exh105.htm


     

    
      

      

    

    Exhibit 10.5

     

     

    
      AMENDED
AND RESTATED

      SPLIT
DOLLAR COLLATERAL ASSIGNMENT

       

       

      [X]  Nationwide Life Insurance
Company of
America                                                        Policy Number  4,270,164

       

      ASSIGNOR:  Joseph
W. Packer,
Jr.                                                                               INSURED:  Joseph
W. Packer, Jr.

       

      ASSIGNEE:
Prudential Savings
Bank                                                                              EFFECTIVE
DATE: November 19, 2008

       

       

      WHEREAS,
the Assignor previously assigned to the Assignee certain interests in the Policy
as security for certain liabilities of the Assignor to the Assignee in
connection with a split-dollar arrangement regarding the Policy in accordance
with Rev. Rul. 64-328, 1964 C.B. 11, pursuant to a Split-Dollar Collateral
Assignment dated September 2, 1993 (the “Prior Assignment”);

       

      WHEREAS,
upon a surrender of the Policy, the Assignor has the right to receive the cash
surrender value of the Policy after the payment of all amounts owed to the
Assignee;

       

      WHEREAS,
as a result of the Assignor’s right to obtain a portion of the cash surrender
value of the Policy upon a surrender of the Policy, the Prior Assignment does
not satisfy the exemption for death benefit only plans under Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”);

       

      WHEREAS,
the parties desire to amend and restate the Prior Assignment in order to
grandfather the Prior Assignment for purposes of Section 409A of the Code, with
the amount of the grandfathered cash surrender value to be determined in
accordance with the “proportional allocation method” set forth in Notice 2007-34
issued by the Internal Revenue Service (the “IRS”);

       

      WHEREAS,
the Prior Assignment is currently deemed to be grandfathered under Treasury
Regulation §1.61-22, which grandfathering treatment under the split dollar
regulations would normally be lost in the event of a material modification of
the Prior Assignment;

       

      WHEREAS,
Part III.D.2 of IRS Notice 2007-34 expressly states that a modification of a
split-dollar life insurance arrangement necessary to avoid the application of
Section 409A of the Code will not be treated as a material modification of the
arrangement for purposes of Treasury Regulation §1.61-22(j);

       

      WHEREAS,
this Amended and Restated Split Dollar Collateral Assignment (the “Restated
Assignment”)  satisfies the requirements in Part III.D.2 of IRS Notice
2007-34 for having the Restated Assignment no longer be subject to Section 409A
of the Code, and the Restated Assignment does not materially enhance the value
of the benefits to the Assignor under the Prior Assignment;

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      WHEREAS,
the Prior Assignment referenced “Indebtedness” and “Liabilities,” which terms
were not defined in the Prior Assignment but which were intended to mean the
Assignor’s obligation to pay to the Assignee out of any death proceeds or cash
surrender value of the Policy an amount equal to the Assignee’s Aggregate
Premiums Paid, as defined herein;

       

      WHEREAS,
the parties do not expect or intend to make any material modifications to this
amended and restated Collateral Assignment which would result in the
grandfathering treatment being lost under either Treasury Regulation §1.61-22 or
Section 409A of the Code; and

       

      WHEREAS,
the Assignee, by accepting this Agreement, agrees to the terms and conditions
hereof.

       

      NOW,
THEREFORE, in consideration of the mutual agreements herein set forth and such
other consideration the sufficiency of which is hereby acknowledged, the parties
hereby amend and restate the Prior Assignment to read in its entirety as
follows:

       

      The
Assignor, being applicant and owner of the subject Policy, hereby assigns and
conveys to the Assignee all right, title, and interest in the Policy, as
collateral security for the obligation to repay to the Assignee the Aggregate
Premiums Paid.  All incidents of ownership in the Policy not
transferred to the Assignee shall remain in the Assignor.

       

      
        	
                A.

              	
                It
      is expressly agreed that the following specific rights are included in
      this assignment and pass by virtue
hereof:

              


      

       

      
        	
                 
      

              	
                1.

              	
                The
      sole right to collect from the Insurer the net proceeds of the Policy when
      it becomes a claim by death or maturity, with the net proceeds to be equal
      to the total death benefit of the Policy minus the Assignee’s Aggregate
      Premiums Paid;

              


      

       

      
        	
                 
      

              	
                2.

              	
                The
      sole right to surrender the Policy at any time provided by the terms of
      the Policy and at such other times as the Insurer may allow, and to
      receive a portion of the Total Cash Surrender Value (as defined herein)
      thereof in an amount equal to the sum of (i) the Assignee’s Aggregate
      Premiums Paid (as defined herein), plus (ii) the Non-Grandfathered Cash
      Surrender Value (as defined herein) of the
  Policy;

              


      

       

      
        	
                 
      

              	
                3.

              	
                The
      sole right to obtain one or more loans or advances on the Policy to the
      extent of the Assignee’s Aggregate Premiums Paid (as defined herein),
      either from the Insurer or, at any time, from other persons, and to pledge
      or assign the Policy as security for such loans or
    advances;

              


      

       

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                4.

              	
                The
      sole right to collect and receive all distributions or shares of surplus,
      dividend deposits or additions to the Policy now or hereafter made or
      apportioned thereto, and to exercise any and all options contained in the
      Policy with respect thereto; provided, that unless and until the Assignee
      shall notify the Insurer in writing to the contrary, the distributions or
      shares of surplus, dividend deposits, and additions shall continue on the
      plan in force at the time of this Restated
  Assignment;

              


      

       

      
        	
                 
      

              	
                5.

              	
                The
      sole right to exercise all nonforfeiture rights permitted by the terms of
      the Policy or allowed by the Insurer and to receive all benefits and
      advantages derived therefrom; and

              


      

       

      
        	
                 
      

              	
                6.

              	
                The
      sole right to the value of any funds held by the Insurer for the purpose
      of paying future premiums under the Policy as determined by the premium
      agreement applicable thereto.

              


      

       

      
        	
                B.

              	
                It
      is expressly agreed that the following specific rights, so long as the
      Policy has not been surrendered, are reserved and excluded from this
      Restated Assignment and do not pass by virtue
  hereof:

              


      

       

      
        	
                 
      

              	
                1.

              	
                The
      right to collect from the Insurer any disability benefit payable in cash
      that does not reduce the amount of
insurance;

              


      

       

      
        	
                 
      

              	
                2.

              	
                The
      right to designate and change the beneficiary;
  and

              


      

       

      
        	
                 
      

              	
                3.

              	
                The
      right to elect any optional mode of settlement permitted by the Policy or
      allowed by the Insurer; but the reservation of these rights shall in no
      way impair the right of the Assignee to surrender the Policy completely
      with all its incidents or impair any other right to the Assignee
      hereunder, and any designation or change of beneficiary or election of a
      mode of settlement shall be made subject to this Restated Assignment and
      to the rights of the Assignee
hereunder.

              


      

       

      
        	
                C.

              	
                The
      Assignee agrees with the Assignor as
follows:

              


      

       

      
        	
                 
      

              	
                1.

              	
                That
      any balance of sums received hereunder from the Insurer remaining after
      payment of the amounts then owed to the Assignee pursuant to this Restated
      Assignment shall be paid by the Assignee to the persons entitled thereto
      under the terms of the Policy had this Restated Assignment not been
      executed;

              


      

       

      
        	
                 
      

              	
                2.

              	
                That
      the Assignee will not exercise either the right to surrender the Policy or
      (except for the purpose of paying premiums) the right to obtain policy
      loans from the Insurer, until there has been a default in any of the
      liabilities or a failure to pay any premium when due, nor until 20 days
      after the Assignee shall have mailed, by first-class mail, to the Assignor
      at the address last supplied in writing to the Assignee specifically
      referring to this assignment, notice of intention to exercise such right;
      and

              


      

       

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

       

       

      
        	
                 
      

              	
                3.

              	
                That
      the Assignee will upon request forward without unreasonable delay to the
      Insurer the Policy for endorsement of any designation or change of
      beneficiary or any election of any optional mode of
      settlement.

              


      

       

      
        	
                D.

              	
                For
      purposes of this Assignment:

              


      

       

      
        	
                 
      

              	
                1.

              	
                The
      Total Cash Surrender Value of the Policy at any time equals at such time
      the cash value set forth in the Policy’s table of values, plus the cash
      value of any paid-up additions, plus any dividend accumulations and unpaid
      dividends, less any policy loans to the Assignee and accrued interest
      thereon.

              


      

       

      
        	
                 
      

              	
                2.

              	
                The
      Aggregate Premiums Paid at any time equal the cumulative premiums paid by
      the Assignee, reduced by the amount of any policy dividends paid in cash
      to the Assignee or used to reduce or offset such premiums, and further
      reduced by any policy loans to the Assignee and accrued interest thereon
      and by any amount received by the Assignee from the Assignor or the
      Insured for the economic benefit under the split-dollar
      arrangement.

              


      

       

      
        	
                 
      

              	
                3.

              	
                The
      Grandfathered Cash Surrender Value of the Policy at any time shall be
      determined in accordance with the “proportional allocation method”
      described in Part III.A.2 of IRS Notice 2007-34 or any successor
      thereto.  Under such method, the Grandfathered Cash Surrender
      Value as of any valuation date shall equal the greater of (i) the Total
      Cash Surrender Value of the Policy that was earned and vested at December
      31, 2004, and (ii) an amount equal to the Total Cash Surrender Value on
      the valuation date multiplied by a fraction, the numerator of which is the
      sum of the grandfathered premiums actually paid on the Policy and the
      denominator of which is the sum of all premiums actually paid on the
      Policy by the valuation date.  Grandfathered premiums shall
      include both premiums actually paid on or before December 31, 2004 that
      were earned and vested (as defined in Treas. Reg. §1.409A-6(a)(2)) as of
      December 31, 2004 and premiums paid after such date pursuant to a legally
      binding right that was earned and vested (as defined in Treas. Reg.
      §1.409A-6(a)(2)) as of such date.

              


      

       

      
        	
                 
      

              	
                4.

              	
                The
      Non-Grandfathered Cash Surrender Value of the Policy at any time shall
      equal the Total Cash Surrender Value at such time minus the Grandfathered
      Cash Surrender Value at such time.

              


      

       

      
        	
                E.

              	
                The
      Insurer is hereby authorized to recognize the Assignee’s claims to rights
      hereunder without investigating the reason for any action taken by the
      Assignee, or the existence, validity or the amount of any liability of the
      Assignor to the Assignee, or the existence of any liability of the
      Assignor to the Assignee, any default therein, or the giving of any notice
      under Paragraph C.2 above or otherwise, or the application to be made by
      the Assignee of any amounts to be paid to the Assignee.  The
      sole signature of the Assignee shall be sufficient for the exercise of any
      rights under the Policy assigned hereby and the sole receipt of the
      Assignee for any sums received shall be a full discharge and release
      therefor to the Insurer.  Checks for all or any part of the sums
      payable under the Policy and assigned herein shall be drawn to the
      exclusive order of the Assignee if, when, and in such amounts as may be
      requested by the Assignee.

              


      

       

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

       

      
        	
                F.

              	
                The
      exercise of any right, option, privilege, or power given herein to the
      Assignee shall be at the option of the Assignee, and (except as restricted
      by Paragraph C.2 above) the Assignee may exercise any such right, option,
      privilege, or power without notice to, or assent by, or affecting the
      liability of, or releasing any interest hereby assigned by the
      Assignor.

              


      

       

      
        	
                G.

              	
                In
      the event of any conflict between the provisions of this assignment and
      the provisions of any note or other evidence of any liability with respect
      to the Policy or rights of collateral security therein, the provisions of
      this Restated Assignment shall prevail as to the
  Insurer.

              


      

       

      
        	
                H.

              	
                Each
      of the undersigned declares that no proceedings in bankruptcy are pending
      against him or it and that his or its property is not subject to any
      assignment for the benefit of
creditors.

              


      

       

       

       

       

       

       

       

       

       

       

       

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

       

      IN WITNESS
WHEREOF, the Assignor and the Assignee have duly executed this Amended
and Restated Split-Dollar Collateral Assignment as of the Effective
Date.

       

       

      
        	
                __________________________________________

              	________________________________________________________


      

      
        	
                Witness

              	
                Joseph
      W. Packer, Jr. Assignor

              


      

       

       

      
        	
                 
      

              	
                PRUDENTIAL
      SAVINGS BANK, Assignee

              


      

       

       

      
        	
                __________________________________________

              	By:
      _____________________________________________________


      

      
        	
                Witness

              	
                     
      Thomas A. Vento, President and

              


      

      
        	
                 
      

              	
                     
      Chief Executive Officer

              


      

       

       

       

       

       

       

       

       

       

       

       

      
 

      
        
           

        

        
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