Exhibit 10.11
LIFE INSURANCE
ENDORSEMENT METHOD SPLIT DOLLAR PLAN
AGREEMENT
Insurer:
Policy Number:
Bank: Cherokee Bank
Insured:
Relationship of Insured to Bank: Executive
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 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 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
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 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 employed by the Bank at the time of death, the
Insured's beneficiary(ies), designated in accordance with Paragraph
III, shall be entitled to an amount equal to twenty percent (20%) of
the net-at-risk insurance portion of the proceeds, plus the percentage
set forth hereinbelow that corresponds to the number of full years the
Insured has been employed by the Bank from the Effective Date of this
Agreement (to a maximum of 80%). The net-at-risk insurance portion is
the total proceeds less the cash value of the policy.
Number of Additional Percentage of
Full Years Split of Net-At-Risk
----------- ----------------------
1-6 10% per year to a maximum of 80%
B. Should the Insured not be employed by the Bank at the time of his or
her death, 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 employment.
Total Years
of Employment
with the Bank Vested (to a maximum of 100%)
--------------- ----------------------------------
1-10 10% per year
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.
IX. TERMINATION OF AGREEMENT
This Agreement shall terminate upon the occurrence of any one of the
following:
A. The Insured shall be discharged from employment 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.
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 that 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.
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 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 the 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 employment 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 Subparagraphs VI [A]).
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 November 30, 2001.
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
overbroad 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.
XX. GUARANTEED DEATH BENEFIT
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 no/100 Dollars ($________________) as a death benefit under Paragraph
VI of this Agreement.
Executed at Canton, Georgia this 25th day of January, 2002.
CHEROKEE BANK
Canton, Georgia
____________________________ By: ____________________________
Witness Title
____________________________ ____________________________
Witness Insured
BENEFICIARY DESIGNATION FORM
FOR LIFE INSURANCE ENDORSEMENT METHOD
SPLIT DOLLAR PLAN AGREEMENT
PRIMARY DESIGNATION:
Name Address Relationship
---- ------- ------------
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
SECONDARY (CONTINGENT) DESIGNATION:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
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, if he
or she survives me, and if no Primary Beneficiary shall survive me, then to the
Secondary (Contingent) Beneficiary.
_____________________________________ __________________________________
Participant Date
