Ocean City Home Bank Split Dollar Life Insurance Agreement



 Exhibit 10.2 

OCEAN CITY HOME BANK 

SPLIT DOLLAR LIFE INSURANCE AGREEMENT 

THIS AGREEMENT entered into this
11th day of March, 2010 by and between Ocean City Home
Bank (the “Bank”), a federally-chartered savings bank, and KIM M. DAVIDSON (the “Employee”). 
 WHEREAS, the
Employee has rendered services to the Bank as a valued employee; and 
 WHEREAS, the Bank desires to encourage the Employee to
continue to render faithful and high quality services to the Bank; and 
 WHEREAS, the Bank seeks to provide financial
protection for the beneficiaries of the Employee in the event of the Employee’s untimely death; and 
 WHEREAS, the Bank is
the owner of one or more life insurance policies under which Employee is an insured (the “Policies”), all of which are identified in Exhibit A hereto. 

NOW, THEREFORE, for value received and in consideration of the mutual covenants and agreements contained herein, the Bank and the
Employee agree as follows: 
 Article I 

Ownership Rights in the Policies 

A. The Bank shall have all of the ownership rights, options and privileges permitted by the Policies, except those expressly granted to
the Employee by the terms of this Agreement. 
 B. The Bank shall have the right to designate itself as beneficiary of the
Policies to the extent of the total death proceeds payable under the Policies, less the Employee’s Interest. For purposes of this Agreement, the “Employee’s Interest” shall be determined as follows: 

 

	 	(i)	While the Employee is an active employee of the Bank or any affiliate of the Bank, the Employee’s interest means an amount set forth in Exhibit B.


  

	 	(ii)	Following the Employee’s termination of employment, other than for “Cause” (as defined in Paragraph C below), by reason of Disability, or following a
Change in Control, “Employee’s Interest” means an amount set forth in Exhibit B. 

  

	 	(iii)	Upon an Employee’s termination of employment on or after the effective date of a Change in Control (as defined in Paragraph C below) for any reason other than a
termination for Cause (as defined below), “Employee’s Interest” means an amount set forth in Exhibit B. 









	 	(iv)	Upon an Employee’s termination of employment by reason of Disability (as defined in Paragraph C below), “Employee’s Interest” means an amount set
forth in Exhibit B. 

 Except to the extent otherwise provided in this Paragraph B and in Article IV, no benefit
shall be provided to an Employee under this Agreement following termination of employment. 
 C. For purposes of this Agreement,
the following definitions shall apply: 
  

	 	(i)	“Cause” shall mean termination because of the Employee’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar infractions) or a final cease-and-desist order. 


 

	 	(ii)	“Change in Control” means a change in control as defined in Internal Revenue Section 409A of the Code and rules, regulations, and guidance of general
application thereunder issued by the Department of the Treasury, including: 

  

	 	(a)	Change in ownership: a change in ownership of the Company or the Bank occurs on the date any one person or group accumulates ownership of Company stock constituting
more than 50% of the total fair market value or total voting power of Company stock, or 

  

	 	(b)	Change in effective control: (x) any one person or more than one person acting as a group acquires within a 12-month period ownership of Company stock possessing
30% or more of the total voting power of Company stock, or (y) a majority of the Company’s or the Bank’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed in advance
by a majority of the Company’s or the Bank’s board of directors, or 

  

	 	(c)	Change in ownership of a substantial portion of assets: a change in ownership of a substantial portion of the Company’s or the Bank’s assets occurs if in a
12-month period any one person or more than one person acting as a group acquires from the Company or the Bank assets having a total gross fair market value equal to or exceeding 40% of the total gross fair market value of all of the Company’s
or the Bank’s assets immediately before the acquisition or acquisitions. For this purpose, gross fair market value means the value of the Company’s or the Bank’s assets, or the value of the assets being disposed of, determined without
regard to any liabilities associated with the assets. 

  

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 A Change of Control shall not occur solely as a result of a conversion of the Bank from the
mutual holding company form of organization to the full stock form of ownership (“Conversion”). 
  

	 	(ii)	“Disability” shall have the same meaning as under Section 22(e)(3) of the Internal Revenue Code of 1986, as amended. 


D. The Employee shall have the right to designate a beneficiary or beneficiaries of the Policies’ death benefits to the extent of
the Employee’s Interest on a form designated by the Bank for such purpose. If more than one beneficiary is named, the share of each beneficiary and the status of each beneficiary (i.e., as primary or contingent) shall be indicated by the
Employee. The Employee shall have the right to change the beneficiary or beneficiaries and the status of the same by submitting the change in writing on a form designated by the Bank for such purpose. The Bank shall take such action as may be
necessary to effectuate the beneficiary designation, as well as any settlement option made available by the Policies that the Employee may elect. The Employee’s beneficiary designation form, as the same may be modified from time to time by the
Employee, shall be incorporated by reference as part of this Agreement. 
 E. The Bank may not take any action with respect to
the Policies that will impair any right or interest of the Employee in the Policies. 
 F. With the consent of the Bank, the
Employee may assign without consideration the “Employee’s Interest” to any person, entity or trust. In the event the Employee transfer the “Employee’s Interest,” then all of the “Employee’s Interest” and
the Employee’s rights under this Agreement shall be vested in the Employee’s transferee, who shall be substituted as a party hereunder and the Employee shall have no further interest in the Policies or in this Agreement. 

Article II 

Premium Payments 

A. The Bank shall contribute the entire premium payable under the Policies. 

B. It is understood and agreed by the Employee that, annually during the term of this Agreement, the Employee will be charged with
taxable income by reason of the economic benefit of the insurance protection received under this Agreement in an amount determined under applicable federal income tax requirements. During the term of this Agreement, the Bank shall annually furnish
the Employee a statement on Form W-2 reporting the Employee’s taxable income with respect to coverage provided under this Agreement, unless such amount is reimbursed to the Bank by the Employee on or before the last day of the calendar year.

 Article III 

Division of Death Proceeds of Policies 

In the event that the Employee shall die while this Agreement is in force, the Bank shall be entitled to receive from the proceeds of the
Policies an amount equal to the Bank’s interest in the Policies, as determined under Paragraph B of Article I of this Agreement. The portion of the 

 

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proceeds of the Policies which represents the “Employee’s Interest” as determined in accordance with Article I, Paragraph B shall be paid to the beneficiary named by the Employee
in accordance with the terms of the policy as reflected in the records of the insurance company. 
 Article IV 

Termination of Agreement 

A. Except as otherwise provided in this Article IV, this Agreement shall terminate (i) automatically upon termination of the
Employee’s employment with the Bank or any affiliate of the Bank, other than by reason of the Employee’s death while actively employed or (ii) by mutual agreement of the Employee and the Bank. If the Employee terminates employment
with the Bank or any affiliate of the Bank and qualifies as an Eligible Retiree, or terminates employment (other than for Cause) on or after the effective date of a Change in Control or by reason of Disability, this Agreement shall continue in
effect and thereafter shall terminate only by mutual agreement of the Employee and the Bank. 
 B. Notwithstanding anything in
this Agreement to the contrary, (i) upon the division of the death proceeds of the Policies pursuant to Article III above, this Agreement shall terminate and (ii) this Agreement shall terminate as of the date that the Executive has been
paid all benefits to which she is entitled under her Salary Continuation Agreement with the Bank of even date herewith. 

Article V 

Amendment 

This Agreement may be amended at any time and from time to time, but only by a written instrument signed by the Bank and the Employee.

 Article VI 

Named Fiduciary and Plan Administrator 

The Bank is hereby designated the Named Fiduciary and Plan Administrator with respect to this Agreement. 

As Named Fiduciary, the Bank shall be responsible for the management and administration of this Agreement. The Bank’s Board of
Directors may delegate to others the Bank’s responsibilities under the plan including the retention of advisors and may execute any other powers necessary for the discharge of its duties to the extent not in conflict with the provisions of the
Employee Retirement Income Security Act of 1974, as amended. 
 Article VII 

Claims Procedure 

A claim form or a request for claim information with respect to benefits under the Agreement may be obtained upon written request to the
Named Fiduciary or its delegate. 
  

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 In the event that the claim is in whole or in part denied, the Named Fiduciary or its
delegate shall provide notification of such denial to the claimant within 90 days. The notifications shall contain the specific reasons for the denial as well as specific reference to the pertinent provisions of the Agreement upon which the denial
is based. The claimant shall also be informed of this claim review procedure and shall be provided with description of the method by which the claim may be perfected. 

A claimant seeking claims review may, within 60 days following receipt by the claimant of a written claims denial, request a claim’s
review by written application to the Named Fiduciary. In connection with the claim’s review, the claimant shall be afforded an opportunity to review claims documents and submit comments in writing. A final decision on review shall be in writing
and shall include, in the event the claims for benefits are wholly and partially denied: 
  

	 	(1)	The specific reasons for the denial; 

  

	 	(2)	Specific reference to pertinent provisions of the Agreement upon which the denial or dispute is based; 


 

	 	(3)	A description of any additional information necessary for the claimant to perfect the claim and an explanation of why such materials or information is necessary; and


  

	 	(4)	An explanation of the Agreement review procedures. 


Article VIII 

Insurer Not a Party to Agreement 

The issuer(s) of the Policies shall not be deemed a party to this Agreement. Payment or other performance of its contractual obligations
in accordance with the provisions of the Policies shall fully discharge the issuer(s) from any and all liability. The Bank shall take such action as may be necessary to ensure that the “Employee’s Interest” in the Policies is
reflected in the records of the issuer of the Policies. 
 Article IX 

Agreement Binding Upon Parties 

This Agreement shall bind both the Bank and the Employee, as well as their heirs, successors, personal representatives and assigns.
Except as otherwise provided by this Agreement, in no event shall a successor entity to the Bank be discharged of its obligation to maintain a level of insurance protection equal to the Employee’s Interest. 

 

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 Article X 

Governing Law 

This Agreement sets forth the entire agreement between the parties hereto, and any and all prior agreements are hereby superseded. The
law of the State of New Jersey shall govern this Agreement, unless preempted by federal law. 
  

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 IN WITNESS WHEREOF, the Employee and a duly authorized representative of the Bank have
executed this Agreement, all as of the day and year written above. 
  

	
	OCEAN CITY HOME BANK
	
	 /s/ Emily J. Bruley

	On behalf of the Board of Directors
	
	 /s/ Kim M. Davidson

	Kim M. Davidson


  

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