Exhibit 10.4.2
SOUTH CAROLINA
SPLIT DOLLAR AGREEMENT
SPARTANBURG COUNTY
THIS AGREEMENT, made and entered into this 21st day of June, 1996, by
and between First South Bank, (hereinafter referred to as the "Corporation"), a
banking corporation organized and existing under the laws of South Carolina, and
▇▇▇▇▇ ▇▇▇ Slider, (hereinafter referred to as the "Employee").
WHEREAS, the Employee has performed his duties in an efficient and
capable manner; and
WHEREAS, the Corporation is desirous of retaining the services of the
employee; and
WHEREAS, the Corporation is desirous of assisting the Employee in
paying for life insurance on his own life; and
WHEREAS, the Corporation has determined that this assistance can best
be provided under a "split-dollar" arrangement; and
WHEREAS, the Employee has applied for, and is the owner and beneficiary
of Insurance Policy No. S7-059-365 (the "Policy") issued by Northwestern
National Life Insurance Company in the face amount of $250,000; and
WHEREAS, the Corporation and Employee agree to make said insurance
policy subject to this split-dollar agreement; and
WHEREAS, the Employee has assigned the Policy to the Corporation as
collateral for amounts to be advanced by the Corporation under this agreement
by an instrument of assignment, dated August 1, 1996 (the "Assignment"); and
WHEREAS, it is now understood and agreed that this split-dollar
agreement is to be effective as of the date on which the Policy was assigned to
the Corporation;
NOW, THEREFORE, for value received and in consideration of the mutual
covenants contained herein, the parties agree as follows:
1. Definitions. For purposes of this agreement, the following terms will
have the meanings set forth below:
(a) "Cash Surrender Value of the Policy" will mean the Cash Value of
the Policy; plus the cash value of any paid-up additions; plus
any dividend accumulations and unpaid dividends; and less any
Policy Loan Balance.
Page 1 of Six (6) Pages
(b) "Cash Value of the Policy" will mean the cash value as
illustrated in the table of values shown in the Policy.
(c) "Corporation's Interest in the Policy" will be as defined in
Paragraph 6.
(d) "Current Loan Value of the Policy" will mean the Loan Value of
the Policy reduced by any outstanding Policy Loan Balance.
(e) "Loan Value of the Policy" will mean the amount which the loan
interest will equal the Cash Value of the Policy and of any
paid-up additions on the next loan interest due date or on the
next premium due date whichever is the smaller amount.
(f) "Policy Loan Balance" at any time will mean policy loans
outstanding plus interest accrued to date.
2. Allocation of Premiums. The Employee will pay that portion of the annual
premium due on the policy that is equal to the less of (a) the amount to
the entire economic benefit (including any economic benefit attributable to
the use of Policy dividends) that would be taxable to the Employee but for
such payments, or (b) the amount of the premium due on the policy. The
Corporation will pay the remainder of the premium. The economic benefit
that would be taxable to the Employee will be computed in accordance with
I.R.S. Revenue Rulings 64-328, 1964-2 C.B. 11 and 66-110, 1966-1 C.B. 12,
as in effect on the effective date of this agreement.
3. Waiver of Premiums Rider. Upon written request by the Corporation, the
Employee will add to the Policy a rider providing for the waiver of
premiums in the event of his disability. Any additional premium
attributable to such rider will be payable by the Corporation.
4. Payment of Premiums. Any premium or portion thereof which is payable by the
Employee under any provision of this agreement may at the election of the
Employee be deducted from the cash compensation otherwise payable to him
and the Corporation agrees to transmit that premium or portion, along with
any premium or portion thereof payable by it, to Northwestern National Life
Insurance Company on or before the premium due date.
5. Application of Policy Dividends. All dividends attributable to the Policy
will be applied to provide paid-up additional insurance.
6. Rights in the Policy. The Employee may exercise all rights, options and
privileges of ownership in the Policy except those granted to the
Corporation
Page 2 of Six (6) Pages
in the Assignment. The Corporation will have those rights in the policy
given to it in the Assignment except as hereinafter modified. The
Corporation will not surrender the policy for cancellation except upon
expiration of the thirty (30) day period described in Paragraph 9. The
Corporation will not without the written consent of the Employee assign its
rights in the Policy, other than for the purpose of obtaining a loan
against the Policy, to anyone other than the Employee. The Corporation will
not take any action in dealing with Northwestern National Life Insurance
Company that would impair any right or interest of the Employee in the
Policy. The Corporation will have the right to borrow from Northwestern
National Life Insurance Company, and to secure that loan by the Policy, an
amount which, together with the unpaid interest accrued thereon, will at no
time exceed the less of (a) the Corporation's Interest in the Policy and
(b) the Loan Value of the Policy. The Corporation's Interest in the Policy
will be the liability of the Employee for which the Policy is held as
collateral security under the Assignment. "Corporation's Interest in the
Policy" will mean, at any time at which the value of such interest is to be
determined under this agreement the total of premiums theretofore paid on
the Policy by the Corporation (including premiums paid by loans charged
automatically against the Policy but not including any premiums paid, by
loan or otherwise, for any supplemental agreement or rider), reduced by the
Policy Loan Balance, with respect to any loans made or charged
automatically against the policy by the Corporation. In the event that the
Corporation has paid additional premiums attributable to a rider providing
for the waiver of premiums in the event of the Employee's disability,
"premiums" as used in the preceding sentence will not include any premiums
waived pursuant to the terms of such rider while this agreement is in
force.
7. Rights to the Proceeds at Death. Upon the death of the Employee while this
agreement is in force, the proceeds of the Policy will be payable as
follows: (a) Part shall be payable to the Employer; this part shall be
equal to the aggregate amount of the interest free loans made by the
Employee pursuant to this Agreement, less any Policy or premium loans or
other indebtedness secured by the Policy, (b) The entire balance of the
proceeds in excess of the part payable under 7(a) above shall be payable to
the beneficiary of the Policy.
8. Termination of Agreement. This agreement may be terminated at any time
while the Insured is living by written notice thereof by either the
Corporation or the Employee to the other; and, in any event, this agreement
will terminate upon termination of the Employee's employment.
Page 3 of Six (6) Pages
9. Employee Rights Upon Termination. The employee will, for the thirty (30)
days immediately following the date on which termination occurs, have the
right to obtain a release of the Assignment by paying to the Corporation an
amount equal to the Corporation's Interest In The Policy. Upon such payment
the Corporation will release its interest in the Policy to the Employee,
Alternatively, at the election of the Employee prior to the expiration of
said thirty (30) day period and upon the payment by him of the excess, if
any, of the Corporation's Interest In The Policy over the Current Loan
Value of the Policy, the Corporation will make a collateral policy loan
from the Insurance Company in the amount of the Current Loan Value of the
Policy, or in the amount of the Corporation's Interest In The Policy, if
less, and release its interest in the Policy to the Employee. Upon release
by the Corporation of all of its interest in the Policy, the Employee will
thereafter own the policy free from the Assignment and from this Agreement
but subject to any Policy loans and interest thereon. If the Employee fails
to make either the payment or the election (and payment, if any) provided
for in this Paragraph, the Employee agrees to transfer all of his right,
title and interest in the Policy to the Corporation, by executing such
documents as are necessary to transfer such right, title and interest to
the Corporation as of the date of termination. The Corporation will
thereafter be able to deal with the Policy in any way that it may see fit.
10. Status of Agreement vs. Collateral Assignment. As between the Employee and
the Corporation, this Agreement will take precedence over any provisions of
the Assignment. The Corporation agrees not to exercise any right possessed
by it under the Assignment except in conformity with this Agreement.
11. Satisfaction of Claim. The Employee rights and interest, and rights and
interest of any persons taking under or through him, will be completely
satisfied upon compliance by the Corporation with the provisions of this
Agreement.
12. Amendment and Assignment. This Agreement may be altered, amended or
modified, including the addition of any extra policy provisions, only by a
written instrument signed by the Corporation and the Employee. Either party
may, subject to the limitations of Paragraph 6, assign its interest and
obligations under this Agreement, provided, however, that any assignment
will be subject to the terms of this Agreement.
13. Possession of Policy. The Corporation will keep possession of the Policy.
The Corporation agrees from time to time to make the Policy available to
Page 4 of Six (6) Pages
the Employee or to Northwestern National Life Insurance Company for the
purpose of endorsing or filing any change of beneficiary on the Policy but
the Policy will promptly be returned to the Corporation.
14. Governing Laws. This Agreement sets forth the entire Agreement of the
parties hereto, and any and all prior agreements, to the extent
inconsistent herewith, are hereby superseded. This Agreement will be
governed by the laws of the State of South Carolina.
15. Interpretation. Where appropriate in this Agreement, words used in the
singular will include the plural and words used in the masculine will
include the feminine.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals,
the Corporation by its duly authorized officer, on the day and year first above
written.
s/ ▇▇▇▇▇ ▇▇▇ Slider (SEAL)
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▇▇▇▇▇ ▇▇▇ Slider
FIRST SOUTH BANK
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇
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Chairman of the Board of Directors
ATTEST:
s/ V. ▇▇▇▇▇ ▇▇▇▇▇▇
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Secretary
Page 5 of Six (6) Pages
STATE OF SOUTH CAROLINA
COUNTY OF SPARTANBURG
I, a Notary Public of the County and State aforesaid, certify that
▇▇▇▇▇ ▇▇▇ Slider personally appeared before me this day and acknowledged the
execution of the foregoing instrument.
WITNESS my hand and official stamp or seal, this 21st day of June,
1996.
My Commission Expires: 5/22/2001 s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Notary Public
STATE OF SOUTH CAROLINA COUNTY OF SPARTANBURG
I, a Notary Public of the County and State aforesaid, certify that V. ▇▇▇▇▇
▇▇▇▇▇▇ personally appeared before me this day and acknowledged that he is
Secretary of First South Bank and that by authority duly given and as the act of
the Corporation, the foregoing instrument was signed in its name by the Chairman
of its Board of Directors, sealed with its corporate seal and attested by him as
its Secretary.
WITNESS my hand and official stamp or seal, this 21st day of June, 1996.
My Commission Expires: 5/22/2001 s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Notary Public
Page 6 of Six (6) Pages
SPLIT DOLLAR LIFE INSURANCE POLICY ENDORSEMENT FORM
NORTHWESTERN NATIONAL LIFE INSURANCE COMPANY
MINNEAPOLIS, MINNESOTA
This endorsement shall apply to the insurance on the life of ▇▇▇▇▇
Slider under policy # S7-059-365
Northwestern National Life Insurance Company agrees to pay the entire
net proceeds to the designated beneficiaries, if said policy becomes a
claim by reason of death of the Insured, in the following manner:
The net proceeds shall be allocated into Parts A and B as follows:
Part A shall consist of the portion of the proceeds equal to the sum of
the total premium paid from the date of this Policy to the date to
which premiums are paid following the Insured's death, less any net
indebtedness to First South.
Part B shall consist of the balance, if any, of the proceeds payable in
a single sum to ▇▇▇▇▇▇ ▇. Slider ( Employee's Beneficiary )
Dated this 20 day of June, 1996
At Spartanburg, South Carolina
▇▇▇▇▇ ▇. Slider First South Bank
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Employee Employer
By s/ V. ▇▇▇▇▇ ▇▇▇▇▇▇
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Its EVP/Sec. & Treasurer
This policy endorsement has been received by Northwestern National
Life Insurance Company at its Home Office and made a part of the above
described policy on __, 19________.
This policy endorsement revokes any prior endorsements applicable to
the above described policy.
STATE OF SOUTH CAROLINA ) FIRST AMENDMENT TO
) SPLIT DOLLAR AGREEMENT
COUNTY OF SPARTANBURG )
WHEREAS, FIRST SOUTH BANK, a bank organized and existing under the laws
of the State of South Carolina (the "Corporation") and ▇▇▇▇▇ ▇. SLIDER (the
"Employee") entered into a Split Dollar Agreement (the "Agreement") on June 21,
1996; and
WHEREAS, Corporation and Employee reserved the right to amend said
Agreement in Paragraph 12 thereof; and
WHEREAS, Corporation and Employee desire to amend said Agreement.
NOW,
THEREFORE, Corporation and Employee hereto agree as follows:
(1) Corporation and Employee hereby amend said Agreement by deleting
Paragraph 7 therefrom in its entirety and substituting in lieu thereof the
following:
7. Rights to the Proceeds at Death. Upon the death of the
Employee while this agreement is in force, the proceeds of the Policy
will be payable as follows: (a) Part shall be payable to the
Corporation; this part shall be equal to the aggregate amount of the
interest free loans made by the Corporation pursuant to this Agreement,
less any Policy or premium loans or other indebtedness secured by the
Policy. (b) The entire balance of the proceeds in excess of the part
payable under 7(a) above shall be payable to the beneficiary of the
Policy.
(2) Corporation and Employee hereby amend said Agreement by adding a
new section at the end thereof, designated Paragraph 16 to read as follows:
16. ERISA.
(a) The President of Corporation is hereby designated
the named fiduciary until resignation or removal. The named
fiduciary shall be responsible for the management, control and
administration of the 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) The funding policy for the split dollar plan
shall be to maintain the insurance policy in force by paying,
when due, all premiums required.
(c) Claim forms or claim information as to the
insurance policy can be obtained by contacting Corporation.
(d) When the named fiduciary has a claim which may be
covered under the provisions described in the insurance
policy, the named fiduciary should contact Corporation, who
will either complete a claim form and forward it to an
authorized representative of the insurance company or advise
the named fiduciary what further requirements are necessary.
The insurance company will evaluate the claim and make a
decision as to payment within ninety (90) days of the date the
claim is received by them.
In the event that a claim is not eligible under the
policy, the insurance company will notify the named fiduciary
of the denial. Such notification will be made in writing,
within ninety (90) days of the date the claim is received, and
will be transmitted through the office of Corporation. The
notification will include the specific reasons for the denial,
as well as specific reference to the policy provisions upon
which the denial is based. The named fiduciary will also be
informed as to the steps which may be taken to have the claim
denial reviewed.
A decision as to the validity of a claim will
ordinarily be made within ten (10) working days of the date
the claim is received by the insurance company. Occasionally,
however, certain questions may prevent the insurance company
from rendering a decision on the validity of the claim within
the specific ninety (90) day period. If this occurs, the named
fiduciary will be notified of the reasons for the delay, as
well as the anticipated length of the delay, in writing and
through Corporation. If further information or other material
is required, the named fiduciary will be so informed.
If the named fiduciary is dissatisfied with the
denial of the claim, or the amount paid, the named fiduciary
has sixty (60) days from the date the named fiduciary receives
notice of a claim denial to file objections to the action
taken by the insurance company. If the named fiduciary wishes
to contest a claim denial, the named fiduciary should notify
Corporation, who will assist in making inquiry to the
insurance company. All objections to insurance company's
actions should be in writing and submitted to Corporation for
transmittal to the insurance company.
The insurance company will review the claim denial
and render a decision on the claim denial. The named fiduciary
will be informed in writing of the decision of the insurance
company within sixty (60) days of the date of the claim review
request is received by the insurance company. This decision
will be final.
Once a decision has been rendered as to the
distribution of proceeds under the claim procedure described
above as to the policy, claims for any benefits due under this
Agreement or the surrender of the policy may be made in
writing by Employee to the named fiduciary.
In the event a claim for benefits is wholly or partly
denied or disputed, the named fiduciary shall within a
reasonable period of time, after receipt of the claim, notify
Employee of such total or partial denial or dispute listing:
(i) The specific reasons for the denial or
dispute;
(ii) Specific reference to pertinent plan
provisions upon which the denial or dispute
is based;
(iii) A description of any additional material or
information necessary for the claimant to
perfect the claim and an explanation of why
such material or information is necessary;
and
(iv) An explanation of the plan's review
procedure. Within sixty (60) days of denial
or notice of claim under the plan, a
claimant may request that the claim be
reviewed by the named fiduciary in a full
and fair hearing. A final decision shall be
rendered by the named fiduciary within sixty
(60) days after receipt of request for
review.
(3) Ratification. As amended by this First Amendment, Corporation and
Employee hereby confirm, ratify and republish said Split Dollar Agreement dated
June 21, 1996.
IN WITNESS WHEREOF, Corporation, by its duly authorized officer, and
Employee hereto have signed this First Amendment to Split Dollar Agreement this
3rd day of June 1999.
Witness:
FIRST SOUTH BANK
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s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ BY: s/ V. ▇▇▇▇▇ ▇▇▇▇▇▇
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s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ Its: Executive Vice President
s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ s/ ▇▇▇▇▇ ▇. Slider
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s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. SLIDER
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THIS ATTACHMENT TO THE BELOW REFERENCED SPLIT DOLLAR LIFE INSURANCE POLICY
PROVIDES INSTRUCTIONS REGARDING THE PAYMENT OF BENEFITS TO THE BANK AND THE
BENEFICIARY NAMED IN THE POLICY. INCLUDED WITH THIS ATTACHMENT IS A PHOTOCOPY OF
A PORTION OF THE BANK'S JANUARY 19, 2005, BOARD OF DIRECTORS MEETING MINUTES.
THOSE MINUTES RECORDED THE BOARD'S APPROVAL OF THE METHOD OF PREMIUM PAYMENTS
ADOPTED BY THE BANK SUBSEQUEST TO THE SEC/IRS RULINGS IN 2002 WHICH CHANGED HOW
PREMIUMS PAID ON SPLIT DOLLAR LIFE INSURANCE POLICIES OF EXECUTIVE OFFICERS
WOULD BE VIEWED. PRIOR TO THIS CHANGE, THE BANK HAD PAID THE ANNUAL PREMIUMS
UNDER AN AGREEMENT THAT UPON THE DEATH OF THE INSURED, THE BANK WOULD RECOVER
THE PREMIUMS IT HAD PAID FROM DEATH BENEFIT PROCEEDS. SINCE THE REGULATORY
CHANGES, IN ESSENCE, GRANDFATHERED THE ACCOUNTING TREATMENT OF BANK-PAID
PREMIUMS PRIOR THE ANNOUNCED CHANGE, THERE REMAIN PREMIUM PAID AMOUNTS CARRIED
AS OTHER ASSETS ON THE BANKS BALANCE SHEET.
▇▇▇▇▇ ▇. SLIDER RELIASTAR/
ING Policy # 7059365 INSURANCE
FACE AMOUNT $250,000
THE BANK PAID ANNUAL PREMIUMS OF $3,750 FOR THE YEARS 1996 THROUGH 2002, SEVEN
YEARS, FOR A TOTAL OF $26,250. THIS AMOUNT IS TO BE DEDUCTED FROM THE TOTAL
DEATH BENEFIT PAID BY THE INSURANCE COMPANY TO REIMBURSE THE BANK. THE
REMAINING PORTION OF THE DEATH BENEFIT PAID BY THE INSURANCE COMPANY WILL BE
PAID TO THE NAMED POLICY BENEFICIARY.
S/ V. ▇▇▇▇▇ ▇▇▇▇▇▇
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V. ▇▇▇▇▇ ▇▇▇▇▇▇, EVP & CFO
This attachment to the ING / Reliastar Insurance Company Policy, Policy # S7-059
- 365, and the associated split dollar agreement, is for information purposes
only. It is not intended to alter, amend, or in any manner change any provision
in either the policy or agreement.
In the event of my death and upon payment of the death benefit as provided in
the policy referenced above, an amount of $26,250 is to be deducted from the
benefit payment proceeds to reimburse First South Bank for the total of the
seven annual premiums it paid for the years 1996 through 2002. The remaining
balance of the policy's death benefit is to be paid to the beneficiary and/or
beneficiaries as named in the policy.
s/ ▇▇▇▇▇ ▇. Slider
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▇▇▇▇▇ ▇. Slider