EXHIBIT 10.1
DIRECTOR INDEXED SALARY CONTINUATION PLAN
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AGREEMENT
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This Agreement, made and entered into this 15th day of December, 1995,
by and between Quitman Federal Savings & Loan Association, a Bank organized and
existing under the laws of the State of Georgia, hereinafter referred to as "the
Bank", and Xxxxxx X. Xxxxxxx, a Key Employee and the Director of the Bank
hereinafter referred to as "the Director."
The Director has been on the Board of the Bank for several years and
has now and for years past faithfully served the Bank. It is the consensus of
the Board of Directors of the Bank (the Board) that the Director's services have
been of exceptional merit, in excess of the compensation paid and an invaluable
contribution to the profits and position of the Bank in its field of activity.
The Board further believes that the Director's experience, knowledge of
corporate affairs, reputation and industry contacts are of such value and his
continued services are so essential to the Bank's future growth and profits that
it would suffer severe financial loss should the Director terminate his
services.
Accordingly, it is the desire of the Bank and the Director to enter
into this Agreement under which the Bank will agree to make certain payments to
the Director upon his retirement and, alternatively, to his beneficiary(ies) in
the event of his premature death while employed by the Bank.
It is the intent of the parties hereto that this Agreement be
considered an arrangement maintained primarily to provide supplemental
retirement benefits for the Director, for purposes of the Employee Retirement
Security Act of 1974 (ERISA). The Director is fully advised of the Bank's
financial status and has had substantial input in the design and operation of
this benefit plan.
Therefore, in consideration of the Director's services performed in the
past and those to be performed in the future and based upon the mutual promises
and covenants herein contained, the Bank and the Director, agree as follows:
I. DEFINITIONS
A. Effective Date:
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The Effective Date of this Agreement shall be December 15,
1995.
B. Plan Year:
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Any reference to "Plan Year" shall mean a calendar year from
January 1 to December 31. In the year of implementation, the
term "Plan Year" shall mean the period from the effective date
to December 31 of the year of the effective date.
C. Retirement Date:
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Retirement Date shall mean retirement from service with the
Bank which becomes effective on the first day of the calendar
month following the month in which the Director reaches his
sixty-fifth (65th) birthday or such later date as the Director
may actually retire.
D. Termination of Service:
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Termination of Service shall mean voluntary resignation of
service by the Director or the Bank's discharge of the
Director without cause [as defined in subparagraph III (D)
hereinafter], prior to the Normal Retirement Age [described in
subparagraph I (J) hereinafter].
E. Pre-Retirement Account:
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A Pre-Retirement Account shall be established as a liability
reserve account on the books of the Bank for the benefit of
the Director. Prior to termination of service or the
Director's retirement, such liability reserve account shall be
increased or decreased each Plan Year (including the Plan Year
in which the Director ceases to serve on the Board of the
Bank) by an amount equal to the annual earnings or loss for
that Plan Year determined by the Index [described in
subparagraph I (G) hereinafter], less the Cost of Funds
Expense for that Plan Year [described in subparagraph I (H)
hereinafter].
F. Index Retirement Benefit:
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The Index Retirement Benefit for the Director for any year
shall be equal to the excess of the annual earnings (if any)
determined by the Index [subparagraph I (G)] for that Plan
Year over the Cost of Funds Expense [subparagraph I (H)] for
that Plan Year.
G. Index:
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The Index for any Plan Year shall be the aggregate annual
after-tax income from the life insurance contracts described
hereinafter as defined by FASB Technical Bulletin 85-4. This
Index shall be applied as if such insurance contracts were
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purchased on the effective date hereof.
Insurance Company: The Guardian Life Insurance Company
Policy Form: Whole Life
Policy Name: Life Paid Up at 96
Insured's Age and Sex: 39, Male
Riders: None
Ratings: None
Option: None
Face Amount: $100,000
Premiums Paid: $4,111.70
Number of Premium Payments: Twenty Six
Assumed Issue Date: December 15, 1995
If such contracts of life insurance are actually purchased by
the Bank then the actual policies as of the dates they were
purchased shall be used in calculations under this Agreement.
If such contracts of life insurance are not purchased or are
subsequently surrendered or lapsed, then the Bank shall
receive annual policy illustrations that assume the above
described policies were purchased from the above named
insurance company(ies) on the Effective Date from which the
increase in policy value will be used to calculate the amount
of the Index.
In either case, references to the life insurance contract are
merely for purposes of calculating a benefit. The Bank has no
obligation to purchase such life insurance and, if purchased,
the Director and his beneficiary(ies) shall have no ownership
interest in such policy and shall always have no greater
interest in the benefits under this Agreement than that of an
unsecured general creditor of the Bank.
H. Cost of Funds Expense:
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The Cost of Funds Expense for any Plan Year shall be
calculated by taking the sum of the amount of premiums set
forth in the Indexed policies described above plus the amount
of any benefits paid to the Director pursuant to this
Agreement (Paragraph III hereinafter) plus the amount of all
previous years after-tax Costs of Funds Expense, and
multiplying that sum by the average after-tax cost of funds of
the Bank's third quarter Call Report for the Plan Year as
filed with the Federal Reserve.
I. Change of Control
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Change of Control shall be deemed to be the cumulative
transfer of more than fifty percent (50%) of the voting stock
of the Bank holding company from the Effective Date of this
Agreement. For the purposes of this Agreement, transfers
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on account of deaths or gifts, transfers between family
members or transfers to a qualified retirement plan maintained
by the Bank shall not be considered in determining whether
there has been a change in control.
J. Normal Retirement Age:
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Normal Retirement Age shall mean the date on which the
Director attains age sixty-five (65).
II. EMPLOYMENT
No provision of this Agreement shall be deemed to restrict or limit any
existing employment agreement by and between the Bank and the Director,
nor shall any conditions herein create specific employment rights to
the Director nor limit the right of the Employer to discharge the
Director with or without cause. In a similar fashion, no provision
shall limit the Director's rights to voluntarily sever his employment
at any time.
III. INDEX BENEFITS
The following benefits provided by the Bank to the Director are in the
nature of a fringe benefit and shall in no event be construed to effect
nor limit the Director's current or prospective salary increases, cash
bonuses or profit-sharing distributions or credits.
A. Retirement Benefits:
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Should the Director continue to serve on the Board of the Bank
until his "Normal Retirement Age" defined in subparagraph
I(J), he shall be entitled to receive the balance in his
Pre-Retirement Account [as defined in subparagraph I (E)] in
ten (10) equal annual installments commencing thirty (30) days
following the Director's Retirement Date [as defined in
subparagraph I (C)]. In addition to these payments, commencing
with the Plan Year in which the Director attains his
Retirement Date, the Index Retirement Benefit [as defined in
subparagraph I (F) above] for each year shall be paid to the
Director until his death.
B. Termination of Service:
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Subject to subparagraph III (D) hereinafter, should the
Director suffer a termination of service [defined in
subparagraph I (D)], he shall be entitled to receive ten
percent (10%), times the number of full years (to a maximum of
100%) the Director has served on the board of the Bank, times
the balance in the Pre-Retirement Account paid over ten (10)
years in equal installments commencing at the Retirement Date
[subparagraph I (C)]. In addition to these payments, ten
percent (10%) times full years of service with the Bank, times
the
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Index Retirement Benefit for each year shall be paid to the
Director until his death.
C. Death:
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Should the Director die prior to having received the full
balance of the Pre- Retirement Account, the unpaid balance of
the Pre-Retirement Account shall be paid in a lump sum to the
beneficiary selected by the Director and filed with the Bank.
In the absence of or a failure to designate a beneficiary, the
unpaid balance shall be paid in a lump sum to the personal
representative of the Director's estate.
D. Discharge for Cause:
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Should the Director be discharged for cause at any time prior
to his Retirement Date, all Index Benefits under this
Agreement [subparagraphs III (A), (B) or (C)] shall be
forfeited. The term "for cause" shall mean gross negligence or
gross neglect or the conviction of a felony or
gross-misdemeanor involving moral turpitude, fraud, dishonesty
or willful violation of any law that results in any adverse
effect on the Bank. If a dispute arises as to discharge "for
cause", such dispute shall be resolved by arbitration as set
forth in this Agreement.
E. Death Benefit:
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Except as set forth above, there is no death benefit provided
under this Agreement.
IV. RESTRICTIONS UPON FUNDING
The Bank shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Agreement.
The Director, his beneficiary(ies) or any successor in interest to him
shall be and remain simply a general creditor of the Bank in the same
manner as any other creditor having a general claim for matured and
unpaid compensation.
The Bank reserves the absolute right at its sole discretion to either
fund the obligations undertaken by this Agreement or to refrain from
funding the same and to determine the exact nature and method of such
funding. Should the Bank elect to fund this Agreement, in whole or in
part, through the purchase of life insurance, mutual funds, disability
policies or annuities, the Bank reserves the absolute right, in its
sole discretion, to terminate such funding at any time, in whole or in
part. At no time shall the Director be deemed to have any lien or
right, title or interest in or to any specific funding investment or to
any assets of the Bank.
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If the Bank elects to invest in a life insurance, disability or annuity
policy upon the life of the Director, then the Director shall assist
the Bank by freely submitting to a physical exam and supplying such
additional information necessary to obtain such insurance or annuities.
V. CHANGE OF CONTROL
Upon a Change of Control [as defined in subparagraph I (I) herein], if
the Director's service on the Board is subsequently terminated then he
shall receive the benefits promised in this Agreement upon attaining
Normal Retirement Age, as if he has served continuously on the Board of
the Bank until that time. The Director will also remain eligible for
all promised death benefits in this Agreement. In addition, no sale,
merger or consolidation of the Bank shall take place unless the new or
surviving entity expressly acknowledges the obligations under this
Agreement and agrees to abide by its terms.
VI. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
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Neither the Director, his/her surviving spouse nor any other
beneficiary under this Agreement shall have any power or right
to transfer, assign, anticipate, hypothecate, mortgage,
commute, modify or otherwise encumber in advance any of the
benefits payable hereunder nor shall any of said benefits be
subject to seizure for the payment of any debts, judgments,
alimony or separate maintenance owned by the Director or his
beneficiary, nor be transferable by operation of law in the
event of bankruptcy, insolvency or otherwise. In the event the
Director or any beneficiary attempts assignment, commutation,
hypothecation, transfer or disposal of the benefits hereunder,
the Bank's liabilities shall forthwith cease and terminate.
B. Binding Obligation of Bank and any Successor in Interest:
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The Bank expressly agrees that it shall not merge or
consolidate into or with another bank or sell substantially
all of its assets to another bank, firm or person until such
bank, firm or person expressly agrees, in writing, to assume
and discharge the duties and obligations of the Bank under
this Agreement. This Agreement shall be binding upon the
parties hereto, their successors, beneficiary(ies), heirs and
personal representatives.
C. Revocation:
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It is agreed by and between the parties hereto that, during
the lifetime of the Director, this Agreement may be amended or
revoked at any time or times, in whole or in part, by the
mutual written assent of the Director and the Bank.
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D. Gender:
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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.
E. Effect on Other Bank Benefit Plans:
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Nothing contained in this Agreement shall affect the right of
the Director to participate in or be covered by any qualified
or non-qualified pension, profit-sharing, group, bonus or
other supplemental compensation or fringe benefit plan
constituting a part of the Bank's existing or future
compensation structure.
F. Headings:
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Headings and subheadings in this Agreement are inserted for
reference and convenience only and shall not be deemed a part
of this Agreement.
G. Applicable Law:
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The validity and interpretation of this Agreement shall be
governed by the laws of the State of Georgia.
VII. ERISA PROVISION
A. Named Fiduciary and Plan Administrator:
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The "Named Fiduciary and Plan Administrator" of this plan
shall be Quitman Federal Savings & Loan Association until its
removal by the Board. As Named Fiduciary and Administrator,
the Bank shall be responsible for the management, control and
administration of the Salary Continuation Agreement as
established herein. He may delegate to others certain aspects
of the management and operation responsibilities of the plan
including the employment of advisors and the delegation of
ministerial duties to qualified individuals.
B. Claims Procedure and Arbitration:
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In the event a dispute arises over benefits under this
Agreement and benefits are not paid to the Director (or to his
beneficiary in the case of the Director's death) and such
claimants feel they are entitled to receive such benefits,
then a written claim must be made to the Plan Administrator
named above within ninety (90) days from the date payments are
refused. The Plan Administrator shall review the written claim
and if the claim is denied, in whole or in part, they shall
provide in writing within ninety (90) days of receipt of such
claim their specific
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reasons for such denial, reference to the provisions of this
Agreement upon which the denial is based and any additional
material or information necessary to perfect the claim. Such
written notice shall further indicate the additional steps to
be taken by claimants if a further review of the claim denial
is desired. A claim shall be deemed denied if the Plan
Administrator fails to take any action within the aforesaid
ninety-day period.
If claimants desire a second review they shall notify the Plan
Administrator in writing within ninety (90) days of the first
claim denial. Claimants may review this Agreement or any
documents relating thereto and submit any written issues and
comments they may feel appropriate. In its sole discretion,
the Plan Administrator shall then review the second claim and
provide a written decision within ninety (90) days of receipt
of such claim. This decision shall likewise state the specific
reasons for the decision and shall include reference to
specific provisions of this Agreement upon which the decision
is based.
If claimants continue to dispute the benefit denial based upon
completed performance of this Agreement or the meaning and
effect of the terms and conditions thereof, then claimants may
submit the dispute to a Board of Arbitration for final
arbitration. Said Board shall consist of one member selected
by the claimant, one member selected by the Bank, and the
third member selected by the first two members. The Board
shall operate under any generally recognized set of
arbitration rules. The parties hereto agree that they and
their heirs, personal representatives, successors and assigns
shall be bound by the decision of such Board with respect to
any controversy properly submitted to it for determination.
Where a dispute arises as to the Bank's discharge of the
Director "for cause" such dispute shall likewise be submitted
to arbitration as above described and the parties hereto agree
to be bound by the decision thereunder.
IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Agreement and executed the original thereof on the 15th day
of December, 1995 and that, upon execution, each has received a conforming copy.
QUITMAN FEDERAL SAVINGS & LOAN ASSOCIATION
/s/ Xxxxx Xxxxxxx By: /s/ Xxxxxx Xxxxx
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Witness Title
/s/ Xxxxx Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------- ----------------------------
Witness Xxxxxx X. Xxxxxxx
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ENDORSEMENT METHOD SPLIT DOLLAR PLAN AGREEMENT
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Insurer: The Guardian Life Insurance Company
Policy Number: 0000000
Bank: Quitman Federal Savings & Loan Association
Insured: Xxxxxx X. Xxxxxxx
Relationship of Bank to Insured: Employer
The respective rights and duties of the Bank and the insured in the subject
policy shall be as defined in the following:
I. DEFINITIONS
Refer to the policy contract for the definition of all 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.
III. BENEFICIARY DESIGNATION RIGHTS
The Insured (or assignee) shall have the right and power to designate a
beneficiary or beneficiaries to receive his 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.
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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 Employee the amount
of imputed income received each year on Form W-2 or its equivalent.
VI. DIVISION OF DEATH PROCEEDS
Subject to Paragraph VII herein, the division of the death proceeds of
the policy is as follows:
A. The Insured's beneficiary(ies), designated in accordance with
Paragraph III, shall be entitled to an amount equal to eighty
percent (80%) of the net at risk insurance portion of the
proceeds. 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.
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. PREMIUM WAIVER
If the policy contains a premium waiver provision, such waived amounts
shall be considered for all purposes of this Agreement as having been
paid by the Bank.
IX. RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY ELECTION EXISTS
In the event the policy involves an endowment or annuity element, the
Bank's right and interest in any endowment proceeds or annuity
benefits, on expiration of the deferment period, shall be determined
under the provisions of this Agreement by regarding such endowment
proceeds or the commuted value of such annuity benefits as the policy's
cash value. Such endowment proceeds or annuity benefits shall be
considered to be like death
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proceeds for the purposes of division under this Agreement.
X. TERMINATION OF AGREEMENT
This Agreement shall terminate at the option of the Bank following
thirty (30) days written notice to the Insured upon the happening of
any one of the following:
1. The Insured shall leave the service of the Bank (voluntarily
or involuntarily) prior to ten years from the date of first
service, or
2. The Insured shall be discharged from employment with the Bank
for cause. The term "for cause" shall mean gross negligence or
gross neglect or the commission of a felony or
gross-misdemeanor involving moral turpitude, fraud, dishonesty
or wilful violation of any law that results in any adverse
effect on the Bank.
Upon such termination, the Insured (or assignee) shall have a ninety
(90) 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 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.
2. The amount of the premiums which have been paid by the Bank
prior to the date of such assignment.
Should the Insured (or assignee) fail to exercise this option within
the prescribed ninety (90) day period, the Insured (or assignee) agrees
that all of his rights, interest and claims in the policy shall
terminate as of the date of the termination of this Agreement.
Except as provided above, this Agreement shall terminate upon
distribution of the death benefit proceeds in accordance with Paragraph
VI above.
XI. 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.
XII. AGREEMENT BINDING UPON THE PARTIES
This Agreement shall bind the Insured and the Bank, their heirs,
successors, personal representatives and assigns.
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XIII. NAMED FIDUCIARY AND PLAN ADMINISTRATOR
Quitman Federal Savings & Loan Association is hereby designed the
"Named Fiduciary" until resignation or removal by the board of
directors. As Named Fiduciary, Quitman Federal Savings & Loan
Association shall be responsible for the management, control, and
administration of this Split Dollar Plan as established herein. The
Named Fiduciary may allocate 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.
XIV. 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.
XV. CLAIMS PROCEDURE FOR LIFE INSURANCE POLICY AND SPLIT DOLLAR PLAN
Claims forms or claim information as to the subject policy can be
obtained by contacting The Benefit Marketing Group, Inc.
(770-952-1529). When the Named Fiduciary has a claim which may be
covered under the provisions described in the insurance policy, he
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 to the Named
Fiduciary.
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, he should contact the office named above and they will
assist in making 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.
XVI. 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.
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XVII. INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT
The Insurer shall not be deemed a party to this Agreement, but will
respect the right s 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
for any and all liability.
Executed at Quitman, Georgia this 15th day of December, 1995.
QUITMAN FEDERAL SAVINGS & LOAN ASSOCIATION
/s/ Xxxxx Xxxxxxx By: /s/ Xxxxxx Xxxxx
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Witness Title
/s/ Xxxxx Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
--------------------------- -----------------------------------------
Witness Xxxxxx X. Xxxxxxx
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BENEFICIARY DESIGNATION FORM
Primary Designation:
Name Relationship
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Xxx X. Xxxxxxx Wife
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Contingent Designation:
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/s/ Xxxxxx X. Xxxxxxx 12/15/95
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Xxxxxx X. Xxxxxxx Date
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