service. If the Executive dies after
Separation from Service, the Beneficiary shall be entitled to the lesser of (i)
the Accrued Benefit as of the day prior to the date of the Executive’s death or
(ii) the Net Death Proceeds.

 

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ARTICLE 3

PREMIUMS AND IMPUTED INCOME

3.1 Premium Payment. The Employer shall pay all premiums due on the Policy from
its general assets.

3.2 Economic Benefit. The Employer shall 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
Beneficiary. The "life insurance premium factor" is the minimum factor
applicable under guidance published pursuant to Treasury Reg. §
1.61-22(d)(3)(ii) or any subsequent authority.

3.3 Imputed Income. The Employer shall impute the economic benefit to the
Executive on an annual basis, by adding the economic benefit to the Executive’s
Form w-2.

ARTICLE 4

SUICIDE OR MISSTATEMENT

No benefits shall be payable if the Executive commits suicide within two years
after the date of this Agreement, or if the Insurer denies coverage (i) for
material misstatements of fact made by the Executive on any application for the
Policy, or (ii) for any other reason; provided, however that the Employer shall
evaluate the reason for the denial, and upon advice of legal counsel and in its
sole discretion, consider judicially challenging any denial.

ARTICLE 5

BENEFICIARIES

5.1 Designation of Beneficiaries. The Executive may designate any person to
receive any benefits payable under the Agreement upon the Executive’s death, and
the designation may be changed from time to time by the Executive by filing a
new designation. Each designation will revoke all prior designations by the
Executive, shall be in the form prescribed by the Administrator and shall be
effective only when filed in writing with the Administrator during the
Executive’s lifetime. If the Executive names someone other than the Executive’s
spouse as a Beneficiary, the Administrator may, in its sole discretion,
determine that spousal consent is required to be provided in a form designated
by the Administrator, executed by the Executive’s spouse and returned to the
Administrator. The Executive’s beneficiary designation shall be deemed
automatically revoked if the Beneficiary predeceases the Executive or if the
Executive names a spouse as Beneficiary and the marriage is subsequently
dissolved.

5.2 Absence of Beneficiary Designation. In the absence of a valid Beneficiary
designation, or if, at the time any benefit payment is due to a Beneficiary,
there is no living Beneficiary validly named by the Executive, the Employer
shall pay the benefit payment to the Executive’s spouse. If the spouse is not
living then the Employer shall pay the benefit payment to the Executive’s living
descendants per stirpes, and if there no living descendants, to the Executive’s
estate. In determining the existence or identity of anyone entitled to a benefit
payment, the Employer may rely conclusively upon information supplied by the
Executive’s personal representative, executor, or administrator.

 

 

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5.3 Facility of Payment. If a distribution is to be made to a minor, or to a
person who is otherwise incompetent, then the Administrator may make such
distribution: (i) to the legal guardian, or if none, to a parent of a minor
payee with whom the payee maintains his or her residence; or (ii) to the
conservator or administrator or, if none, to the person having custody of an
incompetent payee. Any such distribution shall fully discharge the Employer and
the Administrator from further liability on account thereof.

ARTICLE 6

ASSIGNMENT

The Executive may irrevocably assign without consideration all of the
Executive’s interest in this Agreement to any person, entity, or trust. In the
event the Executive shall transfer all of the Executive’s Interest, then all of
the Executive's interest in this 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.

ARTICLE 7

INSURER

The Insurer shall be bound only by the terms of its given Policy. The Insurer
shall not be bound by or deemed to have notice of the provisions of this
Agreement. The Insurer shall have the right to rely on the Employer’s
representations with regard to any definitions, interpretations or Policy
interests as specified under this Agreement.

ARTICLE 8

ADMINISTRATION

8.1 Administrator Duties. The Administrator shall be responsible for the
management, operation, and administration of the Agreement. When making a
determination or calculation, the Administrator shall be entitled to rely on
information furnished by the Employer, Executive or Beneficiary. No provision of
this Agreement shall be construed as imposing on the Administrator any fiduciary
duty under ERISA or other law, or any duty similar to any fiduciary duty under
ERISA or other law.

8.2 Administrator Authority. The Administrator shall enforce this Agreement in
accordance with its terms, shall be charged with the general administration of
this Agreement, and shall have all powers necessary to accomplish its purposes.
Such powers include, but are not limited to, the following:

(a) To construe and interpret the terms and provisions of this Agreement and to
reconcile any inconsistency;

(b) To compute and certify the amount payable to the Executive and the
Beneficiary; to determine the time and manner in which such benefits are paid;
and to determine the amount of any withholding taxes to be deducted;

(c) To maintain all records that may be necessary for the administration of this
Agreement;

(d) To provide for the disclosure of all information and the filing or provision
of all reports and statements to the Executive, the Beneficiary and governmental
agencies as required by law;

(e) To make and publish such rules for the regulation of this Agreement and
procedures for the administration of this Agreement so long as no such rules or
procedures are not inconsistent with the terms hereof;

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(f) To administer this Agreement’s claims procedures;

(g) To approve the forms and procedures for use under this Agreement; and

(h) To employ others, including actuaries, attorneys, accountants, independent
fiduciaries, recordkeepers and administrative consultants, to render advice or
perform services with respect to the responsibilities of the Administrator under
the Agreement.

8.3 Binding Effect of Decision. The decision or action of the Administrator with
respect to any question arising out of or in connection with the administration,
interpretation or application of this Agreement and the rules and regulations
promulgated hereunder shall be final, conclusive and binding upon all persons
having any interest in this Agreement.

8.4 Compensation, Expenses and Indemnity. The Administrator shall serve without
compensation for services rendered hereunder. The Administrator is authorized at
the expense of the Employer to employ such legal counsel and recordkeeper as it
may deem advisable to assist in the performance of its duties hereunder. Expense
and fees in connection with the administration of this Agreement shall be paid
by the Employer.

8.5 Employer Information. The Employer shall supply full and timely information
to the Administrator on all matters relating to the Executive’s death,
Separation from Service, and such other information as the Administrator
reasonably requires.

ARTICLE 9

CLAIMS AND REVIEW PROCEDURE

9.1 Claims Procedure. A Claimant who has not received benefits under this
Agreement that he or she believes should be distributed shall make a claim for
such benefits as follows.

(a) Initiation – Written Claim. The Claimant initiates a claim by submitting to
the Administrator a written claim for the benefits. If such a claim relates to
the contents of a notice received by the Claimant, the claim must be made within
sixty (60) days after such notice was received by the Claimant. All other claims
must be made within one hundred eighty (180) days of the date on which the event
that caused the claim to arise occurred. The claim must state with particularity
the determination desired by the Claimant.

 

(b) Timing of Administrator Response. The Administrator shall respond to such
Claimant within ninety (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 ninety
(90) days by notifying the Claimant in writing, prior to the end of the initial
ninety (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.

 

(c) Notice of Decision. If the Administrator denies part or all of the claim,
the Administrator shall notify the Claimant in writing of such denial. The
Administrator shall write the notification in a manner calculated to be
understood by the Claimant. The notification shall set forth: (i) the specific
reasons for the denial; (ii) a reference to the specific provisions of this
Agreement on which the denial is based; (iii) a description of any additional
information or material necessary for the Claimant to perfect the claim and an
explanation of why it is needed; (iv) an explanation of this Agreement’s review
procedures and the time limits applicable to such procedures; and (v) a
statement of the Claimant’s right to bring a civil action under ERISA Section
502(a) following an adverse benefit determination on review.

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9.2 Review Procedure. If the Administrator denies part or all of the claim, the
Claimant shall have the opportunity for a full and fair review by the
Administrator of the denial as follows.

(a) Initiation – Written Request. To initiate the review, the Claimant, within
sixty (60) days after receiving the Administrator’s notice of denial, must file
with the Administrator a written request for review.

 

(b) Additional Submissions – Information Access. The Claimant shall then have
the opportunity to submit written comments, documents, records and other
information relating to the claim. The Administrator shall also provide the
Claimant, upon request and free of charge, reasonable access to, and copies of,
all documents, records and other information relevant (as defined in applicable
ERISA regulations) to the Claimant’s claim for benefits.

 

(c) Considerations on Review. In considering the review, the Administrator shall
take into account all materials and information the Claimant submits relating to
the claim, without regard to whether such information was submitted or
considered in the initial benefit determination.

 

(d) Timing of Administrator Response. The Administrator shall respond in writing
to such Claimant within sixty (60) days after receiving the request for review.
If the Administrator determines that special circumstances require additional
time for processing the claim, the Administrator can extend the response period
by an additional sixty (60) days by notifying the Claimant in writing, prior to
the end of the initial sixty (60) 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.

 

(e) Notice of Decision. The Administrator shall notify the Claimant in writing
of its decision on review. The Administrator shall write the notification in a
manner calculated to be understood by the Claimant. The notification shall set
forth: (i) the specific reasons for the denial; (ii) a reference to the specific
provisions of this Agreement on which the denial is based; (iii) a statement
that the Claimant is entitled to receive, upon request and free of charge,
reasonable access to, and copies of, all documents, records and other
information relevant (as defined in applicable ERISA regulations) to the
Claimant’s claim for benefits; and (iv) a statement of the Claimant’s right to
bring a civil action under ERISA Section 502(a).

ARTICLE 10

AMENDMENTS AND TERMINATION

This Agreement may be amended only by a written agreement signed by both the
Employer and the Executive. In the event that the Employer decides to maintain
the Policy after termination of the Agreement, the Employer shall be the direct
beneficiary of the entire death proceeds of the Policy.

ARTICLE 11

MISCELLANEOUS

11.1 No Effect on Employment Rights. This Agreement constitutes the entire
agreement between the Employer and the Executive as to the subject matter
hereof. No rights are granted to the Executive by virtue of this Agreement other
than those specifically set forth herein. Nothing contained herein will confer
upon the Executive the right to be retained in the service of the Employer nor
limit the right of the Employer to discharge or otherwise deal with the
Executive without regard to the existence hereof.

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11.2 State Law. To the extent, not governed by ERISA, the provisions of this
Agreement shall be construed and interpreted according to the internal law of
the State of California without regard to its conflicts of laws principles.

11.3 Validity. In case any provision of this Agreement shall be illegal or
invalid for any reason, said illegality or invalidity shall affect the remaining
parts hereof, but this Agreement shall be construed and enforced as if such
illegal or invalid provision had never been inserted herein.

11.4 Notice. Any notice, consent or demand required or permitted to be given to
the Employer or Administrator under this Agreement shall be sufficient if in
writing and hand-delivered or sent by registered or certified mail to the
Employer’s principal business office. Any notice or filing required or permitted
to be given to the Executive or Beneficiary under this Agreement shall be
sufficient if in writing and hand-delivered or sent by mail to the last known
address of the Executive or Beneficiary, as appropriate. Any notice shall be
deemed given as of the date of delivery or, if delivery is made by mail, as of
the date shown on the postmark or on the receipt for registration or
certification.

11.5 Headings and Interpretation. Headings and sub-headings in this Agreement
are inserted for reference and convenience only and shall not be deemed part of
this Agreement. Wherever the fulfillment of the intent and purpose of this
Agreement requires and the context will permit, the use of the masculine gender
includes the feminine and use of the singular includes the plural.

11.6 Coordination with Other Benefits. The benefits provided for the Executive
or the Beneficiary under this Agreement are in addition to any other benefits
available to the Executive under any other plan or program for employees of the
Employer. This Agreement shall supplement and shall not supersede, modify, or
amend any other such plan or program except as may otherwise be expressly
provided herein.

11.7 Inurement. This Agreement shall be binding upon and shall inure to the
benefit of the Employer, its successor and assigns, and the Executive, the
Executive’s successors, heirs, executors, administrators, and the Beneficiary.

IN WITNESS WHEREOF, the Executive and a duly authorized representative of the
Employer have signed this Agreement.

 

EXECUTIVE EMPLOYER               By:   Title: EVP Chief Credit Officer Title:
President/Chief Executive Officer

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SPLIT DOLLAR LIFE INSURANCE AGREEMENT

Beneficiary Designation

I designate the following as Beneficiary under this Agreement:

Primary

____________________________________________________________________________________
_______%

____________________________________________________________________________________
_______%

Contingent

____________________________________________________________________________________
_______%

____________________________________________________________________________________
_______%

 

I understand that I may change this beneficiary designation by delivering a new
written designation to the Administrator, which shall be effective only upon
receipt by the Administrator prior to my death. I further understand that the
designation will be automatically revoked if the Beneficiary predeceases me or
if I have named my spouse as Beneficiary and our marriage is subsequently
dissolved.

Signature: _______________________________ Date: _______

SPOUSAL CONSENT (Required only if Administrator requests and someone other than
spouse is named Beneficiary)

I consent to the beneficiary designation above. I also acknowledge that if I am
named Beneficiary and my marriage is subsequently dissolved, the beneficiary
designation will be automatically revoked.

Spouse Name: _______________________________

Signature:        _______________________________           Date: _________

 

 

By:     ________________________________

 

Title:  ________________________________

 

 

 

 

 

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