EXHIBIT (10)(x)
DIRECTOR SUPPLEMENTAL RETIREMENT PLAN
AGREEMENT
THIS AGREEMENT, made and entered into this ____ day of ______________,
2003, by and between Home Savings Bank of Albemarle, SSB, a Bank organized and
existing under the laws of the State of North Carolina, (hereinafter referred to
as the "Bank"), and R Ronald Swanner, a Director of the Bank, (hereinafter
referred to as the "Director").
WHEREAS, the Director has been in the service of the Bank for several
years and has now and for years faithfully served the Bank. It is the consensus
of the Board of Directors of the Bank (hereinafter referred to as the "Board")
that the Director'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
Director's experience, knowledge of corporate affairs, reputation and industry
contacts are of such value and his continued services are so essential to the
Bank's future growth and profits that it would suffer severe financial loss
should the Director terminate the Director's services.
ACCORDINGLY, the Board has adopted the Bank Director Supplemental
Retirement Plan (hereinafter referred to as the "Director Plan") and it is the
desire of the Bank and the Director to enter into this Agreement under which the
Bank will agree to make certain payments to the Director upon the Director's
retirement or to the Director's beneficiary(ies) in the event of the Director's
death pursuant to the Director Plan;
FURTHERMORE, it is the intent of the parties hereto that this Director
Plan be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Director, and be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Director 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 Director are parties to a Retirement Payment
Agreement dated October of 1985 between Home Savings Bank of Albemarle, SSB and
R Ronald Swanner that provides for the payment of certain benefits. This
Director Supplemental Retirement Plan Agreement and the benefits provided
hereunder shall
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replace and supercede the existing Retirement Payment Agreement and the benefits
provided thereby;
NOW THEREFORE, in consideration of services the Director 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 Director agree as
follows:
I. DEFINITIONS
A. Effective Date:
The Effective Date of the Director Plan shall be February 18,
2003.
B. Plan Year:
Any reference to "Plan Year" shall mean a calendar year from
January 1 to December 31. In the year of implementation, the
term "Plan Year" shall mean the period from the Effective Date
to December 31 of the year of the Effective Date.
C. Retirement Date:
Retirement Date shall mean retirement from service with the Bank
which becomes effective on the day following the annual meeting
after the first day of the calendar month following the date of
the Director's seventieth (70th) birthday or such later date as
the Director may actually retire.
D. Termination of Service:
Termination of Service shall mean voluntary resignation of
service by the Director or the Bank's discharge of the Director
without cause, prior to the Retirement Date (Subparagraph I
[C]).
E. Index Retirement Benefit:
The Index Retirement Benefit for the Director for each plan year
shall be equal to the excess (if any) of the Index (Subparagraph
I [F]) for that Plan Year over the Opportunity Cost
(Subparagraph I [G]) for that Plan Year, divided by a factor
equal to 1.00 minus the marginal tax rate.
F. 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
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FASB Technical Bulletin 85-4. This Index shall be applied as if
such insurance contracts were purchased on the Effective Date
hereof.
Insurance Company: Mass Mutual Life Insurance Company
Policy Form: Flexible Premium Adjustable Life
Policy Name: Strategic Life Executive
Insured's Age and Sex: 55, Male
Riders: None
Ratings: None
Option: Level
Face Amount: $168,630
Premiums Paid: $77,000
Number of Premium Payments: Single
Assumed Purchase Date: February 18, 2003
Insurance Company: New York Life Insurance Company
Policy Form: Flexible Premium Adjustable Life
Policy Name: Strategic Life Executive
Insured's Age and Sex: 55, Male
Riders: None
Ratings: None
Option: Level
Face Amount: $206,347
Premiums Paid: $85,400
Number of Premium Payments: Single
Assumed Purchase Date: February 18, 2003
If such contracts of life insurance are actually purchased by
the Bank, then the actual policies as of the dates they were
purchased shall be used in calculations under this Director
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 illustrations 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 contract are
merely for purposes of calculating a benefit. The Bank has no
obligation to purchase such life insurance and, if purchased,
the Director and the Director's beneficiary(ies) shall have no
ownership interest in such policy and shall always have no
greater interest in the benefits under this Agreement than that
of an unsecured general creditor of the Bank.
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G. 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 Director pursuant to the
Director Plan (Paragraph II hereinafter) plus the amount of all
previous years' after-tax Opportunity Cost, and multiplying that
sum by the greater of either: (i) the average after tax yield of
a one-year Treasury bill; or (ii) the Bank's annualized after
tax cost of funds as calculated from the Bank's third quarter
call report.
H. Change of Control:
Change of Control means the cumulative transfer of more than
fifty percent (50%) of the voting stock of the Bank from the
Effective Date of this Director Plan. For the purposes of this
Director Plan, transfers on account of deaths or gifts,
transfers between family members or transfers made to a
qualified retirement plan maintained by the Bank shall not be
considered in determining whether there has been a Change of
Control.
I. Normal Retirement Age:
Normal Retirement Age shall mean the date on which the Director
attains age seventy (70).
J. Benefit Accounting:
The Bank shall account for the benefit provided herein using the
regulatory accounting principles of the Bank's primary federal
regulator. The Bank shall establish an accrued liability
retirement account for the Director into which appropriate
reserves shall be accrued.
II. BENEFITS
A. Retirement Benefits:
Subject to Subparagraph II (D), hereinafter, should the Director
continue to serve the Bank until "Normal Retirement Age" defined
in Subparagraph I (I), the Director shall be entitled to receive
an annual benefit equal to the amount set forth in Exhibit
"A-1". Said payments shall be made monthly (1/12th of the annual
benefit) and shall commence on the date of the annual board
meeting following the Director's retirement and shall continue
until the Director attains age seventy-six (76). Upon completion
of the aforestated payments and commencing subsequent thereto
and subject to Subparagraph II (A) (i) hereinbelow, the Index
Retirement Benefit (Subparagraph I [E]) shall be paid to the
Director until the Director's death
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at which time said benefit shall cease. Each Plan Year, said
benefits shall be a maximum of Twelve Thousand and 00/100ths
Dollars ($12,000.00) annually.
(i) Index Retirement Benefit Adjustment:
The Index Retirement Benefit payment as set forth
hereinabove for the first Plan Year subsequent to the
Director attaining age seventy-six (76) shall be
adjusted according to a number equal to the aggregate of
the Index Retirement Benefit (Subparagraph I [E]) for
each Plan Year from the Effective Date of this agreement
until the Plan Year subsequent to the Director attaining
age seventy-six (76) over the aggregate of the benefit
payments the Director actually received under the terms
of this Director Plan through that date. For example, if
the Director retires at age sixty-five (65) and the
aggregate annual benefits received by the Director until
the Plan Year the Director attains age seventy-six (76)
were $900,000.00, and the aggregate Index Retirement
Benefits for each Plan Year from the Effective Date of
this agreement to the Plan Year the Director's attains
age seventy-six (76) were $1,000,000.00 then the
Director's Index Retirement Benefit in the first Plan
Year said payment is payable to the Director would be
increased by $100,000.00. If said number is a deficit,
then the Index Retirement Benefit for the Plan Year when
the Director attains age seventy-six (76) and each
subsequent Plan Year's benefit (if necessary) shall be
reduced until the entire deficit has been recovered by
the Bank. For each year thereafter, the Index Retirement
Benefit payment shall be paid as set forth in
Subparagraph I (E). For example, if the Director retires
at age sixty-five (65) and the aggregate annual benefits
to be received by the Director until the Plan Year the
Director attains age seventy-six (76) were
$1,000,000.00, and the aggregate Index Retirement
Benefits for each Plan year from the Effective Date of
this agreement to the Plan Year the Director attains age
seventy-six (76) were $900,000.00 and the Director's
Index Retirement Benefit was $90,000.00 in the first
year, then the Director would not receive any Index
Retirement Benefit in the first year, and the second
years' Index Retirement benefit would be reduced by
$10,000.00.
B. Termination of Service:
Subject to Subparagraph II (E), should an Director suffer a
Termination of Service the Director shall be entitled to receive
the percentage set forth hereinbelow that corresponds to the
number of full years of service on the
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Board of the Bank from the date of first service (to a maximum
of 100%), of the annual benefit set forth in Exhibit A-1. Said
payments shall be made monthly (1/12th of the annual benefit)
and shall commence thirty (30) days following the Director's
Normal Retirement Age (Subparagraph I [J] and shall continue
until the Director attains age seventy-six (76). Upon completion
of the aforestated payments and commencing subsequent thereto
and subject to Subparagraph II (A) (i) hereinabove the Index
Retirement Benefit for each Plan Year subsequent to the year in
which the Director attains age seventy-six (76), and including
the remaining portion of the Plan Year in which the Director
attains age seventy-six (76), shall be paid to the Director
until the Director's death.
Number years service Vested percentage
-------------------- -----------------
1 0%
2 or more 20% per year to 100%
C. Death:
If the Director dies while there is a balance in the Director's
accrued liability retirement account, then the unpaid balance
shall be paid in a lump sum to the individual or individuals
designated in writing by the Director and filed with the Bank.
In the absence of or a failure to designate a beneficiary, the
unpaid balance shall be paid in a lump sum to the personal
representative of the Director's estate. If, upon death, the
Director shall have received the total balance of the Director's
accrued liability retirement account, then no further benefit
shall be due hereunder. In any event, upon the death of the
Director, the Director's beneficiary shall not be entitled to
receive any Index Retirement Benefit.
D. Discharge for Cause:
Should the Director be Discharged for Cause at any time, all
benefits under this Director Plan shall be forfeited. The term
"for cause" shall mean any of the following that result in an
adverse effect on the Bank: (i) gross negligence or gross
neglect; (ii) the commission of a felony or misdemeanor
involving moral turpitude, fraud, or dishonesty; (iii) the
willful violation of any law, rule, or regulation (other than a
traffic violation or similar offense); (iv) an intentional
failure to perform stated duties; or (v) a breach of fiduciary
duty involving personal profit. If a dispute arises as to
discharge "for cause," such dispute shall be resolved by
arbitration as set forth in this Director Plan.
E. Death Benefit:
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Except as set forth above, there is no death benefit provided
under this Agreement.
F. Disability Benefit:
In the event the Director becomes disabled prior to any
Termination of Service, and the Director's employment is
terminated because of such disability, the Director, upon
submission to the Bank of written documentation and verification
of disability, shall be one hundred percent (100%) vested in the
accrued liability retirement account balance on the date of said
disability. Said account shall be credited interest annually,
until paid in full, at a rate of two percent (2%) plus the prime
interest rate each Plan Year. Payment of such benefit shall be
made in one (1) lump sum when the Director reaches his/her
Normal Retirement Age. Disability shall be defined as the
Director being unable to attend at least fifty percent (50%) of
the meetings of the Board of Directors due to a
physician-certified disabling condition. If there is a dispute
regarding whether the Director is disabled, such dispute shall
be resolved by a physician selected by the Bank and such
resolution shall be binding upon all parties to this Agreement.
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 Agreement.
The Director, the Director's beneficiary(ies) or any successor in
interest to the Director 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 Agreement or to refrain from
funding the same and to determine the exact nature and method of such
funding. Should the Bank elect to fund this Agreement, 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 the Director be deemed to have any lien or 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 Director, then the Director 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
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Upon a Change of Control (Subparagraph I [H]), if the Director
subsequently suffers a Termination of Service (Subparagraph I [D]), then
the Director shall be entitled to receive the amount in the Director's
Accrued Liability Retirement Account as of the date of Termination of
Service paid in a lump sum thirty (30) days following said Termination
of Service. The Director will also remain eligible for all promised
death benefits in this Director Plan. In addition, no sale, merger, or
consolidation of the Bank shall take place unless the new or surviving
entity expressly acknowledges the obligations of this Director Plan and
agrees to abide by its terms.
V. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
Neither the Director, his/her surviving spouse nor any other
beneficiary under this Agreement 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 Director or the Director's
beneficiary(ies), nor be transferable by operation of law in the
event of bankruptcy, insolvency or otherwise. In the event the
Director 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:
The Bank shall not merge or consolidate into or with another
bank or sell substantially all of its assets to another bank,
firm or person until such bank, firm or person expressly agree,
in writing, to assume and discharge the duties and obligations
of the Bank under this Director Plan. This Director Plan shall
be binding upon the parties hereto, their successors,
beneficiaries, heirs and personal representatives.
C. Amendment or Revocation:
Subject to Paragraph VII, it is agreed by and between the
parties hereto that, during the lifetime of the Director, this
Director Plan may be amended or revoked at any time or times, in
whole or in part, by the mutual written consent of the Director
and the Bank.
D. Gender:
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Whenever in this Director 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 Director Plan shall affect the right
of the Director 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.
F. Headings:
Headings and subheadings in this Director Plan are inserted for
reference and convenience only and shall not be deemed a part of
this Director Plan.
G. Applicable Law:
The validity and interpretation of this Agreement shall be
governed by the laws of the State of North Carolina.
H. 12 U.S.C. Section 1828(k):
Any payments made to the Director pursuant to this Director
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 Director
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 Director Plan
shall remain in full force and effect notwithstanding such
partial invalidity.
J. Supersede and Entire Agreement:
This Agreement shall supersede the Retirement Payment Agreement
dated October of 1985, and shall constitute the entire agreement
of the parties
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pertaining to this particular Director Supplemental Retirement
Plan Agreement.
VI. ERISA PROVISION
A. Named Fiduciary and Plan Administrator:
The "Named Fiduciary and Plan Administrator" of this Director
Plan shall be Home Savings Bank of Albemarle, SSB 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 Director Plan. The Named
Fiduciary may delegate to others certain aspects of the
management and operation responsibilities of the Director 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 Director
Plan and benefits are not paid to the Director (or to the
Director's beneficiary(ies) in the case of the Director'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 Director 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
Director 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 Director 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
arbitrator shall be selected by mutual agreement of the Bank and
the claimants. The arbitrator shall operate under any generally
recognized set of arbitration rules. 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
Director "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.
VII. TERMINATION OR MODIFICATION OF AGREEMENT BY REASON OF CHANGES IN THE
LAW, RULES OR REGULATIONS
The Bank is entering into this Agreement upon the assumption that
certain existing tax laws, rules and regulations will continue in effect
in their current form. If any said assumptions should change and said
change has a detrimental effect on this Director Plan, then the Bank
reserves the right to terminate or modify this Agreement accordingly.
Upon a Change of Control (Subparagraph I [J]), this paragraph shall
become null and void effective immediately upon said Change of Control.
IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully read
this Agreement and executed the original thereof on the first day set forth
hereinabove, and that upon execution, each has received a conforming copy.
HOME SAVINGS BANK OF
ALBEMARLE, SSB
Albemarle, North Carolina
By:
- -------------------------------- --------------------------------
Witness Title
- -------------------------------- --------------------------------
Witness R Ronald Swanner
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BENEFICIARY DESIGNATION FORM
FOR THE DIRECTOR SUPPLEMENTAL RETIREMENT
PLAN AGREEMENT
I. PRIMARY DESIGNATION
(You may refer to the beneficiary designation information prior
to completion.)
A. PERSON(S) AS A PRIMARY DESIGNATION:
(Please indicate the percentage for each beneficiary.)
Name ______________________ Relationship ___________________ / _______%
Address:_______________________________________________________________
(Street) (City) (State) (Zip)
Name ______________________ Relationship ___________________ / _______%
Address:_______________________________________________________________
(Street) (City) (State) (Zip)
Name ______________________ Relationship ___________________ / _______%
Address:_______________________________________________________________
(Street) (City) (State) (Zip)
Name ______________________ Relationship ___________________ / _______%
Address:_______________________________________________________________
(Street) (City) (State) (Zip)
B. ESTATE AS A PRIMARY DESIGNATION:
My Primary Beneficiary is The Estate of ______________________________
as set forth in the last will and testament dated the _____ day of
_____________, _______ and any codicils thereto.
C. TRUST AS A PRIMARY DESIGNATION:
Name of the Trust: ____________________________________________________
Execution Date of the Trust: _____ / _____ / _________
Name of the Trustee: ___________________________________________________
Beneficiary(ies) of the Trust (please indicate the percentage for each
beneficiary):
________________________________________________________________________
________________________________________________________________________
Is this an Irrevocable Life Insurance Trust? ________ Yes ________ No
(If yes and this designation is for a Split Dollar agreement, an
Assignment of Rights form should be completed.)
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II. SECONDARY (CONTINGENT) DESIGNATION
A. PERSON(s) AS A SECONDARY (CONTINGENT) DESIGNATION:
(Please indicate the percentage for each beneficiary.)
Name ______________________ Relationship ___________________ / _______%
Address:_______________________________________________________________
(Street) (City) (State) (Zip)
Name ______________________ Relationship ___________________ / _______%
Address:_______________________________________________________________
(Street) (City) (State) (Zip)
Name ______________________ Relationship ___________________ / _______%
Address:_______________________________________________________________
(Street) (City) (State) (Zip)
Name ______________________ Relationship ___________________ / _______%
Address:_______________________________________________________________
(Street) (City) (State) (Zip)
B. ESTATE AS A SECONDARY (CONTINGENT) DESIGNATION:
My Secondary Beneficiary is The Estate of ____________________________
as set forth in my last will and testament dated the _____ day of
_____________, _______ and any codicils thereto.
C. TRUST AS A SECONDARY (CONTINGENT) DESIGNATION:
Name of the Trust: _____________________________________________________
Execution Date of the Trust: _____ / _____ / _________
Name of the Trustee: ___________________________________________________
Beneficiary(ies) of the Trust (please indicate the percentage for each
beneficiary):
________________________________________________________________________
________________________________________________________________________
All sums payable under the Director Supplemental Retirement Plan
Agreement by reason of my death shall be paid to the Primary
Beneficiary(ies), if he or she survives me, and if no Primary
Beneficiary(ies) shall survive me, then to the Secondary (Contingent)
Beneficiary(ies). This beneficiary designation is valid until the
participant notifies the bank in writing.
---------------------------- ----------------------------
R Ronald Swanner Date
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