EXHIBIT 10.10
LIFE INSURANCE
ENDORSEMENT METHOD SPLIT DOLLAR PLAN
AGREEMENT
Insurer: Canada Life Assurance Company
Policy Number: US2650611
Bank: Chesapeake Federal Savings & Loan
Association
Insured: Xxxxxxxx Xxxxxxxxx
Relationship of Insured to Bank: Director
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.
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. Upon the death of the Insured, 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.
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 he 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 proceeds for the purposes of division under
this Agreement.
2
X. TERMINATION OF AGREEMENT
This Agreement shall terminate at the option of the Bank following
thirty (30) days written notice to the Insured if the Insured shall be
discharged from service 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 willful 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.
XIII. NAMED XXXXXXXXX AND PLAN ADMINISTRATOR
Chesapeake Federal Savings & Loan Association is hereby designated the
"Named Fiduciary" until resignation or removal by the board of
directors. As Named Fiduciary, the bank 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
3
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. CLAIM PROCEDURES FOR LIFE INSURANCE POLICY AND SPLIT DOLLAR PLAN
Claim 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.
XVII. 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
for any and all liability.
Executed at Baltimore, Maryland this 20/th/ day of October, 1997.
4
Chesapeake Federal Savings &
Loan Association
/s/ By: /s/ Xxxxxxx X. Xxxxx, Xx.
---------------------------- ---------------------------
Witness Title
/s/ /s/ Xxxxxxxx X. Xxxxxxxxx
---------------------------- ------------------------------
Witness Xxxxxxxx X. Xxxxxxxxx
5
