EXHIBIT 10.10
LIFE INSURANCE
ENDORSEMENT METHOD SPLIT DOLLAR PLAN
AGREEMENT
Insurer/Policy Number: Beneficial Life Insurance Company/BL2114939
Northwestern Mutual Life Insurance Company/▇▇▇▇▇▇▇▇
Bank: Southwest Community Bank
Insured: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Relationship of Insured to Bank: Executive Officer
Date: January 6, 2003
The respective rights and duties of the Bank and the Insured in the above
policy(ies) (the "Policy" or Policies) shall be as follows:
I. DEFINITIONS
Refer to the Policy provisions 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 the Policy cash values. Where the Bank and the Insured (or
the Insured's beneficiary[ies] or assignee[s], 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 beneficiary[ies] or assignee[s]) 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.
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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 maintain 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
plus the amount of any taxes paid and taxes on taxes paid (collectively
"Taxes") related to the receipt of such benefit ("gross-up") based on
the Table below, or as adjusted based on then prevailing income tax
rates:
FEDERAL TAX STATE TAX FICA TAX MEDICARE TAX
RATE RATE RATE RATE
---- ---- ---- ----
39.60% 9.30% 7.65%*' 1.45%
*The Social Security portion of the FICA tax only applies in years where the
Employee has not otherwise reached the maximum tax. The Medicare tax only
applies in years where the Employee has otherwise reached the maximum
non-Medicare portion of the FICA tax.
The Bank (or its administrator) will report to the Insured 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 Policies is as follows:
1. If death occurs on or before the attainment of age seventy (70), the
Insured's beneficiary(ies), (designated in accordance with Paragraph
III), shall be entitled to an amount equal to the lesser of $500,000,
or one hundred percent (100%) of the net at risk insurance portion of
the proceeds. If death occurs after age seventy (70) but on or before
age eighty (80), the Insured's beneficiaries shall be entitled to the
lesser of $350,000, or one hundred percent (100%) of the net at risk
insurance proceeds. If death occurs after age eighty (80), the
Insured's beneficiaries shall be entitled to the lesser of $200,000, or
one hundred percent (100%) of the net at risk insurance proceeds. The
net at risk insurance portion is the total proceeds less the cash value
of the Policy.
2. Payment of the death benefit determined by the preceding paragraph
shall be made and distributed from the Policies in the following order,
with resort to each succeeding policy only to the extent that the
proceeds of each prior listed Policy are insufficient to satisfy the
specified death benefit in full: (a) Northwestern Mutual Life/16232160
(b) Beneficial Life/BL2114939.
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3. The Bank and the Insured (or the Insured's beneficiary[ies] or
assignee[s]) shall share in any interest due on the death proceeds on a
pro rata basis in the ratio that the proceeds due the Bank and the
Insured, respectively, bears to the total proceeds, excluding any such
interest.
4. In the event that the Policy is terminated other than as a result of
(a) a termination of this Agreement pursuant to paragraph X or (b) any
intentional act of the Insured which results in the termination of the
Policy, then the Bank shall pay to the Insured's beneficiary(ies) an
amount which will provide a total after-tax death benefit equal to the
benefit that the Insured would have received if the Policy had not been
terminated.
VII. DIVISION OF CASH SURRENDER VALUE
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, less any
Policy loans and unpaid interest or cash withdrawals previously
incurred by the Bank and any applicable Policy surrender charges. Such
cash value shall be determined as of the date of surrender of the
Policy or death of the Insured as the case may be.
VIII. PREMIUM WAIVER
If the Policy contains a premium waiver provision, any 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
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 treated like death 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's right to receive benefits under that certain Executive
Supplemental Compensation Agreement effective as of October 1, 2002
shall terminate for any reason other than the Insured's death, or
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2. The Insured shall be discharged from service with the Bank for cause.
The term "for cause" shall mean:
(a) The Insured's deliberate violation of (i) any state
or federal banking or securities laws, or of the Bylaws, rules,
policies or resolutions of the Bank, or (ii) of the rules or
regulations of the California Department of Financial Institutions, the
Federal Deposit Insurance Corporation, the Federal Reserve Board of
Governors, the Office of the Comptroller of the Currency or any other
regulatory agency or governmental authority having jurisdiction over
the Employer, which has a material adverse effect upon the Bank; or
(b) The Insured's conviction of (i) any felony or (ii) a
crime involving moral turpitude or a fraudulent or dishonest act which,
in each case, has a material adverse effect on the Insured.
Upon such termination, the Insured (or the Insured's beneficiary[ies]
or assignee[s]) shall have a ninety (90) day option to receive from the
Bank an absolute assignment of the Policy[ies) in consideration of a
cash payment to the Bank, whereupon this Agreement shall terminate.
Such cash payment shall be an amount equal to the Policy's[ies'] cash
value, as that term is defined in such Policy[ies], and shall not take
into account any amount of premiums that have been paid by the Bank:
(i) The Bank's share of the cash value of the
Policy on the date of such assignment, as defined in this Agreement.
(ii) The amount of the premiums which have been
paid by the Bank prior to the date of such assignment.
Should the Insured (or the Insured's beneficiary[ies] or assignee[s])
fail to exercise this option within the prescribed ninety (90) day
period, the Insured (or the Insured's beneficiary[ies] or assignee[s])
agrees that all of his or her 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
Except as otherwise provided in Paragraph III above, the Insured may
not, without the prior written consent of the Bank, assign to any
individual, trust or other organization, any right, title or interest
in the Policy nor any rights, options, privileges or duties created
under this Agreement.
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XII. AGREEMENT BINDING UPON THE PARTIES
This Agreement shall be binding upon the Insured and the Bank, and
their respective heirs, successors, personal representatives and
assigns, as applicable.
XIII. NAMED ▇▇▇▇▇▇▇▇▇ AND PLAN ADMINISTRATOR
The Bank is hereby designated the "Named Fiduciary" until resignation
or removal by its Board of Directors. As Named Fiduciary, the Bank
shall be responsible for the management, control, and administration of
this Agreement as established herein. The Named Fiduciary may allocate
to others certain aspects of the management and operations
responsibilities of this Agreement, including the employment of
advisors and the delegation of any ministerial duties to qualified
individuals.
XIV. FUNDING POLICY
The funding Policy for this Agreement shall be to maintain the Policy
in force by paying, when due, all premiums required.
XV. CLAIM PROCEDURES
Claim forms or claim information as to the subject Policy[ies] 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 Policy[ies], it 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[ies], the
Insurer will notify the Named Fiduciary of the denial pursuant to the
requirements under the terms of the Policy[ies]. If the Named Fiduciary
is dissatisfied with the denial of the claim and wishes to contest such
claim denial, it 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 rights of the parties as set forth herein upon receiving an
executed copy of this Agreement. Payment or other performance in
accordance with the Policy[ies provisions shall fully discharge the
Insurer from any and all liability.
IN WITNESS WHEREOF, the Insured and a duly authorized Bank officer have signed
this Agreement as of the above written date.
SOUTHWEST COMMUNITY BANK INSURED
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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BENEFICIARY DESIGNATION FORM
Primary Designation:
Name Relationship
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Wife
Contingent Designation:
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January 6, 2003
Signed: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Exhibit 10.10
BENEFICIARY DESIGNATION FORM
PRIMARY DESIGNATION:
NAME RELATIONSHIP
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Trust
as trustees under the S&M ▇▇▇▇▇▇▇▇▇ Family ------------------------------
Trust dated 12-22-2002.
CONTINGENT DESIGNATION:
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February 6, 2003
Signed: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Exhibit 10.10