Exhibit 10.4.1
FIRST SOUTH BANK
ENDORSEMENT SPLIT DOLLAR AGREEMENT
This ENDORSEMENT SPLIT DOLLAR AGREEMENT (this "Agreement") is entered
into as of this 20th day of February, 2008, by and between First South Bank, a
South Carolina-chartered bank (the "Bank"), and Xxxxx X. Slider, an executive of
the Bank (the "Executive"). This Agreement shall append the Split Dollar Policy
Endorsement entered into on even date herewith or as subsequently amended, by
and between the Bank and the Executive.
WHEREAS, to encourage the Executive to remain a Bank employee, the Bank
is willing to divide the death proceeds of a life insurance policy on the
Executive's life, and
WHEREAS, the Bank will pay life insurance premiums from its general
assets.
NOW THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows.
ARTICLE 1
GENERAL DEFINITIONS
Capitalized terms not otherwise defined in this Agreement are used
herein as defined in the 2008 Salary Continuation Agreement between the Bank and
the Executive. The following terms shall have the meanings specified.
1.1 "Administrator" means the administrator described in Article 7.
1.2 "Executive's Interest" means the benefit set forth in section 2.2.
1.3 "Insured" means the Executive.
1.4 "Insurer" means each life insurance carrier for which there is a
Split Dollar Policy Endorsement attached to this Agreement.
1.5 "Net Death Proceeds" means the total death proceeds of the Policy
minus the cash surrender value.
1.6 "Policy" means the specific life insurance policy or policies
issued by the Insurer.
1.7 "Salary Continuation Agreement" means the 2008 Salary Continuation
Agreement dated as of February 20, 2008, between the Bank and the Executive, as
the same may hereafter be amended.
1.8 "Split Dollar Policy Endorsement" means the form required by the
Administrator or the Insurer to indicate the Executive's interest, if any, in a
Policy on the Executive's life.
ARTICLE 2
POLICY OWNERSHIP/INTERESTS
2.1 Bank Ownership. The Bank is the sole owner of the Policy and shall
have the right to exercise all incidents of ownership. The Bank shall be the
beneficiary of the remaining death proceeds of the Policy after the Executive's
interest is paid according to section 2.2 below.
2.2 Death Benefit. Provided the Executive's death occurs both before
the Executive's Separation from Service and before the Executive attains age 65,
at the Executive's death the Executive's beneficiary designated in accordance
with the Split Dollar Policy Endorsement shall be entitled to Policy proceeds in
an amount equal to the lesser of (x) 100% of the Net Death Proceeds or (y)
$1,988,360 (the lesser of the amounts specified in clauses (x) and (y) being
referred to in this Agreement as the "Executive's Interest"). The Executive's
Interest shall be extinguished at the earlier of the date of the Executive's
Separation from Service or the date the Executive attains age 65, and the
Executive's beneficiary shall be entitled to no benefits under this Agreement
for the Executive's death occurring thereafter. The Executive shall have the
right to designate the beneficiary of the Executive's Interest.
2.3 Option to Purchase. The Bank shall not sell, surrender, or transfer
ownership of the Policy before the Executive's Separation from Service without
first giving the Executive or the Executive's transferee the option to purchase
the Policy for a period of 60 days. The purchase price shall be an amount equal
to the Policy cash surrender value. The option to purchase the Policy shall
lapse if not exercised within 60 days after the date the Bank gives written
notice of the Bank's intention to sell, surrender, or transfer ownership of the
Policy. This provision shall not impair the Bank's rights to terminate this
Agreement.
2.4 Comparable Coverage. The Bank shall maintain the Policy in full
force and effect. The Bank may not amend, terminate, or otherwise abrogate the
Executive's interest in the Policy before the Executive's Separation from
Service unless the Bank replaces the Policy with a comparable insurance policy
to cover the benefit provided under this Agreement and executes a new split
dollar agreement and endorsement for the comparable insurance policy. The Policy
or any comparable policy shall be subject to claims of the Bank's creditors.
2.5 Internal Revenue Code Section 1035 Exchanges. The Executive
recognizes and agrees that the Bank may after this Agreement is adopted wish to
exchange the Policy of life insurance on the Executive's life for another
contract of life insurance insuring the Executive's life. Provided that the
Policy is replaced (or intended to be replaced) with a comparable policy of life
insurance, the Executive agrees to provide medical information and cooperate
with medical insurance-related testing required by a prospective insurer for
implementing the Policy or, if necessary, for modifying or updating to a
comparable insurer.
ARTICLE 3
PREMIUMS
3.1 Premium Payment. The Bank shall pay any premiums due on the Policy.
3.2 Economic Benefit. The Administrator shall annually determine the
economic benefit attributable to the Executive based on the life insurance
premium factor for the Executive's age multiplied by the aggregate death benefit
payable to the Executive's beneficiary. The "life insurance premium factor" is
the minimum factor applicable under guidance published pursuant to Treasury Reg.
section 1.61-22(d)(3)(ii) or any subsequent authority.
3.3 Imputed Income. The Bank shall impute the economic benefit to the
Executive on an annual basis by adding the economic benefit to the Executive's
W-2, or if applicable, Form 1099.
ARTICLE 4
ASSIGNMENT
The Executive may irrevocably assign without consideration all of the
Executive's interest in the Policy and in this Agreement to any person, entity,
or trust established by the Executive or the Executive's spouse. If the
Executive transfers all of the Executive's interest in the Policy, all of the
Executive's interest in the Policy and in the Agreement shall be vested in the
Executive's transferee, who shall be substituted as a party hereunder and the
Executive shall have no further interest in this Agreement.
ARTICLE 5
INSURER
The Insurer shall be bound by the terms of the Policy only. Any
payments the Insurer makes or actions it takes in accordance with the Policy
shall fully discharge it from all claims, suits, and demands of all entities or
persons. The Insurer shall not be bound by or be deemed to have notice of the
provisions of this Agreement.
ARTICLE 6
CLAIMS AND REVIEW PROCEDURES
6.1 Claims Procedure. Any person or entity who has not received
benefits under this Agreement that he or she believes should be paid (the
"claimant") shall make a claim for benefits as follows -
6.1.1 Initiation - written claim. The claimant initiates a claim by
submitting to the Administrator a written claim for benefits. If the
claim relates to the contents of a notice received by the claimant, the
claim must be made within 60 days after the notice was received by the
claimant. All other claims must be made within 180 days after the date
of the event that caused the claim to arise. The claim must state with
particularity the determination desired by the claimant.
6.1.2 Timing of Administrator response. The Administrator shall respond
to the claimant within 90 days after receiving the claim. If the
Administrator determines that special circumstances require additional
time for processing the claim, the Administrator can extend the
response period by an additional 90 days by notifying the claimant in
writing, before the end of the initial 90-day period, that an
additional period is required. The notice of extension must set forth
the special circumstances and the date by which the Administrator
expects to render its decision.
6.1.3 Notice of decision. If the Administrator denies part or all of
the claim, the Administrator shall notify the claimant in writing of
the denial. The Administrator shall write the notification in a manner
calculated to be understood by the claimant. The notification shall set
forth -
(a) The specific reasons for the denial,
(b) A reference to the specific provisions of this Agreement
on which the denial is based,
(c) A description of any additional information or material
necessary for the claimant to perfect the claim and an
explanation of why it is needed,
(d) An explanation of the Agreement's review procedures and
the time limits applicable to such procedures, and
(e) A statement of the claimant's right to bring a civil
action under ERISA section 502(a) after an adverse benefit
determination on review.
6.2 Review Procedure. If the Administrator denies part or all of the
claim, the claimant shall have the opportunity for a full and fair review by the
Administrator of the denial, as follows -
6.2.1 Initiation - written request. To initiate the review, the
claimant must file with the Administrator a written request for review
within 60 days after receiving the Administrator's notice of denial.
6.2.2 Additional submissions - information access. The claimant shall
then have the opportunity to submit written comments, documents,
records, and other information relating to the claim. Upon request and
free of charge, the Administrator shall also provide the claimant
reasonable access to and copies of all documents, records, and other
information relevant (as defined in applicable ERISA regulations) to
the claimant's claim for benefits.
6.2.3 Considerations on review. In considering the review, the
Administrator shall take into account all materials and information the
claimant submits relating to the claim, without regard to whether the
information was submitted or considered in the initial benefit
determination.
6.2.4 Timing of Administrator response. The Administrator shall respond
in writing to the claimant within 60 days after receiving the request
for review. If the Administrator determines that special circumstances
require additional time for processing the claim, the Administrator can
extend the response period by an additional 60 days by notifying the
claimant in writing before the end of the initial 60-day period that an
additional period is required. The notice of extension must set forth
the special circumstances and the date by which the Administrator
expects to render its decision.
6.2.5 Notice of decision. The Administrator shall notify the claimant
in writing of its decision on review. The Administrator shall write the
notification in a manner calculated to be understood by the claimant.
The notification shall set forth -
(a) The specific reasons for the denial,
(b) A reference to the specific provisions of the Agreement
on which the denial is based,
(c) A statement that the claimant is entitled to receive,
upon request and free of charge, reasonable access to and
copies of all documents, records, and other information
relevant (as defined in applicable ERISA regulations) to the
claimant's claim for benefits, and
(d) A statement of the claimant's right to bring a civil
action under ERISA section 502(a).
ARTICLE 7
ADMINISTRATION OF AGREEMENT
7.1 Administrator Duties. This Agreement shall be administered by an
Administrator, which shall consist of the Bank's board of directors or such
committee as the board shall appoint. The Executive may not be a member of the
Administrator. The Administrator shall have the discretion and authority to (x)
make, amend, interpret, and enforce all appropriate rules and regulations for
the administration of this Agreement and (y) decide or resolve any and all
questions that may arise, including interpretations of this Agreement.
7.2 Agents. In the administration of this Agreement, the Administrator
may employ agents and delegate to them such administrative duties as it sees fit
(including acting through a duly appointed representative) and may from time to
time consult with counsel, who may be counsel to the Bank.
7.3 Binding Effect of Decisions. The decision or action of the
Administrator about any question arising out of the administration,
interpretation, and application of this Agreement and the rules and regulations
promulgated hereunder shall be final and conclusive and binding upon all persons
having any interest in the Agreement.
7.4 Indemnity of Administrator. The Bank shall indemnify and hold
harmless the members of the Administrator against any and all claims, losses,
damages, expenses, or liabilities arising from any action or failure to act with
respect to this Agreement, except in the case of willful misconduct by the
Administrator or any of its members.
7.5 Information. To enable the Administrator to perform its functions,
the Bank shall supply full and timely information to the Administrator on all
matters relating to the date and circumstances of the retirement, death, or
Separation from Service of the Executive, and such other pertinent information
as the Administrator may reasonably require.
ARTICLE 8
MISCELLANEOUS
8.1 Amendment and Termination of Agreement. This Agreement may be
amended or terminated solely by a written agreement signed by the Bank and the
Executive. However, this Agreement shall terminate upon the first to occur of
(w) distribution of the death benefit proceeds in accordance with section 2.2
above, or (x) termination of the Salary Continuation Agreement under Article 5
of the Salary Continuation Agreement, or (y) the Executive's Separation from
Service, or (z) the date the Executive attains age 65.
8.2 Binding Effect. This Agreement shall bind the Executive and the
Bank and their beneficiaries, survivors, executors, administrators, and
transferees, and any Policy beneficiary.
8.3 No Guarantee of Employment. This Agreement is not an employment
policy or contract. It does not give the Executive the right to remain an
employee of the Bank nor does it interfere with the Bank's right to discharge
the Executive. It also does not require the Executive to remain an employee or
interfere with the Executive's right to terminate employment at any time.
8.4 Successors; Binding Agreement. By an assumption agreement in form
and substance satisfactory to the Executive, the Bank shall require any
successor (whether direct or indirect, by purchase, merger, consolidation, or
otherwise) to all or substantially all of the business or assets of the Bank to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Bank would be required to perform this Agreement had no
succession occurred.
8.5 Applicable Law. This Agreement and all rights hereunder shall be
governed by and construed according to the laws of the State of South Carolina,
except to the extent preempted by the laws of the United States of America.
8.6 Entire Agreement. This Agreement and the Salary Continuation
Agreement constitute the entire agreement between the Bank and the Executive
concerning the subject matter. No rights are granted to the Executive under this
Agreement other than those specifically set forth.
8.7 Severability. If any provision of this Agreement is held invalid,
such invalidity shall not affect any other provision of this Agreement not held
invalid, and each such other provision shall continue in full force and effect
to the full extent consistent with law. If any provision of this Agreement is
held invalid in part, such invalidity shall not affect the remainder of the
provision not held invalid, and the remainder of the provision together with all
other provisions of this Agreement shall continue in full force and effect to
the full extent consistent with law.
8.8 Headings. Headings and subheadings herein are included solely for
convenience of reference and shall not affect the meaning or interpretation of
any provision of this Agreement.
8.9 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed, certified or registered mail, return receipt
requested, with postage prepaid, to the following addresses or to such other
address as either party may designate by like notice. Unless otherwise changed
by notice, notice shall be properly addressed to the Executive if addressed to
the address of the Executive on the books and records of the Bank at the time of
the delivery of such notice, and properly addressed to the Bank if addressed to
the board of directors, First South Bank, 0000 Xxxx X. Xxxxx Xx. Xxxxxxxxx,
Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000.
IN WITNESS WHEREOF, the Executive and a duly authorized representative
of the Bank have executed this Agreement as of the date first written above.
EXECUTIVE: BANK:
First South Bank
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Xxxxx X. Slider By: -------------------------------
Its: ------------------------------
AGREEMENT TO COOPERATE WITH INSURANCE UNDERWRITING INCIDENT TO
INTERNAL REVENUE CODE SECTION 1035 EXCHANGE
I acknowledge that I have read the Endorsement Split Dollar Agreement
and agree to be bound by its terms, particularly the covenant on my part set
forth in section 2.5 of the Endorsement Split Dollar Agreement to provide
medical information and cooperate with medical insurance-related testing
required by an insurer to issue a comparable insurance policy to cover the
benefit provided under this Endorsement Split Dollar Agreement.
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Witness Xxxxx X. Slider
SPLIT DOLLAR POLICY ENDORSEMENT
Insured: Xxxxx X. Slider
Insurer: New York Life Insurance Company
Policy No.: 56312985
According to the terms of the First South Bank Endorsement Split Dollar
Agreement dated as of February 20, 2008, the undersigned Owner requests that the
above-referenced policy issued by the Insurer provide for the following
beneficiary designation and limited contract ownership rights to the Insured:
1. Upon the death of the Insured, proceeds shall be paid in one sum to
the Owner, its successors or assigns, to the extent of the Owner's interest in
the policy. It is hereby provided that the Insurer may rely solely upon a
statement from the Owner concerning the amount of proceeds it is entitled to
receive under this paragraph.
2. Any proceeds at the death of the Insured in excess of the amount
paid under the provisions of the preceding paragraph shall be paid in one sum
to:
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PRIMARY BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER
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CONTINGENT BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER
The exclusive rights to change the beneficiary for the proceeds payable under
this paragraph and to assign all rights and interests granted under this
paragraph are hereby granted to the Insured. The sole signature of the Insured
shall be sufficient to exercise the rights. The Owner retains all contract
rights not granted to the Insured under this paragraph.
3. It is agreed by the undersigned that this designation and limited
assignment of rights shall be subject in all respects to the contractual terms
of the policy.
4. Any payment directed by the Owner under this endorsement shall be a
full discharge of the Insurer, and such discharge shall be binding on all
parties claiming any interest under the policy.
5. This Split Dollar Policy Endorsement supersedes and replaces all
prior endorsements of the Insured relating to the above-referenced policy issued
by the Insurer.
6. The exercise by the Owner of the right to surrender the policy shall
terminate the rights of the Insured.
7. The Owner of the policy is First South Bank. The Owner alone may
exercise all policy rights, except that the Owner will not have the rights
specified in paragraph 2 of this Split Dollar Policy Endorsement.
The undersigned for the Owner is signing in a representative capacity
and warrants that he or she has the authority to bind the entity on whose behalf
this document is executed.
Signed at ____________________________, South Carolina this ____ day of
____________________, 2008.
INSURED: OWNER:
First South Bank
By: __________________________
_________________________________
Xxxxx X. Slider
Its: __________________________
SPLIT DOLLAR POLICY ENDORSEMENT
Insured: Xxxxx X. Slider
Insurer: Lincoln National Life Insurance Company
Policy No.: C0020285
According to the terms of the First South Bank Endorsement Split Dollar
Agreement dated as of February 20, 2008, the undersigned Owner requests that the
above-referenced policy issued by the Insurer provide for the following
beneficiary designation and limited contract ownership rights to the Insured:
1. Upon the death of the Insured, proceeds shall be paid in one sum to
the Owner, its successors or assigns, to the extent of the Owner's interest in
the policy. It is hereby provided that the Insurer may rely solely upon a
statement from the Owner concerning the amount of proceeds it is entitled to
receive under this paragraph.
2. Any proceeds at the death of the Insured in excess of the amount
paid under the provisions of the preceding paragraph shall be paid in one sum
to:
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PRIMARY BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER
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CONTINGENT BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER
The exclusive rights to change the beneficiary for the proceeds payable under
this paragraph and to assign all rights and interests granted under this
paragraph are hereby granted to the Insured. The sole signature of the Insured
shall be sufficient to exercise the rights. The Owner retains all contract
rights not granted to the Insured under this paragraph.
3. It is agreed by the undersigned that this designation and limited
assignment of rights shall be subject in all respects to the contractual terms
of the policy.
4. Any payment directed by the Owner under this endorsement shall be a
full discharge of the Insurer, and such discharge shall be binding on all
parties claiming any interest under the policy.
5. This Split Dollar Policy Endorsement supersedes and replaces all
prior endorsements of the Insured relating to the above-referenced policy issued
by the Insurer.
6. The exercise by the Owner of the right to surrender the policy shall
terminate the rights of the Insured.
7. The Owner of the policy is First South Bank. The Owner alone may
exercise all policy rights, except that the Owner will not have the rights
specified in paragraph 2 of this Split Dollar Policy Endorsement.
The undersigned for the Owner is signing in a representative capacity
and warrants that he or she has the authority to bind the entity on whose behalf
this document is executed.
Signed at __________________________, South Carolina this ______ day of
__________________, 2008.
INSURED: OWNER:
First South Bank
By: _________________________
___________________________
Xxxxx X. Slider
Its: _________________________