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Athens
Federal Community Bank
Amended Group Term Carve
Out Plan
This Plan
is adopted this 30
th day of December, 2008, by and between the
Athens Federal Community
Bank , a savings association located in Athens, Tennessee
(the “Company”) and the Participant selected to
participate in this Plan (the
“Participant”).
The Company
wishes to attract and retain highly qualified executives. To
further this objective, the Company is willing to divide the death
proceeds of certain life insurance policies which are owned by the
company on the lives of the participating executives with the
designated beneficiary of each insured participating executive as
set forth herein. The Company may terminate the Plan at any time
for any reason prior to the normal date of retirement or disability
as defined herein. The Company will pay the life insurance premiums
from its general assets.
Whenever used
in this Plan, the following terms shall have the meanings
specified:
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1.1
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“ Change of Control
” means the transfer of shares of the Company’s voting
common stock such that one entity or one person acquires (or is
deemed to acquire when applying Section 318 of the Code) more
than 50 percent of the Company’s outstanding voting common
stock.
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1.2
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“ Compensation
Committee ” means either the Compensation Committee
designated from time to time by the Company’s Board of
Directors or a majority of the Company’s Board of Directors,
either of which shall hereinafter be referred to as the
Compensation Committee.
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1.3
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“ Disability ”
means the Participant suffering a sickness, accident or injury
which has been determined by the carrier of any individual or group
disability insurance policy covering the Participant or by the
Social Security Administration to be a disability rendering the
Participant totally and permanently disabled. The Participant must
submit proof to the Company of the carrier’s or Social
Security Administration’s determination upon the request of
the Company.
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1.4
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“ Insured ” means
the individual whose life is insured.
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1.5
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“ Insurer ” means
the insurance company issuing the life insurance policy on the life
of the Insured.
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1.6
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“ Normal Retirement Age
” means the Participant attaining age 65.
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Page 1 of 7
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1.7
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“ Normal Retirement
Date ” means the later of the Normal Retirement Age or
the date that the Participant terminates employment or is
terminated for any reason other than Termination for
Cause.
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1.8
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“ Participant ”
means the employee who is designated by the Compensation Committee
to participate in this Plan, elects in writing to participate in
this Plan using the form attached hereto as Exhibit A and
signs a Split Dollar Policy Endorsement for each Policy in which
the Participant is the Insured.
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1.9
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“ Policy ” or
“ Policies ” means the individual insurance
policy or policies adopted by the Compensation Committee for
purposes of insuring a Participant’s life under this
Plan.
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1.10
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“ Plan ” means
this document including all amendments thereto.
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1.11
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“ Termination for Cause
” means that the Company has terminated the
Participant’s employment for any of the following
reasons:
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1.11.1
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“ Termination of
Employment ” means the Participant ceasing to be employed
by the Company for any reason other than death.
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1.12
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“ Three Times Base Annual
Salary ” means the current base annual salary of the
Participant at the date of the Participant’s death,
multiplied by a factor of three (3).
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ARTICLE 2 -
PARTICIPATION
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2.1
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Eligibility to
Participate .
The Compensation Committee in its sole discretion shall designate
from time to time executives that are eligible to participate in
this Plan.
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2.2
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Participation
. The eligible executive
may participate in this Plan by executing an Election to
Participate and a Split Dollar Policy Endorsement for each Policy.
The Split Dollar Policy Endorsement shall bind the Participant and
his or her beneficiaries, assigns and transferees to the terms and
conditions of this Plan. An executive’s participation is
limited to only Policies where he or she is the Insured.
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2.3
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Termination of
Participation . A Participant’s rights under
this Plan shall cease and his or her participation in this Plan
shall terminate if either of the following events occur:
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2.3.1
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If
there is a Termination for Cause; or
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2.3.2
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If
the Participant’s employment with the Company is terminated
or ceases for any reason at any time other than death excluding
termination after change in control occurs. In the event that the
Company decides to maintain the Policy after the
Participant’s Termination of Participation in the Plan, the
Company shall be the direct beneficiary of the entire death
proceeds of the Policy.
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Page 2 of 7
ARTICLE 3 - POLICY
OWNERSHIP/INTERESTS
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3.1
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Participant’s
Interest .
The Participant or the Participant’s assignee shall have the
right to designate the beneficiary of an amount of death proceeds
noted in Sections 3.1.1 below. The Participant shall also have
the right to elect and change settlement options with the consent
of the Company and the Insurer.
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3.1.1
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Death prior to Termination of
Employment .
If the Participant dies prior to Termination of’ Employment,
Participant’s beneficiary shall receive an amount of death
proceeds equal to Three Times Base Annual Salary, less $50,000
(from the Company’s existing Group Term Plan), capped at a
maximum of $450,000.
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3.2
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Company’s Interest
. The Company shall own
the Policies and shall have the right to exercise all incidents of
ownership except that the Company shall not sell, surrender or
transfer ownership of a Policy so long as a Participant has an
interest in the Policy as described in section 3.1. This provision
shall not impair the right of the Company to terminate this Plan.
With respect to each Policy, the Company shall be the beneficiary
of the remaining death proceeds of the Policy after the
Participant’s Interest is determined according to section
3.1.
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4.1
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Premium Payment
. The Company shall pay
all premiums due on all Policies.
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4.2
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Economic Benefit
. The Company shall
determine the economic benefit attributable to the Participant
based on the amount of the current term rate for the
Participant’s age multiplied by the aggregate death benefit
payable to the Participant’s beneficiary. The “current
term rate” is the minimum amount required to be imputed under
Revenue Rulings 64-328 and 66-110, or any subsequent applicable
authority.
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4.3
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Imputed Income
. The Company shall
impute the economic benefit to the Participant on an annual
basis.
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Any Participant
may assign without consideration all interests in his or her Policy
and in this Plan to any person, entity or trust. In the event a
Participant shall transfer all of his or her interest in the Policy
then all of that Part
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