Exhibit 10.4.3
SPLIT DOLLAR AGREEMENT
SOUTH CAROLINA 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 Xxxxxx Xxxxx Xxxxxx, (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. S7-059-369 (the "Policy") issued by Northwestern
National Life Insurance Company in the face amount of $100,000; 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 June 7, 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 the Employee or to Metropolitan Life Insurance Company
Page 4 of Six (6) Pages
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/ V. Xxxxx Xxxxxx
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Xxxxxx Xxxxx Xxxxxx
FIRST SOUTH BANK
By:
s/ Xxxxx Xxxxxxxxxxxxxx
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Chairman of the Board of Directors
ATTEST:
s/ Xxxxx X. Slider
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Asst. 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 Xxxxxx
Xxxxx Xxxxxx 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/ Xxxx X. Xxxxxxx
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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 s/
Xxxxx X. Slider 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/ Xxxx X. Xxxxxxx
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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 Xxxxxx Xxxxx Xxxxxx
under policy #S7-059-369
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 Xxxx X. Xxxxxx ( Employee's Beneficiary )
Dated this 20 day of June, 1996 at Spartanburg, South Carolina.
s/ Xxxxxx Xxxxx Xxxxxx First South Bank
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Employee Employer
By Xxxxx X. Slider
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Its President/CEO
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 June 20, 1996.
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 XXXXXX XXXXX XXXXXX (the
"Employee") entered into a Split Dollar Agreement (the "Agreement") on June 21,
1996, regarding Insurance Policy No. S7-059-369 issued by Northwestern National
Life Insurance Company; 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) Corporation and Employee hereby amend said Agreement by stating
that all references to Metropolitan Life Insurance Company in Paragraph 13 shall
mean Northwestern National Life Insurance Company.
(4) 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
23rd day of July of 1999.
Witness: FIRST SOUTH BANK
s/ Xxxxxxx X Xxxxxxxxxxx BY: S/ Xxxxx X. Slider
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s/ Xxxx X. Xxxxxxx Its: President & CEO
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s/ s/ Xxxxxx Xxxxx Xxxxxx
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s/ Xxxxxxx X. Xxxxxxxxxxx
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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.
XXXXXX XXXXX XXXXXX RELIASTAR / ING Policy # 7059369 INSURANCE FACE AMOUNT
$100,000
THE BANK PAID ANNUAL PREMIUMS OF $3,000 FOR THE YEARS 1996 THROUGH 2002, SEVEN
YEARS, FOR A TOTAL OF $21,000. 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.
XXXXXX XXXXX XXXXXX MET LIFE Policy # 923206686 PR INSURANCE FACE AMOUNT
$100,000
THE BANK PAID ANNUAL PREMIUMS OF $2,651 FOR THE YEARS 1996 THROUGH 2002, SEVEN
YEARS, FOR A TOTAL OF $18,557, AND REIMBURSED THE INSURED'S PRIOR EMPLOYER FOR
FIVE YEARS OF PREMIUM PAYMENTS, $13,255. THE TOTAL OF THESE TWO, $31,812, 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/ Xxxxx X. Slider
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Xxxxx X. Slider, President & CEO
This attachment to the ING / Reliastar Insurance Company Policy, Policy #
S7-059-369, 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 $18,000 is to be deducted from the
benefit payment proceeds to reimburse First South Bank for the total of the
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/ V. Xxxxx Xxxxxx
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