Exhibit 10.3
THIS CONTRACT IS SUBJECT TO ARBITRATION PURSUANT TO THE SOUTH
CAROLINA UNIFORM ARBITRATION ACT.
AMENDED EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
EXECUTIVE AGREEMENT
THIS AMENDED AGREEMENT is made and entered into as of this 17th day of
October, 2007, by and between GrandSouth Bank, a bank organized and existing
under the laws of the State of South Carolina (hereinafter referred to as the
"Bank"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an Executive of the Bank (hereinafter referred
to as the "Executive").
WHEREAS, the Bank and the Executive initially entered into an Executive
Supplemental Retirement Plan Executive Agreement on September 11, 2001, which
was subsequently amended on September 11, 2001 (the "Original Agreement"); and
WHEREAS, the Original Agreement contained the following premises, which
are hereby reaffirmed;
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; and
WHEREAS, the Board has adopted the GrandSouth Bank Executive
Supplemental Retirement Plan (hereinafter referred to as the "Executive
Plan") and it is the desire of the Bank and the Executive to enter into
this Amended 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; and
WHEREAS, 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 be considered a non-qualified benefit plan for purposes
of the Employee Retirement 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
WHEREAS, the Bank and the Executive now desire to amend and restate the
Original Agreement in compliance with the recently enacted Internal Revenue Code
Section 409A and associated federal regulations.
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 to
amend and restate the Original Agreement as follows:
I. DEFINITIONS
A. Effective Date:
The Effective Date of the Executive Plan shall be September 13,
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 the date upon which Executive attains
the Normal Retirement Age (Subparagraph I (J))
D. Termination of Service:
Termination of Service shall mean the Executive's voluntary
termination for Good Reason or the Bank's discharge of the
Executive without cause, prior to the Normal Retirement Age
(Subparagraph I (J)).
A voluntary termination by the Executive shall be considered an
involuntary termination with "Good Reason" if any of the
following occurs without the Executive's advance written consent:
(a) a material diminution of the Executive's base compensation;
(b) a material diminution of the Executive's authority, duties,
or responsibilities; (c) a material diminution in the authority,
duties, or responsibilities of the supervisor to whom the
Executive is required to report; (d) a material diminution in the
budget over which the Executive retains authority; (e) a material
change in the geographic location at which the Executive must
perform services for the Bank; or (f) any other action or
inaction that constitutes a material breach by the Bank of this
Agreement. In order to qualify as a voluntary termination for
Good Reason, the Executive must give notice to the Bank of the
existence of one or more of the conditions described in (a) - (f)
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above within 90 days after the initial existence of the
condition, and the Bank shall have 30 days thereafter to remedy
the condition ("Cure Period").
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 Retirement Date (Subparagraph
I (C)), 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 1.05 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.
Insurance Company: Massachusetts Mutual Life
Insurance Company
Policy Form: Flexible Premium Adjustable
Life
Policy Name: Strategic Life Executive
Insured's Age and Sex: 47, Male
Riders: None
Ratings: None
Option: Level
Face Amount: $1,081,920
Premiums Paid: $368,000
Number of Premium Payments: Single
Assumed Purchase Date: September 13, 2001
Insurance Company: Union Central Life Insurance
Company
Policy Form: Universal Life Insurance
Policy Name: COLI UL
Insured's Age and Sex: 47, Male
Riders: None
Ratings: None
Option: Level
Face Amount: $1,060,447
Premiums Paid: $368,000
Number of Premium Payments: Single
Assumed Purchase Date: September 13, 2001
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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 illustration 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 Federal Funds Rate.
I. Change of Control:
A "Change of Control" of the Bank shall be deemed to have been
effected for purposes of this Agreement:
A. on the date voting control over more than 50% of the stock
of the Bank's holding company (the "Holding Company") is
acquired, directly or indirectly, by any person or group
acting in concert;
B. if the Holding Company is merged with or into any other
entity and the shareholders of the Holding Company
immediately before such merger own less than 50% of the
combined voting control of the corporation resulting from
such merger; or
C. if more than 50% of the assets of the Holding Company are
acquired, directly or indirectly, by any person or group
acting in concert during any consecutive 12 month period.
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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 Retirement
Date. In addition to these payments and commencing in conjunction
therewith, the Index Retirement Benefit (Subparagraph I (F)) for
each Plan Year subsequent to the Retirement Date, and including
the remaining portion of the Plan Year following the Retirement
Date, 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
twenty-five percent (25%) 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, twenty-five percent (25%) 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 Executive's estate. Said payment
due hereunder shall be made the first day of the second month
following the decease of the Executive. Provided, however, that
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anything hereinabove to the contrary notwithstanding, no death
benefit shall be payable hereunder if the Executive dies on or
before the 13th day of September, 2003.
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:
(i) the willful and continued failure by the Executive to
substantially perform his duties (other than the Executive's
inability to perform, with or without reasonable
accommodation, resulting from his incapacity due to physical
or mental illness or impairment), after a demand for
substantial performance is delivered to him by the Bank,
which demand specifically identifies the manner in which the
Executive is alleged to have not substantially performed his
duties;
(ii) the willful engaging by the Executive in misconduct
(criminal, immoral, or otherwise) which is materially
injurious to the Bank, its holding company, or either of
their officers, directors, shareholders, employees, or
customers, monetarily or otherwise;
(iii) the Executive's conviction of a felony; or
(iv) the commission in the course of the Executive's employment
of an act of fraud, embezzlement, theft or proven
dishonesty, or any other illegal act or practice, which
would constitute a felony, (whether or not resulting in
criminal prosecution or conviction), or any act or practice
which the Bank shall, in good faith, deem to have resulted
in the Executive's becoming unbondable under the Bank's or
its holding company's "banker's blanket bond".
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
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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.
"Disability" or "Disabled" shall mean (a) the Executive is unable
to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a
continuous period of not less than 12 months; or (b) the
Executive is, by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can
be expected to last for a continuous period of not less than 12
months, receiving income replacement benefits for a period of not
less than three months under an accident and health plan covering
employees of the Bank; or (c) the Executive has been determined
to be totally disabled by the Social Security Administration or
Railroad Retirement Board; or (d) the Executive has been
determined to be disabled in accordance with a disability
insurance program provided by the Bank and in which Executive
participates, provided that the definition of disability applied
under such disability insurance program complies with the
requirements of (a) or (b) listed above.
III. 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, his 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.
IV. CHANGE OF CONTROL
If the Executive suffers a Termination of Service (Subparagraph I (D))
within 24 months after a Change of Control (Subparagraph I(D)), then
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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.
V. 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:
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.
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.
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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 South Carolina.
H. 12 U.S.C. Section 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. Section 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 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.
K. Section 409A Savings Clause:
Despite any contrary provision of this Amended Agreement, if when
the Executive's employment terminates the Executive is a
"specified employee," as defined in section 409A of the Internal
Revenue Code, and if any payments or benefits under this
Agreement will result in additional tax or interest to the
Executive because of section 409A, the Executive shall not be
entitled to the payments or benefits until the earliest of (a)
the date that is at least six months after termination of the
Executive's employment for reasons other than the Executive's
death, (b) the date of the Executive's death, or (c) any earlier
date that does not result in additional tax or interest to the
Executive under section 409A. As promptly as possible after the
end of the period during which payments or benefits are delayed
under this provision, the entire amount of delayed payments shall
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be paid to Executive in a single lump sum. References in this
Agreement to Section 409A of the Internal Revenue Code of 1986
include rules, regulations and guidance of general application
issued by the Department of the Treasury under such Section 409A.
VI. ERISA PROVISION
A. Named Fiduciary and Plan Administrator:
The "Named Fiduciary and Plan Administrator" of this Executive
Plan shall be GrandSouth 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.
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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
submit the dispute to an arbitrator for final arbitration
pursuant to the South Carolina Uniform Arbitration Act. 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.
IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Amended Agreement and executed the original thereof on the
first day set forth hereinabove, and that, upon execution, each has received a
conforming copy.
[Signatures Omitted]
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BENEFICIARY DESIGNATION FORM
FOR THE EXECUTIVE SUPPLEMENTAL
RETIREMENT PLAN AGREEMENT
PRIMARY DESIGNATION:
Name Address Relationship
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SECONDARY (CONTINGENT) DESIGNATION:
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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.
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Date
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THIS CONTRACT IS SUBJECT TO ARBITRATION PURSUANT TO THE SOUTH
CAROLINA UNIFORM ARBITRATION ACT.
AMENDED & RESTATED
LIFE INSURANCE
ENDORSEMENT METHOD SPLIT DOLLAR PLAN
AGREEMENT
Insurer: Massachusetts Mutual Life Insurance Company
Union Central Life Insurance Company
Policy Number: 0044375
U200001333
Bank: GrandSouth Bank
Insured: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Relationship of Insured to Bank: Executive
THIS AMENDED AGREEMENT is made and entered into this __th day of
_________, 2007, by and between the Bank, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an Executive of
the Bank (hereinafter referred to as the "Executive").
WHEREAS, the Bank and the Executive initially entered into a Life
Insurance Endorsement Method Split Dollar Plan Agreement on September 11, 2001,
which was subsequently amended on September 13, 2007 (the "Original Agreement");
WHEREAS, the Bank and the Executive now desire to amend and restate the
Original Agreement in compliance with the recently enacted Internal Revenue Code
Section 409A and associated federal regulations.
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 to
amend and restate the Original Agreement as follows:
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.
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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 on or
before the 13th day of September, 2003, the Insured's
beneficiary(ies), designated in accordance with Paragraph III,
shall be entitled to an amount equal to one hundred percent
(100%) of the net-at-risk insurance portion of the proceeds.
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 and die subsequent
to the 13th day of September, 2003, the Insured's
beneficiary(ies), designated in accordance with Paragraph III,
shall be entitled to an amount equal to eighty percent (80%)
of the net-at-risk insurance portion of the proceeds. The
net-at-risk insurance portion is the total proceeds less the
cash value of the policy.
C. Should the Insured not be employed by the Bank at the time of
his or her death and die on or before the 13th day of
September, 2003, 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 with the Bank. Should the Insured not
be employed by the Bank at the time of his or her death and
die subsequent to the 13th day of September, 2003, 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%)
----------------- -----------------------------
1-4 25% per year
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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.
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:
(v) the willful and continued failure by the Insured to
substantially perform his duties (other than the Insured's
inability to perform, with or without reasonable
accommodation, resulting from his incapacity due to physical
or mental illness or impairment), after a demand for
substantial performance is delivered to him by the Bank,
which demand specifically identifies the manner in which the
Insured is alleged to have not substantially performed his
duties;
(vi) the willful engaging by the Insured in misconduct (criminal,
immoral, or otherwise) which is materially injurious to the
Bank, its holding company, or either of their officers,
directors, shareholders, employees, or customers, monetarily
or otherwise;
(vii) the Insured's conviction of a felony; or
(viii) the commission in the course of the Insured's employment
of an act of fraud, embezzlement, theft or proven
dishonesty, or any other illegal act or practice, which
would constitute a felony, (whether or not resulting in
criminal prosecution or conviction), or any act or practice
which the Bank shall, in good faith, deem to have resulted
in the Insured's becoming unbondable under the Bank's or its
holding company's "banker's blanket bond".
B. Surrender, lapse, or other termination of the Policy by the Bank.
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Upon receipt of notice from the Insurer of 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 GrandSouth 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. Claims Procedure and Arbitration:
In the event a dispute arises over benefits under this Split
Dollar Plan and benefits are not paid to the Insured (or to the
Insured's beneficiary(ies) in the case of the Insured'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
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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 Split Dollar 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 Split
Dollar 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 Split Dollar Plan or the meaning
and effect of the terms and conditions thereof, then claimants
may submit the dispute to an arbitrator for final arbitration.
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 Insured
"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.
C. 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.
D. 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.
E. 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.
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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
A "Change of Control" of the Bank shall be deemed to have been
effected for purposes of this Agreement if either:
a. voting control over more than 50% of the stock of the Bank's
holding company (the "Holding Company") is acquired,
directly or indirectly, by any person or group acting in
concert,
b. The Holding Company is merged with or into any other entity
and the shareholders of the Holding Company immediately
before such merger own less than 50% of the combined voting
control of the corporation resulting from such merger, or
c. voting control over more than 50% of the stock of the Bank
is acquired, directly or indirectly, by any person or group
acting in concert.
If within two years following a Change of Control, the Bank terminates
the Insured for any reason except for Cause or the Insured voluntarily
terminates his employment for "Good Reason," 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)).
For purposes of this Agreement, a voluntary termination by the Insured
shall be considered an involuntary termination with "Good Reason" if
any of the following occurs without the Insured's advance written
consent: (i) a material diminution of the Insured's base compensation;
(ii) a material diminution of the Insured's authority, duties, or
responsibilities; (iii) a material diminution in the authority, duties,
or responsibilities of the supervisor to whom the Insured is required
to report; (iv) a material diminution in the budget over which the
Insured retains authority; (v) a material change in the geographic
location at which the Insured must perform services for the Bank; or
(vi) any other action or inaction that constitutes a material breach by
the Bank of this Agreement. Furthermore, in order to qualify as a
voluntary termination for Good Reason, the Insured must give notice to
the Bank of the existence of one or more of the conditions described in
(a) - (f) above within 90 days after the initial existence of the
condition, and the Bank shall have 30 days thereafter to remedy the
condition.
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.
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XVII. EFFECTIVE DATE
The Effective Date of this Agreement shall be September 13, 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. I.R.C. SECTION 409A SAVINGS CLAUSE
Notwithstanding any provision to the contrary contained herein, if when
the Insured's employment terminates the Insured is a "specified
employee," as defined in section 409A of the Internal Revenue Code, and
if any payments or benefits under this Agreement will result in
additional tax or interest to the Insured because of section 409A, the
Insured shall not be entitled to the payments or benefits until the
earliest of (a) the date that is at least six months after termination
of the Insured's employment for reasons other than the Insured's death,
(b) the date of the Insured's death, or (c) any earlier date that does
not result in additional tax or interest to the Insured under section
409A. As promptly as possible after the end of the period during which
payments or benefits are delayed under this provision, the entire
amount of delayed payments shall be paid to Executive in a single lump
sum. References in this Agreement to Section 409A of the Internal
Revenue Code of 1986 include rules, regulations and guidance of general
application issued by the Department of the Treasury under such Section
409A.
XX. APPLICABLE LAW
The validity and interpretation of this Agreement shall be governed by
the laws of the State of South Carolina.
Executed at Fountain Inn, South Carolina this 13th day of September, 2001.
[SIGNATURES OMITTED]
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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.
--------------------------------- ------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Date
20
AMENDMENT
TO THE EXECUTIVE SUPPLEMENTAL
RETIREMENT PLAN AGREEMENT AND THE
LIFE INSURANCE ENDORSEMENT METHOD SPLIT DOLLAR PLAN AGREEMENT
This Amendment, made and entered into this ______ day of _____________, 2001, by
and between GrandSouth Bank, a Bank organized and existing under the laws of the
State of South Carolina, hereinafter referred to as the, "Bank", and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, a Key Employee and Executive of the Bank, hereinafter referred to as
the, "Executive", shall effectively amend the Executive Supplemental Retirement
Plan Agreement and the Life Insurance Endorsement Method Split Dollar Plan
Agreement as specifically set forth herein pursuant to said Agreements.
I. EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN AGREEMENT
1. The date of September 11, 2001 in Subparagraph I (A) shall be
changed to September 13, 2001.
2. The following language shall be added to the end of Subparagraph
I (F) of said Agreement, "... divided by a factor equal to 1.05
minus the marginal tax rate."
3. The following life insurance policy information shall be added to
Subparagraph I (G):
Insurance Company: Massachusetts Mutual Life
Insurance Company
Policy Form: Flexible Premium Adjustable
Life
Policy Name: Strategic Life Executive
Insured's Age and Sex: 47, Male
Riders: None
Ratings: None
Option: Level
Face Amount: $1,081,920
Premiums Paid: $368,000
Number of Premium Payments: Single
Assumed Purchase Date: September 13,2001
Insurance Company: Union Central Life Insurance
Company
Policy Form: Universal Life Insurance
Policy Name: COLI UL
Insured's Age and Sex: 47, Male
Riders: None
Ratings: None
Option: Level
Face Amount: $1,060,447
Premiums Paid: $368,000
Number of Premium Payments: Single
Assumed Purchase Date: September 13,2001
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4. The date of September 11, 2003 in Subparagraph II (C) shall be
changed to September 13, 2003.
II. LIFE INSURANCE ENDORSEMENT METHOD SPLIT DOLLAR PLAN AGREEMENT
1. The following life insurance policy information shall be added to
page one (1):
Insurer: Massachusetts Mutual Life Insurance Company
Union Central Life Insurance Company
Policy Number: 0044375
U200001333
2. The date of September 11, 2003 in Subparagraphs VI (A), (B) and
(C) shall be changed to September 13, 2003.
3. The date of September 11, 2003 in Paragraph XVII shall be changed
to September 13, 2001.
4. The date of September 11, 2003 in the final execution sentence
shall be changed to September 13, 2001.
This Amendment shall be effective the 13th day of September, 2001. To the extent
that any paragraph, term, or provision of said agreement is not specifically
amended herein, or in any other amendment thereto, said paragraph, term, or
provision shall remain in full force and effect as set forth in said September
11, 2001 Agreements.
(SIGNATURES OMITTED)
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