Exhibit 10.10
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
EXECUTIVE AGREEMENT
THIS AGREEMENT is made and entered into this ____ day of ______________,
2002, by and between Cherokee Bank, a bank organized and existing under the laws
of the State of Georgia (hereinafter referred to as the "Bank"), and
_________________, an Executive of the Bank (hereinafter referred to as the
"Executive").
WHEREAS, the Executive is now in the employ of the Bank and has for many
years faithfully served the Bank. It is the consensus of the Board of Directors
(hereinafter referred to as the "Board") that the Executive'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 Executive's experience, knowledge of
corporate affairs, reputation and industry contacts are of such value, and the
Executive's continued services so essential to the Bank's future growth and
profits, that it would suffer severe financial loss should the Executive
terminate their services;
ACCORDINGLY, the Board has adopted the Cherokee Bank Executive Supplemental
Retirement Plan Executive Agreement (hereinafter referred to as the "Executive
Plan") and it is the desire of the Bank and the Executive to enter into this
Agreement under which the Bank will agree to make certain payments to the
Executive upon the Executive's retirement or to the Executive's beneficiary(ies)
in the event of the Executive's death pursuant to the Executive Plan;
FURTHERMORE, it is the intent of the parties hereto that this Executive
Plan be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Executive, and to be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Executive is fully advised of
the Bank's financial status and has had substantial input in the design and
operation of this benefit plan; and
NOW THEREFORE, in consideration of services the Executive has 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 Executive agree as
follows:
I. DEFINITIONS
A. Effective Date:
---------------
The Effective Date of the Executive Plan shall be November 30, 2001.
B. Plan Year:
Any reference to the "Plan Year" shall mean a calendar year from
January 1st to December 31st. In the year of implementation, the
term "Plan Year" shall mean the period from the Effective Date to
December 31st of the year of the Effective Date.
C. Retirement Date:
----------------
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 Executive reaches age sixty-five
(65) or such later date as the Executive may actually retire.
D. Termination of Service:
------------------------
Termination of Service shall mean the Executive's voluntary
resignation of service by the Executive or the Bank's discharge of
the Executive without cause, prior to the Normal Retirement Age
(Subparagraph I [J]).
E. Pre-Retirement Account:
-----------------------
A Pre-Retirement Account shall be established as a liability reserve
account on the books of the Bank for the benefit of the Executive.
Prior to the Executive's Termination of Service or the Executive's
retirement, whichever event shall first occur, such liability
reserve account shall be increased or decreased each Plan Year,
until the aforestated event occurs, by the Index Retirement Benefit
(Subparagraph I [F]).
F. Index Retirement Benefit:
--------------------------
The Index Retirement Benefit for each Executive in the Executive
Plan for each Plan Year shall be equal to the excess (if any) of the
Index (Subparagraph I [G]) for that Plan Year over the Opportunity
Cost (Subparagraph I [H]) for that Plan Year, divided by a factor
equal to 1.06 minus the marginal tax rate.
G. Index:
-----
The Index for any Plan Year shall be the aggregate annual after-tax
income from the life insurance contract(s) described hereinafter as
defined by FASB Technical Bulletin 85-4. This Index shall be applied
as if such insurance contract(s) were purchased on the Effective
Date of the Executive Plan.
2
Insurance Company:
Policy Form:
Policy Name:
Insured's Age and Sex:
Riders:
Ratings:
Option:
Face Amount:
Premiums Paid:
Number of Premium Payments:
Assumed Purchase Date:
If such contracts of life insurance are actually purchased by the
Bank, then the actual policies as of the dates they were actually
purchased shall be used in calculations under this Executive Plan.
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 or had not subsequently surrendered or lapsed. Said
illustrations shall be received from the respective insurance
companies and will indicate the increase in policy values for
purposes of calculating the amount of the Index.
In either case, references to the life insurance contracts are
merely for purposes of calculating a benefit. The Bank has no
obligation to purchase such life insurance and, if purchased, the
Executive and the Executive's beneficiary(ies) shall have no
ownership interest in such policy and shall always have no greater
interest in the benefits under this Executive Plan than that of an
unsecured creditor of the Bank.
H. Opportunity Cost:
-----------------
The Opportunity Cost for any Plan Year shall be calculated by taking
the sum of the amount of premiums for the life insurance policies
described in the definition of "Index" plus the amount of any
after-tax benefits paid to the Executive pursuant to the Executive
Plan (Paragraph II hereinafter) plus the amount of all previous
years' after-tax Opportunity Cost, and multiplying that sum by the
average after-tax yield of a one-year Treasury ▇▇▇▇ for the Plan
Year.
I. Change of Control:
-------------------
Change of Control means the cumulative transfer of more than fifty
percent (50%) of the voting stock of the Bank from the Effective
Date of this Executive Plan. For the purposes of this Executive
Plan, transfers made 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 of Control.
3
J. Normal Retirement Age:
----------------------
Normal Retirement Age shall mean the date on which the Executive
attains age sixty-five (65).
II. INDEX BENEFITS
A. Retirement Benefits:
--------------------
Subject to Subparagraph II (D) hereinafter, an Executive who remains
in the employ of the Bank until the Normal Retirement Age
(Subparagraph I [J]) shall be entitled to receive the balance in the
Pre-Retirement Account in fifteen (15) equal annual installments
commencing thirty (30) days following the Executive's retirement. In
addition to these payments and commencing in conjunction therewith,
the Index Retirement Benefit (Subparagraph I [F]) for each Plan Year
subsequent to the Executive's retirement, and including the
remaining portion of the Plan Year following said retirement, shall
be paid to the Executive until the Executive's death.
B. Termination of Service:
------------------------
Subject to Subparagraph II (D), should an Executive suffer a
Termination of Service, the Executive shall be entitled to receive
ten percent (10%) times the number of full years of employment with
the Bank from the date of first employment with the Bank (to a
maximum of 100%), times the balance in the Pre-Retirement Account
payable to the Executive in fifteen (15) equal annual installments
commencing thirty (30) days following the Executive's Normal
Retirement Age (Subparagraph I [J]). In addition to these payments
and commencing in conjunction therewith, ten percent (10%) times the
number of full years of employment with the Bank from the date of
first employment with the Bank (to a maximum of 100%), times the
Index Retirement Benefit for each Plan Year subsequent to the year
in which the Executive attains Normal Retirement Age, and including
the remaining portion of the Plan Year in which the Executive
attains Normal Retirement Age, shall be paid to the Executive until
the Executive's death.
C. Death:
-----
Should the Executive die while there is a balance in the Executive's
Pre-Retirement Account (Subparagraph I [E]), said unpaid balance of
the Executive's Pre-Retirement Account shall be paid in a lump sum
to the individual or individuals the Executive may have designated
in writing and filed with the Bank. In the absence of any effective
beneficiary designation, the unpaid balance shall be paid as set
forth herein to the duly qualified executor or administrator of the
4
Executive's estate. Said payment due hereunder shall be made the
first day of the second month following the decease of the
Executive.
D. Discharge for Cause:
---------------------
Should the Executive be Discharged for Cause at any time, all
benefits under this Executive Plan shall be forfeited. 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. If a
dispute arises as to discharge "for cause," such dispute shall be
resolved by arbitration as set forth in this Executive Plan.
E. Death Benefit:
--------------
Except as set forth above, there is no death benefit provided under
this Agreement.
F. Disability Benefit:
-------------------
In the event the Executive becomes disabled prior to any Termination
of Service, and the Executive's employment is terminated because of
such disability, he shall immediately begin receiving the benefits
in Subparagraph II (A) above. Such benefit shall begin without
regard to the Executive's Normal Retirement Age and the Executive
shall be one hundred percent (100%) vested in the entire benefit
amount. If there is a dispute regarding whether the Executive is
disabled, such dispute shall be resolved by a physician selected by
the Bank and such resolution shall be binding upon all parties to
this Agreement.
III. DEFERRAL BENEFITS
A. Deferral Election:
------------------
Any Executive wishing to defer any portion or all of the Executive's
compensation may elect to defer up to twenty-five percent (25%) of
compensation each year for a maximum of five (5) years. At the end
of the five-year period, the Board shall have the option of
extending the deferral period for any amount of time it shall deem
to be appropriate. The Executive will make the election to defer by
filing with the Bank a written statement setting forth the amount of
the deferrals and the Executive's election of payment as set forth
in Subparagraph III (C) hereinafter. This statement must be filed
prior to having earned the deferred income.
5
B. Deferred Compensation Account:
-------------------------------
The Bank shall establish a Deferred Compensation Account in the name
of the Executive and credit that account with the deferrals. The
Bank shall also credit interest to the Deferred Compensation Account
balance on December 31st of each year. The interest rate credited
shall be one hundred percent (100%) of the yield of a one-year
Treasury ▇▇▇▇ as of the crediting date.
C. Retirement, Termination of Service or Death:
------------------------------------------------
Upon the Executive's Retirement Date or Termination of Service
(Subparagraphs I [C] and [D] hereinabove), the balance of the
Executive's Deferred Compensation Account shall be payable as
elected by the Executive one (1) year prior to receiving said
benefit payable to the Executive thirty (30) days following said
event. If the Executive fails to make said payment election, then
the Executive shall be paid in ten (10) equal annual installments as
set forth herein. Should the Executive die while there is a balance
in the Executive's Deferred Compensation Account, such balance shall
be paid pursuant to Subparagraph II (C) hereinabove.
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 Executive Plan.
The Executive, their beneficiary(ies), or any successor in interest 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 Executive Plan or to refrain from
funding the same and to determine the extent, nature and method of such
funding. Should the Bank elect to fund this Executive Plan, 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 any Executive be deemed to have any lien nor right, title or
interest in or to any specific funding investment or to any assets of the
Bank.
If the Bank elects to invest in a life insurance, disability or annuity
policy upon the life of the Executive, then the Executive shall assist the
Bank by freely submitting to a physical exam and supplying such additional
information necessary to obtain such insurance or annuities.
6
V. CHANGE OF CONTROL
Upon a Change of Control (Subparagraph I [I]), if the Executive
subsequently suffers a Termination of Service (Subparagraph I [D]), then
the Executive shall receive the benefits promised in this Executive Plan
upon attaining Normal Retirement Age, as if the Executive had been
continuously employed by the Bank until the Executive's Normal Retirement
Age. The Executive will also remain eligible for all promised death
benefits in this Executive Plan. 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 Executive Plan
and agrees to abide by its terms.
VI. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
------------------------------------------
Neither the Executive, nor the Executive's surviving spouse, nor any
other beneficiary(ies) under this Executive Plan 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 owed by the Executive or the Executive's
beneficiary(ies), nor be transferable by operation of law in the
event of bankruptcy, insolvency or otherwise. In the event the
Executive 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 the Bank and any Successor in Interest:
-------------------------------------------------------------------
The Bank 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 agree, in writing, to
assume and discharge the duties and obligations of the Bank under
this Executive Plan. This Executive Plan shall be binding upon the
parties hereto, their successors, beneficiaries, heirs and personal
representatives.
C. Amendment or Revocation:
-------------------------
It is agreed by and between the parties hereto that, during the
lifetime of the Executive, this Executive Plan may be amended or
revoked at any time or times, in whole or in part, by the mutual
written consent of the Executive and the Bank.
7
D. Gender:
------
Whenever in this Executive Plan 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:
---------------------------------------
Nothing contained in this Executive Plan shall affect the right of
the Executive 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:
--------
Headings and subheadings in this Executive Plan are inserted for
reference and convenience only and shall not be deemed a part of
this Executive Plan.
G. Applicable Law:
---------------
The validity and interpretation of this Agreement shall be governed
by the laws of the State of Georgia.
H. 12 U.S.C. Sec. 1828(k):
-------------------------
Any payments made to the Executive pursuant to this Executive Plan,
or otherwise, are subject to and conditioned upon their compliance
with 12 U.S.C. Sec. 1828(k) or any regulations promulgated
thereunder.
I. Partial Invalidity:
-------------------
If any term, provision, covenant, or condition of this Executive
Plan is determined by an arbitrator or a court, as the case may be,
to be invalid, void, or unenforceable, such determination shall not
render any other term, provision, covenant, or condition invalid,
void, or unenforceable, and the Executive Plan shall remain in full
force and effect notwithstanding such partial invalidity.
J. Employment:
----------
No provision of this Executive Plan shall be deemed to restrict or
limit any existing employment agreement by and between the Bank and
the Executive, nor shall any conditions herein create specific
employment rights to the Executive nor limit the right of the
8
Employer to discharge the Executive with or without cause. In a
similar fashion, no provision shall limit the Executive's rights to
voluntarily sever the Executive's employment at any time.
VII. ERISA PROVISION
A. Named Fiduciary and Plan Administrator:
------------------------------------------
The "Named Fiduciary and Plan Administrator" of this Executive Plan
shall be Cherokee Bank until its resignation or removal by the
Board. As Named Fiduciary and Plan Administrator, the Bank shall be
responsible for the management, control and administration of the
Executive Plan. The Named Fiduciary may delegate to others certain
aspects of the management and operation responsibilities of the
Executive Plan including the employment of advisors and the
delegation of ministerial duties to qualified individuals.
B. Claims Procedure and Arbitration:
-----------------------------------
In the event a dispute arises over benefits under this Executive
Plan and benefits are not paid to the Executive (or to the
Executive's beneficiary(ies) in the case of the Executive's death)
and such claimants feel they are entitled to receive such benefits,
then a written claim must be made to the Named Fiduciary and Plan
Administrator named above within sixty (60) days from the date
payments are refused. The Named Fiduciary and Plan Administrator
shall review the written claim and if the claim is denied, in whole
or in part, they shall provide in writing within sixty (60) days of
receipt of such claim the specific reasons for such denial,
reference to the provisions of this Executive Plan 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 Named
Fiduciary and Plan Administrator fail to take any action within the
aforesaid sixty-day period.
If claimants desire a second review they shall notify the Named
Fiduciary and Plan Administrator in writing within sixty (60) days
of the first claim denial. Claimants may review this Executive Plan
or any documents relating thereto and submit any written issues and
comments it may feel appropriate. In their sole discretion, the
Named Fiduciary and Plan Administrator shall then review the second
claim and provide a written decision within sixty (60) 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 the Plan Agreement upon which the decision is
based.
If claimants continue to dispute the benefit denial based upon
completed performance of this Executive Plan or the meaning and
effect of the terms and conditions thereof, then claimants may
9
submit the dispute to an arbitrator for final arbitration. The
arbitrator shall be selected by mutual agreement of the Bank and the
claimants. The arbitrator 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 arbitrator with
respect to any controversy properly submitted to it for
determination.
Where a dispute arises as to the Bank's discharge of the Executive
"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.
VIII. TERMINATION OR MODIFICATION OF AGREEMENT BY REASON
OF CHANGES IN THE LAW, RULES OR REGULATIONS
The Bank is entering into this Agreement upon the assumption that certain
existing tax laws, rules and regulations will continue in effect in their
current form. If any said assumptions should change and said change has a
detrimental effect on this Executive Plan, then the Bank reserves the
right to terminate or modify this Agreement accordingly; provided,
however, that the Executive shall be entitled to receive at least his/her
Executive's Deferred Compensation Account including interest earned. Upon
a Change of Control (Subparagraph I [I]), this paragraph shall become null
and void effective immediately upon said Change of Control.
IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully read
this Agreement and executed the original thereof on the first day set forth
hereinabove, and that, upon execution, each has received a conforming copy.
CHEROKEE BANK
Canton, Georgia
____________________________ By: ____________________________
Witness Title
____________________________ ____________________________
Witness Insured
10
BENEFICIARY DESIGNATION FORM
FOR THE EXECUTIVE SUPPLEMENTAL
RETIREMENT PLAN AGREEMENT
PRIMARY DESIGNATION:
Name Address Relationship
---- ------- ------------
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
SECONDARY (CONTINGENT) DESIGNATION:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
All sums payable under the Executive Supplemental Retirement Plan Executive
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
11
DEFERRAL DECLARATION
I. AUTHORIZATION AND AMOUNT OF DEFERRAL
The undersigned ____________________, an Executive of Cherokee Bank hereby
elects to defer ___________ ($ or percent) of the Executive's income for
the year ______ and all subsequent years thereafter pursuant to the
Executive Supplemental Retirement Plan Executive Agreement effective the
______ day of ___________, _____ unless modified by the Executive
accordingly. The undersigned is a party to the above referenced agreement.
II. DISTRIBUTION ELECTION
Pursuant to the Provisions of my Executive Supplemental Retirement Plan
Executive Agreement with Cherokee Bank, I hereby elect to have any
distribution of the balance in my Deferral Account paid to me in
installments as designated below:
______ Lump sum.
______ Five (5) annual installments with the amount of each
installment determined as of each installment date by dividing
the entire amount in my Benefit Account by the number of
installments then remaining to be paid, with the final
installment to be the entire remaining balance in the Benefit
Account.
______ Ten (10) annual installments with the amount of each
installment determined as of each installment date by dividing
the entire amount in my Benefit Account by the number of
installments then remaining to be paid, with the final
installment to be the entire remaining balance in the Benefit
Account.
______ Fifteen (15) annual installments with the amount of each
installment determined as of each installment date by dividing
the entire amount in my Benefit Account by the number of
installments then remaining to be paid, with the final
installment to be the entire remaining balance in the Benefit
Account.
______ The aforestated length of time for payments in monthly
installments.
Date: ___________ Participant: ______________________________
12