Exhibit 10.8
GREER STATE BANK
Amended and Restated Stock Appreciation Rights
Agreement
GREER STATE BANK
AMENDED AND RESTATED STOCK
APPRECIATION RIGHTS
AGREEMENT
WITH R. DENNIS
HENNETT
NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR CONSTRUED TO BE AN
EMPLOYMENT AGREEMENT EITHER
EXPRESS OR IMPLIED.
THIS AMENDED AND
RESTATED STOCK APPRECIATION RIGHTS AGREEMENT (the
“Agreement”) is adopted this 22
nd
day of
February, 2007, by and between GREER STATE BANK, a state-chartered
commercial bank located in Greer, South Carolina (the
“Company”) and R. DENNIS HENNETT (the
“Executive”) and is effective as of the 1
st
day of
January, 2005.
This Agreement amends and restates
the prior Stock Appreciation Rights Agreement between the Company
and the Executive effective January 1, 2004 (the “Prior
Agreement”).
The parties intend this Amended and
Restated Agreement to be a material modification of the Prior
Agreement such that all amounts earned and vested prior to
December 31, 2004 shall be subject to the provisions of
Section 409A of the Code and the regulations promulgated
thereunder.
INTRODUCTION
To encourage the Executive to remain
an employee of the Company, the Company is willing to provide to
the Executive an opportunity to share in the increase in the Book
Value of the Corporation’s common stock.
Phantom Stock Award grants may be
credited to the Stock Appreciation Rights Account at the beginning
of the first Plan Year and at the beginning of each Plan Year
thereafter up to the Executive’s Normal Retirement Date. The
Stock Appreciation Rights Account shall be an accounting device to
keep track of the appreciation on the Phantom Stock Awards. This
Agreement is intended to provide the Executive with a projected
retirement benefit; however, upon the occurrence of various
triggering events, the Company will pay the value of the Stock
Appreciation Rights Account in cash from its general
assets.
GREER STATE BANK
Amended and Restated Stock Appreciation Rights
Agreement
AGREEMENT
The Executive and the Company agree
as follows:
Article 1
Definitions
Whenever used in this Agreement, the
following words and phrases shall have the meanings
specified:
1.1 “ Account Balance
” means the value of the Executive’s Stock Appreciation
Rights Account at any given point in time.
1.2 “ Anniversary Date
” means December 31 of each Plan Year.
1.3 “ Beneficiary
” means each designated person, or the estate of the deceased
Executive, entitled to benefits, if any, upon the death of the
Executive determined pursuant to Article 6.
1.4 “ Beneficiary
Designation Form ” means the form provided from time to
time by the Plan Administrator that the Executive completes, signs
and returns to the Plan Administrator to designate one or more
Beneficiaries.
1.5 “Board” or
“Board of Directors” means the Board of Directors
of the Company.
1.6 “ Book Value
” means total shareholders’ equity as it appears on the
Corporation’s consolidated balance sheet (excluding
unrealized gains or losses in the Company’s investment
portfolio) plus any cash dividends paid to the shareholders after
the Effective Date of this Agreement.
1.7 “Book Value Per
Share” means Book Value divided by the total number of
shares of Common Stock.
1.8 “ Change in Control
” means a change in the ownership or effective control of the
Corporation or the Company, or in the ownership of a substantial
portion of the assets of the Corporation or the Company, as such
change is defined in Section 409A of the Code and regulations
thereunder.
1.9 “ Code ”
means the Internal Revenue Code of 1986, as amended.
1.10 “ Common Stock
” means the issued and outstanding shares of the common stock
of the Corporation.
1.11 “ Corporation
” means Greer Bancshares Incorporated.
1.12 “ Disability
” means sickness, accident, or injury which, in the judgment
of a physician appointed and paid by the Company, prevents the
Executive from performing all of the Executive’s customary
duties for the Company. As a condition to any benefits, the Company
may require the Executive to submit to such physical or mental
evaluations and tests as the Company’s Board of Directors
deems appropriate.
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GREER STATE BANK
Amended and Restated Stock Appreciation Rights
Agreement
1.13 “ Effective Date
” means January 1, 2005
1.14 “
Normal Retirement Age ” means December 31
st
of the
year in which the Executive attains age 65 years and 10
months.
1.15 “ Normal Retirement
Date ” means the later of the Normal Retirement Age or
Termination of Employment.
1.16 “ Phantom Stock
” means the hypothetical number of shares of the Common Stock
awarded to the Executive.
1.17 “ Plan
Administrator ” means the Company.
1.18 “ Plan Year
” means a twelve-month period commencing on January 1
and ending on December 31 of each year. The initial Plan Year
shall commence on the Effective Date of this Agreement.
1.19 “ Specified
Employee ” means a key employee (as defined in
Section 416(i) of the Code without regard to paragraph 5
thereof) of the Company if any stock of the Company is publicly
traded on an established securities market or otherwise.
1.20 “ Stock Appreciation
Rights Account” means the Stock Appreciation Rights
Account described in Article 3 of this Agreement.
1.21 “Termination of
Employment ” means the termination of the
Executive’s employment with the Company for reasons other
than death. Whether a Termination of Employment takes place is
determined based on the facts and circumstances surrounding the
termination of the Executive’s employment and whether the
Company and the Executive intended for the Executive to provide
significant services for the Company following such termination. A
termination of employment will not be considered a Termination of
Employment if:
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(a)
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the Executive
continues to provide services as an employee of the Company at an
annual rate that is twenty percent (20%) or more of the
services rendered, on average, during the immediately preceding
three full calendar years of employment (or, if employed less than
three years, such lesser period) and the annual remuneration for
such services is twenty percent (20%) or more of the average
annual remuneration earned during the final three full calendar
years of employment (or, if less, such lesser period),
or
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(b)
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the Executive continues to
provide services to the Company in a capacity other
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GREER STATE BANK
Amended and Restated Stock Appreciation Rights
Agreement
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than as an employee of the
Company at an annual rate that is fifty percent (50%) or more
of the services rendered, on average, during the immediately
preceding three full calendar years of employment (or if employed
less than three years, such lesser period) and the annual
remuneration for such services is fifty percent (50%) or more
of the average annual remuneration earned during the final three
full calendar years of employment (or if less, such lesser
period).
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Article 2
Phantom Stock
Award
2.1 Initial Phantom Stock
Award. As of the Effective Date of the Prior Agreement, the
Executive’s Stock Appreciation Rights Account was credited
with an initial award of thirteen thousand one hundred and sixty
seven (13,167) shares of Phantom Stock, unadjusted for the 3/2
stock split on March 1, 2004.
2.2 Additional Phantom Stock
Awards. So long as the Executive is employed by the Company,
and the Corporation achieved a minimum of twelve percent
(12%) return on equity for the Plan Year immediately preceding
the January 1 award, the Executive’s Stock Appreciation
Rights Account shall be credited with additional awards of Phantom
Stock as follows, unadjusted for the 3/2 stock split on
March 1, 2004:
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January 1, 2005
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13,167
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January 1, 2006
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13,167
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January 1, 2007
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13,167
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January 1, 2008
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13,167
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For any Plan Year the
Corporation’s return on equity is less than twelve percent
(12%), no award of Phantom Stock shall ever be made with regard to
such Plan Year. No Phantom Stock will be credited to the Stock
Appreciation Rights Account after January 1, 2008.
2.3 Adjustments . Phantom
Stock awards above may be adjusted in accordance with
Section 3.1.3 below, if applicable.
Article 3
Stock Appreciation Rights
Account
3.1 Establishing and
Crediting . The Company shall establish a Stock Appreciation
Rights Account on its books for the Executive. Any dispute in
relation to the value of the Stock Appreciation Right Account
and/or in determination of return on equity for a Plan Year will be
settled by the Company’s accounting firm which shall be
conclusive and binding upon all parties. The value of the Stock
Appreciation Rights Account is determined as follows:
3.1.1 Valuation . On each
Anniversary Date and immediately prior to the payment
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GREER STATE BANK
Amended and Restated Stock Appreciation Rights
Agreement
of any benefits the value of the
Stock Appreciation Rights Account shall be determined by totaling
the value of all shares of Phantom Stock credited to the Stock
Appreciation Rights Account. The value of each share of Phantom
Stock shall be the amount (if any) by which the Current Price Per
Share exceeds such share of the Phantom Stock’s Initial Price
Per Share as defined below:
(a) “ Initial Price Per
Share ” is the Book Value Per Share on the first day of
the Plan Year for which a Phantom Stock award is credited to the
Executive’s Phantom Stock Account. Notwithstanding the
foregoing, the Initial Price Per Share for the Initial Phantom
Stock Award under 2.1 is eleven dollars and fifty two cents
($11.52) unadjusted for the 3/2 stock split on March 1,
2004.
(b ) “Current Price Per
Share ” shall be the Book Value Per Share at the date of
valuation except that the Current Price Per Share shall never be
less than the Initial Price Per Share.
3.1.2 Interest. Prior to
payment of any benefits, no interest shall be credited on the Stock
Appreciation Rights Account.
3.1.3 Changes in Number Shares of
Phantom Stock . If there is a change in the number of the
outstanding shares of the Common Stock by reason of a stock
dividend or split, recapitalization, merger, consolidation,
combination or exchange of shares where the shares are issued
without additional consideration paid to the Corporation, then the
number of shares of Phantom Stock and the Initial Price Per Share
shall be adjusted appropriately by the Company, whose determination
shall be conclusive; provided, however, that a fractional Phantom
Stock share shall be rounded up to the nearest whole
share.
3.2 Statement of Accounts .
The Company shall provide to the Executive, within 120 days
following the Anniversary Date of each Plan Year that this
Agreement is in effect, a statement setting forth the value of the
Stock Appreciation Rights Account as of such Anniversary
Date.
3.3 Accounting Device Only .
The Stock Appreciation Rights Account is solely a device for
measuring amounts that may be paid under this Agreement. The
Phantom Stock is used solely as a measurement tool; no Corporation
stock will be purchased, sold, registered, or issued in connection
with this Agreement. The Executive will only be entitled to cash,
and not stock in lieu of cash. The Executive will not receive any
stock or stock rights by virtue of this Agreement. The Stock
Appreciation Rights Account is not a trust fund of any kind. The
Executive is a general unsecured creditor of the Company for the
payment of benefits. The benefits represent the mere Company
promise to pay such benefits. The Executive’s rights are not
subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by the
Executive’s creditors. Only cash will be paid as a benefit
and no stock or any other property is to be paid to the
Executive.
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GREER STATE BANK
Amended and Restated Stock Appreciation Rights
Agreement
Article 4
Lifetime Benefits
4.1 Normal Retirement Benefit
. Upon Termination of Employment on or after the Normal Retirement
Age, the Company shall pay to the Executive the benefit described
in this Section 4.1 in lieu of any other benefit under this
Agreement.
4.1.1 Amount of Benefit . The
benefit under this Section 4.1 is the value of the Stock
Appreciation Rights Account as determined under Article 3 above at
the Executive’s Normal Retirement Date.
4.1.2 Payment of Benefit .
The Company shall pay the benefit to the Executive over fifteen
(15) years in one hundred eighty (180) equal consecutive
monthly installments, including interest at an annual rate equal to
seven percent (7.0%), compounded monthly commencing within thirty
(30) days following the Executive’s Normal Retirement
Date.
For Example:
Assuming that the value of the
Stock Appreciation Rights Account at the Executive’s Normal
Retirement Date is $100,000, then the Executive is entitled to
180 equal consecutive monthly installments including interest
at the annual rate of 7.0%, compounded monthly. The monthly
installments would thus be $893.62.
4.2 Early Termination Benefit
. Upon Termination of Employment prior to Normal Retirement Age and
a Change of Control other than because of Disability, the Company
shall pay to the Executive the benefit described in this
Section 4.2 in lieu of any other benefit under this
Agreement.
4.2.1 Amount of Benefit . The
benefit under this Section 4.2 is the value of the vested
Stock Appreciation Rights Account as determined under Article 3
above on the date of the Executive’s Termination of
Employment. This benefit is determined by vesting the Executive in
twenty-five percent (25%) of the value of the Stock
Appreciation Rights Account at the end of the first Plan Year, and
an additional twenty-five percent (25%) for each Plan Year
thereafter until the Executive is one hundred percent
(100%) vested in the value of the Stock Appreciation Rights
Account.
4.2.2 Payment of Benefit .
The Company shall pay the benefit to the Executive over fifteen
(15) years in one hundred eighty (180) equal consecutive
monthly installments, including interest at an annual rate equal to
seven percent (7.0%), compounded monthly, commencing within thirty
(30) days following the Executive’s Normal Retirement
Age.
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GREER STATE BANK
Amended and Restated Stock Appreciation Rights
Agreement
4.3 Disability Benefit . Upon
Termination of Employment because of Disability prior to Normal
Retirement Age and prior to a Change in Control, the Company shall
pay to the Executive the benefit described in this Section 4.3
in lieu of any other benefit under this Agreement.
4.3.1 Amount of Benefit . The
benefit under this Section 4.3 is the value of the vested
Stock Appreciation Rights Account as determined under Article 3
above on the date of the Executive’s Termination of
Employment. This benefit is determined by vesting the Executive in
one hundred percent (100%) of the value of the Stock
Appreciation Rights Account.
4.3.2 Payment of Benefit .
The Company shall pay the benefit to the Executive over fifteen
(15) years in one hundred eighty (180) equal consecutive
monthly installments, including interest at an annual rate equal to
seven percent (7.0%), compounded monthly, commencing within thirty
(30) days following the Executive’s Termination of
Employment.
4.4 Change in Control Benefit
. Upon Termination of Employment prior to Normal Retirement Age and
after a Change of Control, the Company shall pay to the Executive
the benefit described in this Section 4.4 in lieu of any other
benefit under this Agreement.
4.4.1 Amount of Benefit. The
benefit under this Section 4.4 is the greater of the value of
the Stock Appreciation Rights Account as determined under Article 3
above on the day immediately prior to the Change of Control or
three hundred seventy three thousand seventeen dollars
($373,017).
4.4.2 Payment of Benefit .
The Company shall pay the benefit to the Executive over fifteen
(15) years in one hundred eighty (180) equal consecutive
monthly installments, including interest at an annual rate equal to
seven percent (7.0%), compounded monthly, commencing within thirty
(30) days following the Executive’s Termination of
Employment.
4.5 Restriction on Timing of
Distribution . Notwithstanding any provision of this
Agreement to the contrary, if the Executive is considered a
Specified Employee at Termination of Employment under such
procedures as established by the Company in accordance with
Section 409A of the Code, benefit distributions that are made
upon Termination of Employment may not commence earlier than six
(6) months after the date of such Termination of
Employment. Therefore, in the event this Section 4.5 is
applicable to the Executive, any distribution which would otherwise
be paid to the Executive within the first six months following the
Termination of Employment shall be accumulated and paid to the
Executive in a lump sum on the first day of the seventh month
following the Termination of Employment. All subsequent
distributions shall be paid in the manner specified.
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GREER STATE BANK
Amended and Restated Stock Appreciation Rights
Agreement
4.6 Distributions Upon Income
Inclusion Under Section 409A of the Code . Upon the
inclusion of any portion of the Stock Appreciation Rights Account
into the Executive’s income as a result of the failure of
this non-qualified deferred compensation plan to comply with the
requirements of Section 409A of the Code, to the extent such
tax liability can be covered by the Executive’s vested Stock
Appreciation Rights Account, a distribution shall be made as soon
as is administratively practicable following the discovery of the
plan failure.
4.7 Change in Form or Timing of
Distributions . For distribution of benefits under this
Article 4, the Executive and the Company may, subject to the terms
of Section 9.1, amend the Agreement to delay the timing or
change the form of distributions. Any such
amendment:
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(a)
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may not
accelerate the time or schedule of any distribution, except as
provided in Section 409A of the Code and the regulations
thereunder;
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(b)
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must, for
benefits distributable under Section 4.2, be made at least
twelve (12) months prior to the first scheduled
distribution;
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(c)
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must, for
benefits distributable under Sections 4.1, 4.2, 4.3 and 4.4, delay
the commencement of distributions for a minimum of five
(5) years from the date the first distribution was originally
scheduled to be made; and
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(d)
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must take
effect not less than twelve (12) months after the amendment is
made.
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Article 5
Death Benefits
5.1 Death During Employment .
If the Executive dies while in the employment of the Company, the
Company shall pay to the Executive’s Beneficiary the benefit
described in this Section 5.1 in lieu of any other benefit
under this Agreement.
5.1.1 Amount of Benefit . The
benefit under this Section 5.1 shall be equal to the value of
the Stock Appreciation Rights Account as determined under Article 3
above on the date of the Executive’s death. This benefit is
determined by vesting the Executive’s Beneficiary in one
hundred percent (100%) of the value of the Stock Appreciation
Rights Account.
5.1.2 Payment of Benefit .
The Company shall pay the benefit to the Executive’s
beneficiary over fifteen (15) years in one hundred eighty
(180) equal consecutive monthly installments, including
interest at an annual rate equal to seven percent (7.0%),
compounded monthly, commencing within thirty (30) days
following the date of the Executive’s death.
5.2 Death During Payment of a
Lifetime Benefit . If the Executive dies after any payments
have commenced under this Agreement but before receiving all such
payments, the Company shall pay the remaining benefits to the
Executive’s Beneficiary at the same time and in the same
amounts they would have been paid to the Executive had the
Executive survived.
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GREER STATE BANK
Amended and Restated Stock Appreciation Rights
Agreement
5.3 Death After Termination of
Employment But Prior to Commencement of Benefit Payments. If
the Executive dies after Termination of Employment, but prior to
the commencement of benefit payments, the Company shall pay the
same benefit payments to the Executive’s Beneficiary that the
Executive was entitled to prior to death except that the benefit
payments shall commence within 90 days following the date of the
Executive’s death.
Article 6
Beneficiaries
6.1 Beneficiary Designation .
The Executive shall have the right, at any time, to designate a
Beneficiary(ies) to receive any benefits payable under this
Agreement upon the death of the Executive. The Beneficiary
designated under this Agreement may be the same a
