Exhibit 10.31
LIFE INSURANCE
ENDORSEMENT METHOD SPLIT DOLLAR PLAN
AGREEMENT
Insurer: Jefferson Pilot
Union Central
Policy Number: JP5063504
U200000706
Bank: Clovis Community Bank
Insured: Tom Sommer
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 and die before the
Executive attains age sixty-five (65), the Insured's
beneficiary(ies), designated in accordance with Paragraph III,
shall be entitled to an amount equal to Four Hundred Sixty Six
Thousand Dollars and No/00ths ($ 466,000.00), or one hundred
percent (100%) of the net at risk insurance portion of the
proceeds, whichever amount is less. The net at risk insurance
portion is the total proceeds less the cash value of the
policy.
B. Should the Insured be employed by the Bank, or retired from
the Bank, and die on or subsequent to attaining the age of
sixty-five (65), the Insured's beneficiary(ies), designated in
accordance with Paragraph III, shall be entitled to an amount
equal to the amount as set forth in Exhibit A, attached hereto
and fully incorporated herein by reference, that corresponds
to the age of the Insured at the time of death, or one hundred
percent (100%) of the net at risk insurance portion of the
proceeds, whichever amount is less. The net at risk insurance
portion is the total proceeds less the cash value of the
policy.
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C. Should the Insured not be employed by the Bank at the time of
his or her death, and have been involuntarily terminated from
employment with the Bank, and die prior to attaining age
sixty-five (65), 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
Effective Date of this Agreement. Should the Insured not be
employed by the Bank at the time of his or her death, and have
been involuntarily terminated from employment with the Bank,
and die subsequent to attaining age sixty-five (65)*, the
Insured's beneficiary(ies) shall be entitled to the following
percentage of the proceeds described in Subparagraph VI (B)
hereinabove:
TOTAL YEARS
OF EMPLOYMENT
WITH THE BANK VESTED (TO A MAXIMUM OF 100%)
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0-2 0%
3 10%
4 20%
5 30%
6 40%
7 50%
8 60%
9 70%
10 80%
11 90%
12 100%
D. The Bank shall be entitled to the remainder of such proceeds.
E. 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.
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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:
1. The Insured shall leave the employment of the Bank
involuntarily prior to two (2) full years of employment with
the Bank from the Effective Date of this Agreement; or
2. The Insured shall leave the employment of the Bank voluntarily
at any time; or
3. The Insured attains the age of seventy-nine (79); or
4. 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
5. Surrender, 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:
1. The Bank's share of the cash value of the policy on the date
of such assignment, as defined in this Agreement; or
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2. 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.
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 Clovis
Community Bank until 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,
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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 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.
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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
for 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 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. 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) & (B)].
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 June 7, 2000.
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.
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XIX. APPLICABLE LAW
The validity and interpretation of this Agreement shall be governed by
the laws of the State of California.
XX. COMPETITION AFTER TERMINATION OF EMPLOYMENT
The Bank shall not pay any benefit under this Agreement if the Insured,
without the prior written consent of the Bank, engages in, becomes
interested in, directly or indirectly, as a sole proprietor, as a
partner in a partnership, or as a substantial shareholder in a
corporation, or becomes associated with, in the capacity of employee,
director, officer, principal, agent, trustee or in any other capacity
whatsoever, any enterprise conducted in the trading area (a 50 mile
radius) of the business of the Bank, which enterprise is, or may deemed
to be, competitive with any business carried on by the Bank as of the
date of termination of the Insured's employment or his retirement. This
section shall not apply following a Change of Control.
Executed at Clovis, California this 21st day of June, 2000.
CLOVIS COMMUNITY BANK
Clovis, California
/s/ Janice H. Neary By: /s/ Daniel J. Doyle
- ------------------------ ------------------------------------
Witness Daniel J. Doyle
President and Chief Executive Officer
/s/ Janice H. Neary /s/ Tom Sommer
- ------------------------ ------------------------------------
Witness Tom Sommer
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BENEFICIARY DESIGNATION FORM
FOR LIFE INSURANCE ENDORSEMENT METHOD
SPLIT DOLLAR PLAN AGREEMENT
PRIMARY DESIGNATION:
NAME ADDRESS RELATIONSHIP
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SECONDARY (CONTINGENT) DESIGNATION:
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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.
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Tom Sommer Date
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EXHIBIT A
AGE OF INSURED AT THE AMOUNT OF DEATH BENEFIT, OR 100%
TIME OF DEATH OF THE NET-AT-RISK, WHICHEVER AMOUNT IS LESS
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65 $ 455,599.00
66 $ 443,407.00
67 $ 429,039.00
68 $ 412,303.00
69 $ 392,992.00
70 $ 370,885.00
71 $ 345,741.00
72 $ 317,305.00
73 $ 285,298.00
74 $ 249,425.00
75 $ 209,365.00
76 $ 164,775.00
77 $ 115,287.00
78 $ 60,504.00
79 or older $ 0.00 and this Agreement
automatically terminates
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