Exhibit 10.13
LIFE INSURANCE
ENDORSEMENT METHOD SPLIT DOLLAR PLAN
AGREEMENT
Insurer:
Policy Number:
Bank: Cherokee Bank
Insured:
Relationship of Insured to Bank: Director
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
Refer to the policy contract for the definition of any terms in this
Agreement that are not defined herein. If the definition of a term in the
policy is inconsistent with the definition of a term in this Agreement,
then the definition of the term as set forth in this Agreement shall
supersede and replace the definition of the terms as set forth in the
policy.
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 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
Subject to the following, 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. The Bank shall exercise due
diligence in reviewing the financial stability of the insurance company
and the policy that are the subject of this Agreement. If the Bank
believes that the Insurer under the policy is financially weak or that the
policy is not performing well, the Bank may, at any time, surrender the
policy or substitute a different policy provided that the Bank is under no
obligation to invest in such replacement policy any more than the proceeds
available from the cash surrender value of the original policy. The
Executive will cooperate by undertaking any necessary medical examination.
If the Bank chooses to surrender the above-referenced policy without
replacing it or the policy otherwise ceases to exist prior to the death of
the Insured, the Bank agrees to pay the Insured's named beneficiary(ies)
______________________ and 00/100ths Dollars ($___________________) as a
death benefit under Paragraph VI of this Agreement.
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 serving on the Board of the Bank at the time
of death or be terminated due to disability*, the Insured's
beneficiary(ies), designated in accordance with Paragraph III, shall
be entitled to an amount equal to one hundred percent (100%) 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.
2
B. Should the Insured not be serving on the Board of the Bank at the
time of his or her death for reasons other than disability, the
Insured's beneficiary(ies), designated in accordance with Paragraph
III, shall be entitled to the percentage as set forth hereinbelow of
the proceeds described in Subparagraph VI (A) above that corresponds
to the number of full years the Insured has been employed by the
Bank since the date of first service on the Board of the Bank:
Total Years
of Service with
the Bank Vested (to a maximum of 100%)
---------- ----------------------------------
0-3 or less 0%
3 or more 100%
*Disability shall be as defined in the Director Supplemental
Retirement Agreement in effect at the time of said disability.
C. The Bank shall be entitled to the remainder of such proceeds.
D. 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. 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 proceeds for the purposes of division under this Agreement.
3
IX. TERMINATION OF AGREEMENT
This Agreement shall terminate upon the occurrence of any one of the
following:
A. The Insured shall leave the service of the Board of the Bank
(voluntarily or involuntarily except for disability) prior to three
(3) full years of service with the Bank from the date of first
service on the Board of the Bank.
B. The Insured shall be discharged from service with the Bank for
cause. The term "for cause" shall mean any of the following that
result in an adverse effect on the Bank: (i) gross negligence or
gross neglect; (ii) the commission of a felony or gross misdemeanor
involving moral turpitude, fraud, or dishonesty; (iii) the willful
violation of any law, rule, or regulation (other than a traffic
violation or similar offense); (iv) an intentional failure to
perform stated duties; or (v) a breach of fiduciary duty involving
personal profit; or
X. Xxxxxxxxx, lapse, or other termination of the Policy by the Bank,
and subject to payment under Paragraph IV herein.
Upon such termination, 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:
A. The Bank's share of the cash value of the policy on the date of such
assignment, as defined in this Agreement; or
B. The amount of the premiums which 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
X. 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.
XI. AGREEMENT BINDING UPON THE PARTIES
This Agreement shall bind the Insured and the Bank, their heirs,
successors, personal representatives and assigns.
XII. 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 Cherokee Bank, until its resignation or
removal by the Board of Directors. 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.
D. Claim Procedures.
-----------------
Claim forms or claim information as to the subject policy can be obtained
by contacting Benmark, Inc. (800-544-6079). When the Named Fiduciary has a
claim which may be covered under the provisions described in the insurance
5
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.
XIII. 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.
XIV. 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.
XV. CHANGE OF CONTROL
Change of Control shall be deemed to be the cumulative transfer of more
than fifty percent (50%) of the voting stock of the Bank from the date of
this Agreement. For purposes of this Agreement, transfers on account of
death 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 of Control. Upon a Change
of Control, if the Insured's service is subsequently terminated, except
for cause, then the Insured shall be one hundred percent (100%) vested in
the benefits promised in this Agreement 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 Subparagraph VI [A]).
6
XVI. 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.
XVII. EFFECTIVE DATE
The Effective Date of this Agreement shall be _____________, ______.
XVIII. 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 over
broad 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.
XIX. APPLICABLE LAW
The validity and interpretation of this Agreement shall be governed by the
laws of the State of Georgia.
Executed at Canton, Georgia, this ________day of ___________, 2002.
CHEROKEE BANK
Canton, Georgia
____________________________ By: ____________________________
Witness Title
____________________________ ____________________________
Witness Insured
7
BENEFICIARY DESIGNATION FORM
FOR THE LIFE INSURANCE ENDORSEMENT METHOD
SPLIT DOLLAR PLAN AGREEMENT
I. PRIMARY DESIGNATION
--------------------
(You may refer to the beneficiary designation information prior to
completion.)
A. PERSON(S) AS A PRIMARY DESIGNATION:
---------------------------------------
(Please indicate the percentage for each beneficiary.)
Name___________________________ Relationship___________________/_______%
Address:________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________ Relationship___________________/_______%
Address:________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________ Relationship___________________/_______%
Address:________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________ Relationship___________________/_______%
Address:________________________________________________________________
(Street) (City) (State) (Zip)
B. ESTATE AS A PRIMARY DESIGNATION:
--------------------------------
My Primary Beneficiary is The Estate of___________________________________
as set forth in the last will and testament dated the _____ day of
_____________, _______ and any codicils thereto.
C. TRUST AS A PRIMARY DESIGNATION:
-----------------------------------
Name of the Trust: __________________________________________________
Execution Date of the Trust: _____ / _____ / _________
Name of the Trustee: ________________________________________________
Beneficiary(ies) of the Trust (please indicate the percentage for each
beneficiary):
_________________________________________________________________________
_________________________________________________________________________
Is this an Irrevocable Life Insurance Trust? ________ Yes ________ No (If
yes and this designation is for a Split Dollar agreement, an Assignment of
Rights form should be completed.)
8
II. SECONDARY (CONTINGENT) DESIGNATION
------------------------------------
A. PERSON(S) AS A PRIMARY DESIGNATION:
---------------------------------------
(Please indicate the percentage for each beneficiary.)
Name___________________________ Relationship___________________/_______%
Address:________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________ Relationship___________________/_______%
Address:________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________ Relationship___________________/_______%
Address:________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________ Relationship___________________/_______%
Address:________________________________________________________________
(Street) (City) (State) (Zip)
B. ESTATE AS A PRIMARY DESIGNATION:
--------------------------------
My Primary Beneficiary is The Estate of___________________________________
as set forth in the last will and testament dated the _____ day of
_____________, _______ and any codicils thereto.
C. TRUST AS A PRIMARY DESIGNATION:
-----------------------------------
Name of the Trust: __________________________________________________
Execution Date of the Trust: _____ / _____ / _________
Name of the Trustee: ________________________________________________
Beneficiary(ies) of the Trust (please indicate the percentage for each
beneficiary):
_________________________________________________________________________
_________________________________________________________________________
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(ies),
if he or she survives me, and if no Primary Beneficiary(ies) shall survive me,
then to the Secondary (Contingent) Beneficiary(ies). This beneficiary
designation is valid until the participant notifies the bank in writing.
______________________________________ __________________________________
Participant Date
9
