GREER STATE BANK

Salary Continuation Agreement

 

Prepared 7-18-05

 

GREER STATE BANK

SALARY CONTINUATION AGREEMENT

WITH KENNETH M. HARPER

 

NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR CONSTRUED TO BE AN EMPLOYMENT
AGREEMENT EITHER EXPRESS OR IMPLIED.

 

THIS SALARY CONTINUATION AGREEMENT (the “Agreement”) is adopted this 12th day of
August, 2005, by and between GREER STATE BANK, a state-chartered commercial bank
located in Greer, South Carolina (the “Company”), and KENNETH M. HARPER (the
“Executive”).

 

The purpose of this Agreement is to provide specified benefits to the Executive,
a member of a select group of management or highly compensated employees who
contribute materially to the continued growth, development and future business
success of the Company. This Agreement shall be unfunded for tax purposes and
for purposes of Title I of the Employee Retirement Income Security Act of 1974
(“ERISA”), as amended from time to time. The Company will pay the benefits from
its general assets.

 

The Company and the Executive agree as provided herein.

 

Article 1

Definitions

 

Whenever used in this Agreement, the following words and phrases shall have the
meanings specified:

 

1.1 “Accrual Balance” means the liability that should be accrued by the Company,
under Generally Accepted Accounting Principles (“GAAP”), for the Company’s
obligation to the Executive under this Agreement, by applying Accounting
Principles Board Opinion Number 12 (“APB 12”) as amended by Statement of
Financial Accounting Standards Number 106 (“FAS 106”) and the Discount Rate. Any
one of a variety of amortization methods may be used to determine the Accrual
Balance. However, once chosen by the Company at its sole discretion the method
must be consistently applied. The Accrual Balance shall be reported by the
Company to the Executive on Schedule A.

 

1.2 “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 4.

 

1.3 “Beneficiary Designation Form” means the form provided time to time by the
Plan Administrator that the Executive completes, signs and returns to the Plan
Administrator to designate one or more Beneficiaries.

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GREER STATE BANK

Salary Continuation Agreement

 

1.4 “Board” or “Board of Directors” means the Board of Directors of the Company.

 

1.5 “Change in Control” means

 

  (i) the acquisition, directly or indirectly, (including beneficial ownership)
by any “person” as this term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended within any twelve (12) consecutive
month period of the Corporation’s or Company’s issued and outstanding common
stock representing an aggregate of fifty percent (50%) or more of the
Corporation’s or Company’s common stock; or

 

  (ii) consummation of merger, sale, acquisition, or liquidation of all, or
substantially all, of the Corporation’s or the Company’s assets or outstanding
stock; or

 

  (iii) the occurrence of any other event or circumstance which is not covered
by 1.5(i) or 1.5(ii) above, which the Board determines affects the Corporation’s
or Company’s control and, to implement the purposes of this Agreement, adopts a
resolution that the event or circumstance constitutes a Change in Control for
the purposes of this Agreement.

 

  (iv) Notwithstanding any other provisions in this Agreement, “Change in
Control” shall not be construed to mean the formation of a bank holding company
or other entity approved in advance by the Company’s Board of Directors or any
changes in ownership of the Company’s assets or stock as the result of the
formation of such an entity.

 

1.6 “Code” means the Internal Revenue Code of 1986, as amended.

 

1.7 “Corporation” means Greer Bancshares Incorporated.

 

1.8 “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.

 

1.9 “Discount Rate” means the rate used by the Plan Administrator for
determining the Accrual Balance. The initial Discount Rate is six and
one-quarter percent (6.25%). However, the Plan Administrator, in its sole
discretion, may adjust the Discount Rate to maintain the rate within reasonable
standards according to GAAP.

 

1.10  “Early Termination” means the Executive’s Termination of Employment before
Normal Retirement Age for reasons other than death, Disability, Termination for
Cause, or following a Change of Control.

 

1.11  “Early Termination Date” means the month, day and year in which Early
Termination occurs.

 

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GREER STATE BANK

Salary Continuation Agreement

 

1.12  “Effective Date” means May 1, 2005.

 

1.13  “Normal Retirement Age” means the Executive’s sixty-fifth (65th) birthday.

 

1.14  “Normal Retirement Date” means the later of the Normal Retirement Age or
Termination of Employment.

 

1.15  “Plan Administrator” means the Company.

 

1.16  “Plan Year” means a twelve-month period commencing on November 1 and
ending on October 31 of each year. The initial Plan Year shall commence on the
Effective Date of this Agreement.

 

1.17  “Termination for Cause” has that meaning set forth in Article 5.

 

1.18  “Termination of Employment” means Executive ceasing to be employed by the
Company for any reason whatsoever other than by reason of a leave of absence
approved by the Board.

 

1.19  “Years of Service” means the twelve consecutive month period beginning on
Executive’s date of hire and any twelve (12) month anniversary thereof, during
the entirety of which time the Executive is an employee of the Company. Service
with a subsidiary or other entity controlled by the Company before the time such
entity became a subsidiary or under such control shall not be considered
“credited service” unless the Plan Administrator specifically agrees to credit
such service. In addition, the Plan Administrator in its discretion may also
grant additional Years of Service in such circumstances where it deems such
additional service appropriate.

 

Article 2

Benefits During Lifetime

 

2.1 Normal Retirement Benefit. Upon Termination of Employment on or after the
Normal Retirement Age for reasons other than death, the Company shall pay to the
Executive the benefit described in this Section 2.1 in lieu of any other benefit
under this Agreement.

 

  2.1.1  Amount of Benefit. The annual benefit under this Section 2.1 is Fifty
Thousand Dollars ($50,000).

 

  2.1.2  Payment of Benefit. The Company shall pay the annual benefit to the
Executive in twelve (12) equal consecutive monthly installments commencing on
the first day of the month following the Executive’s Normal Retirement Date. The
annual benefit shall be paid to the Executive for fifteen (15) years.

 

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Salary Continuation Agreement

 

2.2 Early Termination Benefit. Upon Early Termination, the Company shall pay to
the Executive the benefit described in this Section 2.2 in lieu of any other
benefit under this Agreement.

 

  2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the Early
Termination Benefit set forth on Schedule A for the Plan Year during which the
Early Termination Date occurs. This benefit is determined by vesting the
Executive in ten percent (10%) of the Accrual Balance for the first Plan Year,
and an additional ten percent (10%) of said amount for each succeeding Plan Year
thereafter until the Executive becomes one hundred percent (100%) vested in the
Accrual Balance.

 

  2.2.2 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 commencing with the first day of the month following Normal
Retirement Age.

 

2.3 Disability Benefit. Upon Termination of Employment due to Disability prior
to Normal Retirement Age, the Company shall pay to the Executive the benefit
described in this Section 2.3 in lieu of any other benefit under this Agreement.

 

  2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the Disability
Benefit set forth on Schedule A for the Plan Year during which the Termination
of Employment occurs. This benefit is determined by vesting the Executive in one
hundred percent (100%) of the Accrual Balance.

 

  2.3.2 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 commencing with the first day of the month following the
Executive’s Termination of Employment.

 

2.4 Change of Control Benefit. Upon a Change of Control followed by the
Executive’s Termination of Employment, the Company shall pay to the Executive
the benefit described in this Section 2.4 in lieu of any other benefit under
this Agreement.

 

  2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the Change of
Control Benefit set forth on Schedule A for the Plan Year during which the
Termination of Employment occurs. This benefit is determined by vesting the
Executive in one hundred percent (100%) of the Normal Retirement Benefit
described in Section 2.1.

 

  2.4.2 Payment of Benefit. The Company shall pay the benefit to the Executive
in a lump sum present value payment based on the Discount Rate within sixty (60)
days following Termination of Employment.

 

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GREER STATE BANK

Salary Continuation Agreement

 

Article 3

Death Benefits

 

3.1 Death During Active Service. If the Executive dies while employed by the
Company, the Company shall pay to the Executive’s Beneficiary the benefit
described in this Section 3.1. This benefit shall be paid in lieu of all other
benefits under this Agreement.

 

  3.1.1 Amount of Benefit. The benefit under this Section 3.1 is the
Pre-Retirement Death Benefit set forth on Schedule A for the Plan Year during
which death occurs.

 

  3.1.1.1  For the first ten (10) Years of Service, this benefit is based upon
one hundred percent (100%) of the Accrual Balance.

 

  3.1.1.2  After the Executive has completed ten (10) Years of Service, this
benefit is based upon one hundred percent (100%) of the Normal Retirement
Benefit described in Section 2.1.

 

  3.1.2 Payment of Benefit. The Company shall pay the benefit to the Beneficiary
over fifteen (15) years in one hundred eighty (180) equal consecutive monthly
installments commencing within thirty (30) days following the date of the
Executive’s death.

 

3.2 Death During Payment of a Lifetime Benefit. If the Executive dies after any
benefit 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.

 

3.3 Death After Termination of Employment But Prior to Commencement of Benefit
Payments. If the Executive dies after Termination of Employment, but prior to
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 thirty (30) days
following the date of the Executive’s death.

 

Article 4

Beneficiaries

 

4.1 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 as or different from the beneficiary designation under
any other benefit plan of the Company in which the Executive participates.

 

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Salary Continuation Agreement

 

4.2 Beneficiary Designation: Change. The Executive shall designate a Beneficiary
by completing and signing the Beneficiary Designation Form, and delivering it to
the Plan Administrator or its designated agent. The Executive’s Beneficiary
designation shall be deemed automatically revoked if the Beneficiary predeceases
the Executive or if the Executive names a spouse as Beneficiary and the marriage
is subsequently dissolved. The Executive shall have the right to change a
Beneficiary by completing, signing and otherwise complying with the terms of the
Beneficiary Designation Form and the Plan Administrator’s rules and procedures,
as in effect from time to time. Upon the acceptance by the Plan Administrator of
a new Beneficiary Designation Form, all Beneficiary designations previously
filed shall be cancelled. The Plan Administrator shall be entitled to rely on
the last Beneficiary Designation Form filed by the Executive and accepted by the
Plan Administrator prior to the Executive’s death.

 

4.3 Acknowledgment. No designation or change in designation of a Beneficiary
shall be effective until received, accepted and acknowledged in writing by the
Plan Administrator or its designated agent.

 

4.4 No Beneficiary Designation. If the Executive dies without a valid
beneficiary designation, or if all designated Beneficiaries predecease the
Executive, then the Executive’s spouse shall be the designated Beneficiary. If
the Executive has no surviving spouse, the benefits shall be made to the
personal representative of the Executive’s estate or its assignee.

 

4.5 Facility of Payment. If the Plan Administrator determines in its discretion
that a benefit is to be paid to a minor, to a person declared incompetent, or to
a person incapable of handling the disposition of that person’s property, the
Plan Administrator may direct payment of such benefit to the guardian, legal
representative or person having the care or custody of such minor, incompetent
person or incapable person. The Plan Administrator may require proof of
incompetence, minority or guardianship as it may deem appropriate prior to
distribution of the benefit. Any payment of a benefit shall be a payment for the
account of the Executive and the Executive’s Beneficiary, as the case may be,
and shall be a complete discharge of any liability under the Agreement for such
payment amount.

 

Article 5

General Limitations

 

5.1 Termination for Cause. Notwithstanding any provision of this Agreement to
the contrary, the Company shall not pay any benefit under this Agreement, and
the Executive shall irrevocably forfeit all benefits under this Agreement, if
the Company terminates the Executive’s employment for:

 

  (a) Gross negligence or gross neglect of duties prior to a Change in Control;

 

  (b) Conviction of a felony; or

 

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GREER STATE BANK

Salary Continuation Agreement

 

  (c) Fraud, disloyalty, or willful violation of any law or material Company
policy in connection with the Executive’s employment.

 

5.2 Forfeiture Provision. While Executive is employed by the Company and during
the period of time the Executive is receiving any benefit payments pursuant to
this Agreement, the Executive will not, for himself or on behalf of, or in
conjunction with any other person or persons, company, partnership, limited
liability company, proprietorship, trust company, bank, financial services
institution, or other entity, directly or indirectly, own, manage, operate,
control, be employed by, consult with, participate in, or be connected in any
manner with the ownership, employment, management, operation, consulting or
control of any financial services institution that competes with the Company
within Greenville County, South Carolina, Spartanburg County, South Carolina, or
any other market served by the Company at the time payment of benefits commence.
In the event of any actual breach by the Executive of the provisions of this
Section 5.2, all payments under this Agreement payable to the Executive shall
irrevocably forfeit and terminate and no further amount shall be due or payable
to the Executive pursuant to this Agreement. The Executive specifically
acknowledges that the restrictions set forth above are reasonable and bear a
valid connection with the business operations of the Company, and specifically
admits that Executive is capable of obtaining suitable employment not in
competition with the Company. If any one of the restrictions contained herein
shall for any reason be held to be excessively broad as to duration or
geographical area, it shall be deemed amended by limiting and reducing it so as
to be valid and enforceable to the extent compatible with applicable state law
as it shall then appear. Executive acknowledges that the Company would not have
entered into this Agreement without the provision Section 5.2 contained herein.
This Section 5.2 shall not prohibit the Executive from owning stock in any
publicly traded company provided the Executive’s stock ownership is five percent
(5%) or less of the issued and outstanding stock of such publicly traded company
and the Executive has no corporate responsibility other than the Executive’s
rights as a stockholder.

 

5.3 Excess Parachute Payment. Notwithstanding anything in this Agreement to the
contrary, in the event that the benefit payable to Executive pursuant to this
Agreement should cause a “parachute payment”, as defined in Code Section
280G(b)(2) of the Code, then such benefit shall be reduced One Dollar ($1.00) at
a time until the payment will not constitute a parachute payment. In the event
the benefit Executive receives under this Agreement should be incorrectly
calculated so that such amount constitutes a parachute payment, then Executive
will promptly refund to Company the excess amount. Excess amount shall mean the
amount in excess of Executive’s base amount, as defined in Code Section
280G(b)(3), multiplied by 2.999.

 

5.4 Suicide or Misstatement. The Company shall not pay any benefit under this
Agreement if the Executive commits suicide within two years after the Effective
Date. In addition, the Company shall not pay any benefit under this Agreement if
the Executive has made any material misstatement of fact on any application for
life insurance owned by the Company on the Executive’s life.

 

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GREER STATE BANK

Salary Continuation Agreement

 

Article 6

Claims and Review Procedures

 

6.1 For all claims other than Disability benefits:

 

  6.1.1 Claims Procedure. Any individual (“Claimant”) who has not received
benefits under this Agreement that he or she believes should be paid shall make
a claim for such benefits as follows:

 

  6.1.1.1  Initiation – Written Claim. The Claimant initiates a claim by
submitting to the Company a written claim for the benefits.

 

  6.1.1.2  Timing of Company Response. The Company shall respond to such
Claimant within 90 days after receiving the claim. If the Company determines
that special circumstances require additional time for processing the claim, the
Company can extend the response period by an additional 90 days by notifying the
Claimant in writing, prior to 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 Company expects to render its
decision.

 

  6.1.1.3  Notice of Decision. If the Company denies part or all of the claim,
the Company shall notify the Claimant in writing of such denial. The Company
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 this 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) following an adverse benefit determination on review.

 

  6.1.2  Review Procedure. If the Company denies part or all of the claim, the
Claimant shall have the opportunity for a full and fair review by the Company of
the denial, as follows:

 

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GREER STATE BANK

Salary Continuation Agreement

 

  6.1.2.1  Initiation – Written Request. To initiate the review, the Claimant,
within 60 days after receiving the Company’s notice of denial, must file with
the Company a written request for review.

 

  6.1.2.2  Additional Submissions – Information Access. The Claimant shall then
have the opportunity to submit written comments, documents, records and other
information relating to the claim. The Company shall also provide the Claimant,
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.

 

  6.1.2.3  Considerations on Review. In considering the review, the Company
shall take into account all materials and information the Claimant submits
relating to the claim, without regard to whether such information was submitted
or considered in the initial benefit determination.

 

  6.1.2.4  Timing of Company Response. The Company shall respond in writing to
such Claimant within 60 days after receiving the request for review. If the
Company determines that special circumstances require additional time for
processing the claim, the Company can extend the response period by an
additional 60 days by notifying the Claimant in writing, prior to 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
Company expects to render its decision.

 

  6.1.2.5  Notice of Decision. The Company shall notify the Claimant in writing
of its decision on review. The Company 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 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).

 

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GREER STATE BANK

Salary Continuation Agreement

 

6.2 For Disability claims:

 

  6.2.1 Claims Procedures. Any individual (“Claimant”) who has not received
benefits under this Agreement that he or she believes should be paid shall make
a claim for such benefits as follows:

 

  6.2.1.1  Initiation – Written Claim. The Claimant initiates a claim by
submitting to the Company a written claim for the benefits.

 

  6.2.1.2  Timing of Company Response. The Company shall notify the Claimant in
writing or electronically of any adverse determination as set out in this
Section.

 

  6.2.1.3  Notice of Decision. If the Company denies part or all of the claim,
the Company shall notify the Claimant in writing of such denial. The Company
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,

 

  (e) A statement of the Claimant’s right to bring a civil action under ERISA
Section 502(a) following an adverse benefit determination on review,

 

  (f) [See §2560.503-1(g)(v)] Any internal rule, guideline, protocol, or other
similar criterion relied upon in making the adverse determination, or a
statement that such a rule, guideline, protocol, or other similar criterion was
relied upon in making the adverse determination and that the Claimant can
request and receive free of charge a copy of such rule, guideline, protocol or
other criterion from the Company, and

 

  (g) If the adverse benefit determination is based on a medical necessity or
experimental treatment or similar exclusion or limit, either an explanation of
the scientific or clinical judgment for the determination, applying the terms of
this Agreement to the Claimant’s medical circumstances, or a statement that such
explanation will be provided free of charge upon request.

 

  6.2.1.4 

Timing of Notice of Denial/Extensions. The Company shall notify the Claimant of
denial of benefits in writing or electronically not later than

 

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Salary Continuation Agreement

 

 

45 days after receipt of the claim by the Company. The Company may elect to
extend notification by two 30-day periods subject to the following requirements:

 

  (a) For the first 30-day extension, the Company shall notify the Claimant (1)
of the necessity of the extension and the factors beyond the Company’s control
requiring an extension; (2) prior to the end of the initial 45-day period; and
(3) of the date by which the Company expects to render a decision.

 

  (b) If the Company determines that a second 30-day extension is necessary
based on factors beyond the Company’s control, the Company shall follow the same
procedure in (a) above, with the exception that the notification must be
provided to the Claimant before the end of the first 30-day extension period.

 

  (c) For any extension provided under this section, the Notice of Extension
shall specifically explain the standards upon which entitlement to a benefit is
based, the unresolved issues that prevent a decision on the claim, and the
additional information needed to resolve those issues. The Claimant shall be
afforded 45 days within which to provide the specified information.

 

  6.2.2  Review Procedures – Denial of Benefits. If the Company denies part or
all of the claim, the Claimant shall have the opportunity for a full and fair
review by the Company of the denial, as follows:

 

  6.2.2.1  Initiation of Appeal. Within 180 days following notice of denial of
benefits, the Claimant shall initiate an appeal by submitting a written notice
of appeal to Company.

 

  6.2.2.2  Submissions on Appeal – Information Access. The Claimant shall be
allowed to provide written comments, documents, records, and other information
relating to the claim for benefits. The Company shall provide to the Claimant,
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.

 

  6.2.2.3  Additional Company Responsibilities on Appeal. On appeal, the Company
shall:

 

  (a) [See §2560.503-1(h)(3)(i)-(v)] Take into account all materials and
information the Claimant submits relating to the claim, without regard to
whether such information was submitted or considered in the initial benefit
determination;

 

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Salary Continuation Agreement

 

  (b) Provide for a review that does not afford deference to the initial adverse
benefit determination and that is conducted by an appropriate named fiduciary of
the Company who is neither the individual who made the adverse benefit
determination that is the subject of the appeal, nor the subordinate of such
individual;

 

  (c) In deciding an appeal of any adverse benefit determination that is based
in whole or in part on a medical judgment, including determinations with regard
to whether a particular treatment, drug, or other item is experimental,
investigational, or not medically necessary or appropriate, consult with a
health care professional who has appropriate training and experience in the
field of medicine involved in the medical judgment;

 

  (d) Identify medical or vocational experts whose advice was obtained on behalf
of the Company in connection with a Claimant’s adverse benefit determination,
without regard to whether the advice was relied upon in making the benefit
determination; and

 

  (e) Ensure that the health care professional engaged for purposes of a
consultation under subsection (c) above shall be an individual who was neither
an individual who was consulted in connection with the adverse benefit
determination that is the subject of the appeal, nor the subordinate of any such
individual.

 

  6.2.2.4  Timing of Notification of Benefit Denial – Appeal Denial. The Company
shall notify the Claimant not later than 45 days after receipt of the Claimant’s
request for review by the Company, unless the Company determines that special
circumstances require an extension of time for processing the claim. If the
Company determines that an extension is required, written notice of such shall
be furnished to the Claimant prior to the termination of the initial 45-day
period, and such extension shall not exceed 45 days. The Company shall indicate
the special circumstances requiring an extension of time and the date by which
the Company expects to render the determination on review.

 

  6.2.2.5  Content of Notification of Benefit Denial. The Company shall provide
the Claimant with a notice calculated to be understood by the Claimant, which
shall contain:

 

  (a) The specific reason or reasons for the adverse determination;

 

  (b) Reference to the specific plan provisions on which the benefit
determination 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 relevant information (as defined in applicable ERISA regulations);

 

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Salary Continuation Agreement

 

  (d) A statement of the Claimant’s right to bring an action under ERISA Section
502(a);

 

  (e) [See §2560.503-1(j)(5)] Any internal rule, guideline, protocol, or other
similar criterion relied upon in making the adverse determination, or a
statement that such a rule, guideline, protocol, or other similar criterion was
relied upon in making the adverse determination and that the Claimant can
request and receive free of charge a copy of such rule, guideline, protocol or
other criterion from the Company;

 

  (f) If the adverse benefit determination is based on a medical necessity or
experimental treatment or similar exclusion or limit, either an explanation of
the scientific or clinical judgment for the determination, applying the terms of
this Agreement to the Claimant’s medical circumstances, or a statement that such
explanation will be provided free of charge upon request; and

 

  (g) The following statement: “You and your Company may have other voluntary
alternative dispute resolution options such as mediation. One way to find out
what may be available is to contact your local U.S. Department of Labor Office
and your state insurance regulatory agency.”

 

Article 7

Amendments and Termination

 

This Agreement may be amended or terminated by a written agreement signed by the
Company and the Executive. Additionally, the Company may also unilaterally amend
this Agreement to conform with written directives to the Company from its
banking regulators or to otherwise comply with federal and state laws and
regulations. If the Company unilaterally amends the agreement, the Company shall
provide a copy of the amendment to the Executive. If the Board determines in
good faith that the Executive is no longer a member of a select group of
management or highly compensated employees, as that phrase applies to ERISA, for
reasons other than death, Disability or retirement the Company may terminate
this Agreement and pay benefits to the Executive as follows:

 

  7.1.1  Termination of Agreement Prior to a Change in Control. Upon termination
of this Agreement prior to a Change in Control, the Company shall distribute to
the Executive the Early Termination benefits described in Section 2.2 as if
Early Termination occurred on the date of such termination, regardless of
whether Early Termination actually occurs. Such amount shall be distributed to
the Executive or his or her Beneficiary in a lump sum within sixty (60) days
following Termination of Employment.

 

  7.1.2 

Termination of Agreement Following a Change in Control. Upon termination of this
Agreement following a Change in Control, the Company shall distribute to the
Executive the Change in Control benefits described in Section 2.4. Such

 

12

--------------------------------------------------------------------------------

GREER STATE BANK

Salary Continuation Agreement

 

 

amount shall be distributed to the Executive or his or her Beneficiary in a lump
sum within sixty (60) days following Termination of Employment.

 

Article 8

Administration of Agreement

 

8.1 Plan Administrator Duties. This Agreement shall be administered by a Plan
Administrator. The Plan Administrator shall also have the discretion and
authority to (i) make, amend, interpret and enforce all appropriate rules and
regulations for the administration of this Agreement and (ii) decide or resolve
any and all questions including interpretations of this Agreement, as may arise
in connection with the Agreement.

 

8.2 Agents. In the administration of this Agreement, the Plan 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 Company.

 

8.3 Binding Effect of Decisions. The decision or action of the Plan
Administrator with respect to any question arising out of or in connection with
the administration, interpretation and application of the Agreement and the
rules and regulations promulgated hereunder shall be final and conclusive and
binding upon all persons having any interest in the Agreement. No Executive or
Beneficiary shall be deemed to have any right, vested or nonvested, regarding
the continued use of any previously adopted assumptions, including but not
limited to the Discount Rate.

 

8.4 Indemnity of Plan Administrator. The Company shall indemnify and hold
harmless the members of the Plan Administrator and the Board 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 Plan Administrator or any of its members or the Board.

 

8.5 Company Information. To enable the Plan Administrator to perform its
functions, the Company shall supply full and timely information to the Plan
Administrator on all matters relating to the date and circumstances of the
retirement, Disability, death, or Termination of Employment of the Executive,
and such other pertinent information as the Plan Administrator may reasonably
require.

 

8.6 Annual Statement. The Plan Administrator shall provide to the Executive,
within 120 days after the end of each Plan Year, a statement setting forth the
benefits payable under this Agreement.

 

13

--------------------------------------------------------------------------------

GREER STATE BANK

Salary Continuation Agreement

 

Article 9

Miscellaneous

 

9.1 Binding Effect. This Agreement shall bind the Executive and the Company, and
their beneficiaries, survivors, successors, personal representatives, and
transferees.

 

9.2 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
Company, nor does it interfere with the Company’s right to discharge the
Executive. It also does not require the Executive to remain an employee nor
interfere with the Executive’s right to terminate employment at any time.

 

9.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.

 

9.4 Tax Withholding. The Company shall withhold any taxes that, in its
reasonable judgment, are required to be withheld from the benefits provided
under this Agreement. The Executive acknowledges that the Company’s sole
liability regarding taxes is to forward any amounts withheld to the appropriate
taxing authority(ies).

 

9.5 Governing Law. The Agreement and all rights hereunder shall be governed by
the laws of the State of South Carolina, except to the extent preempted by the
laws of the United States of America.

 

9.6 Unfunded Arrangement. The Executive and Beneficiary are general unsecured
creditors of the Company for the payment of benefits under this Agreement. The
benefits represent the mere promise by the Company to pay such benefits. The
rights to benefits are not subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors. Any insurance on the Executive’s life is a general asset of the
Company to which the Executive and Beneficiary have no preferred or secured
claim; provided, however, that the Company is under no obligation to purchase
any life insurance on the Executive by executing this Agreement.

 

9.7 Reorganization. The Company or Corporation shall not merge or consolidate
into or with another company, or reorganize, or sell substantially all of its
assets to another company, firm, or person unless such succeeding or continuing
company, firm, or person agrees to assume and discharge the obligations of the
Company under this Agreement. Upon the occurrence of such event, the term
“Company” as used in this Agreement shall be deemed to refer to the successor or
survivor company.

 

9.8 Entire Agreement. This Agreement constitutes the entire agreement between
the Company and the Executive as to the subject matter hereof. No rights are
granted to the Executive by virtue of this Agreement other than those
specifically set forth herein.

 

9.9 Interpretation. Wherever the fulfillment of the intent and purpose of this
Agreement requires, and the context will permit, the use of the masculine gender
includes the feminine and use of the singular includes the plural.

 

14

--------------------------------------------------------------------------------

GREER STATE BANK

Salary Continuation Agreement

 

9.10 Alternative Action. In the event it shall become impossible for the Company
or the Plan Administrator to perform any act required by this Agreement, the
Company or Plan Administrator may in its discretion perform such alternative act
as most nearly carries out the intent and purpose of this Agreement and is in
the best interests of the Company.

 

9.11 Headings. Article and section headings are for convenient reference only
and shall not control or affect the meaning or construction of any of its
provisions.

 

9.12 Validity. In case any provision of this Agreement shall be illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Agreement shall be construed and enforced as if
such illegal and invalid provision has never been inserted herein.

 

9.13 Notice. Any notice or filing required or permitted to be given to the
Company or Plan Administrator under this Agreement shall be sufficient if in
writing and hand-delivered, or sent by registered or certified mail, to the
address below:

 

1111 West Poinsett Street

Greer, SC 29652

 

Such notice shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for
registration or certification. Any notice or filing required or permitted to be
given to the Executive under this Agreement shall be sufficient if in writing
and hand-delivered, or sent by mail, to the last known address of the Executive.

 

9.14 Named Fiduciary. The Company shall be the named fiduciary and Plan
Administrator under this Agreement. It may delegate to others certain aspects of
the management and operational responsibilities including the employment of
advisors and the delegation of ministerial duties to qualified individuals.

 

IN WITNESS WHEREOF, the Executive and a duly authorized representative of the
Company have signed this Agreement.

 

EXECUTIVE:       COMPANY:         GREER STATE BANK /s/ Kenneth M. Harper      
By  

/s/ R. Dennis Hennett

KENNETH M. HARPER                     Title  

Chief Executive Officer

 

15

--------------------------------------------------------------------------------

GREER STATE BANK

Salary Continuation Agreement

BENEFICIARY DESIGNATION FORM

 

{    }  New Designation

 

{    }  Change in Designation

 

I, KENNETH M. HARPER, designate the following as beneficiary of benefits under
the Agreement payable following my death:

 

Primary:

___________________________________________________________

   _____ %

 

___________________________________________________________

   _____ %

Contingent:

___________________________________________________________

   _____ %

 

___________________________________________________________

   _____ %

 

Notes:

 

  •   Please PRINT CLEARLY or TYPE the names of the beneficiaries.

 

  •   To name a trust as beneficiary, please provide the name of the trustee(s)
and the exact name and date of the trust agreement.

 

  •   To name your estate as beneficiary, please write “Estate of _[your
name]_”.

 

  •   Be aware that none of the contingent beneficiaries will receive anything
unless ALL of the primary beneficiaries predecease you.

 

I understand that I may change these beneficiary designations by delivering a
new written designation to the Plan Administrator, which shall be effective only
upon receipt and acknowledgment by the Plan Administrator prior to my death. I
further understand that the designations will be automatically revoked if the
beneficiary predeceases me, or, if I have named my spouse as beneficiary and our
marriage is subsequently dissolved.

 

Name:                 Signature:              

Date: ____________

                 

 

Received by the Plan Administrator this              day of
                                             , 20    

 

By:                 Title:                                  

--------------------------------------------------------------------------------

 

CLARKCONSULTINGTM    Salary Continuation Plan    Plan Year Reporting
Hypothetical Termination Benefits Schedule

 

Kenneth M. Harper

    Birth Date: 6/1/1964
    Plan Anniversary Date: 11/1/2005
    Normal Retirement: 6/1/2029, Age 65
    Normal Retirement Payment: Monthly for 15 years

  

Early Termination Benefit

Annual Benefit Payable in
Monthly Installments at
Normal Retirement Date for 15
Years

--------------------------------------------------------------------------------

  

Disability Benefit

Annual Benefit Payable in
Monthly Installments at
Normal Retirement Date for 15
Years

--------------------------------------------------------------------------------

  

Change of Control Benefit

Lump Sum Payable at
Termination

--------------------------------------------------------------------------------

  

Pre-Retirement
Death

Annual Benefit
Payable in Monthly
Installments

--------------------------------------------------------------------------------

Period
Ending

--------------------------------------------------------------------------------

  

Discount
Rate

(1)

--------------------------------------------------------------------------------

   

Benefit
Level

(2)

--------------------------------------------------------------------------------

  

Accrual
Balance

(3)

--------------------------------------------------------------------------------

   Vesting
(4)

--------------------------------------------------------------------------------

    Based On
Accrual
(5)

--------------------------------------------------------------------------------

   Vesting
(6)

--------------------------------------------------------------------------------

    Based On
Accrual
(7)

--------------------------------------------------------------------------------

   Vesting
(8)

--------------------------------------------------------------------------------

    Based On
Benefit
(9)

--------------------------------------------------------------------------------

   Based On
Custom 2
(10)

--------------------------------------------------------------------------------

Oct 20051

   6.25 %   50,000    4,405    10 %   197    100 %   1,971    100 %   111,718   
451

Oct 2006

   6.25 %   50,000    13,638    20 %   1,147    100 %   5,735    100 %   118,904
   1,396

Oct 2007

   6.25 %   50,000    23,464    30 %   2,781    100 %   9,271    100 %   126,552
   2,402

Oct 2008

   6.25 %   50,000    33,923    40 %   5,037    100 %   12,593    100 %  
134,692    3,472

Oct 2009

   6.25 %   50,000    45,054    50 %   7,857    100 %   15,714    100 %  
143,356    4,612

Oct 2010

   6.25 %   50,000    56,901    60 %   11,188    100 %   18,647    100 %  
152,577    5,824

Oct 2011

   6.25 %   50,000    69,510    70 %   14,982    100 %   21,402    100 %  
162,391    7,115

Oct 2012

   6.25 %   50,000    82,931    80 %   19,193    100 %   23,991    100 %  
172,836    8,489

Oct 2013

   6.25 %   50,000    97,214    90 %   23,781    100 %   26,424    100 %  
183,953    9,951

Oct 2014

   6.25 %   50,000    112,417    100 %   28,709    100 %   28,709    100 %  
195,785    11,507

Oct 2015

   6.25 %   50,000    128,597    100 %   30,857    100 %   30,857    100 %  
208,378    50,000

Oct 2016

   6.25 %   50,000    145,818    100 %   32,874    100 %   32,874    100 %  
221,782    50,000

Oct 2017

   6.25 %   50,000    164,146    100 %   34,770    100 %   34,770    100 %  
236,047    50,000

Oct 2018

   6.25 %   50,000    183,654    100 %   36,551    100 %   36,551    100 %  
251,230    50,000

Oct 2019

   6.25 %   50,000    204,416    100 %   38,224    100 %   38,224    100 %  
267,390    50,000

Oct 2020

   6.25 %   50,000    226,514    100 %   39,797    100 %   39,797    100 %  
284,589    50,000

Oct 2021

   6.25 %   50,000    250,033    100 %   41,274    100 %   41,274    100 %  
302,894    50,000

Oct 2022

   6.25 %   50,000    275,065    100 %   42,662    100 %   42,662    100 %  
322,376    50,000

Oct 2023

   6.25 %   50,000    301,707    100 %   43,966    100 %   43,966    100 %  
343,112    50,000

Oct 2024

   6.25 %   50,000    330,062    100 %   45,191    100 %   45,191    100 %  
365,182    50,000

Oct 2025

   6.25 %   50,000    360,242    100 %   46,343    100 %   46,343    100 %  
388,671    50,000

Oct 2026

   6.25 %   50,000    392,363    100 %   47,424    100 %   47,424    100 %  
413,671    50,000

Oct 2027

   6.25 %   50,000    426,549    100 %   48,441    100 %   48,441    100 %  
440,279    50,000

 

Salary Continuation Plan for Greer State Bank - Greer, SC   Securities offered
through Clark Securities, Inc., 450636 27699 209747 v5.36.52 06/27/2005:11
SCP-E, F NB   Member NASD & SIPC, Los Angeles, CA 90071, (213) 486-6300.

--------------------------------------------------------------------------------

CLARKCONSULTINGTM    Salary Continuation Plan    Plan Year Reporting
Hypothetical Termination Benefits Schedule

 

Kenneth M. Harper

    Birth Date: 6/1/1964
    Plan Anniversary Date: 11/1/2005
    Normal Retirement: 6/1/2029, Age 65
    Normal Retirement Payment: Monthly for 15 years

  

Early Termination Benefit

Annual Benefit Payable in
Monthly Installments at
Normal Retirement Date for 15
Years

--------------------------------------------------------------------------------

  

Disability Benefit

Annual Benefit Payable in
Monthly Installments at
Normal Retirement Date for 15
Years

--------------------------------------------------------------------------------

  

Change of Control Benefit

Lump Sum Payable at
Termination

--------------------------------------------------------------------------------

  

Pre-Retirement
Death

Annual Benefit
Payable in Monthly
Installments

--------------------------------------------------------------------------------

Period
Ending

--------------------------------------------------------------------------------

  

Discount
Rate

(1)

--------------------------------------------------------------------------------

   

Benefit
Level

(2)

--------------------------------------------------------------------------------

  

Accrual
Balance

(3)

--------------------------------------------------------------------------------

   Vesting
(4)

--------------------------------------------------------------------------------

    Based On
Accrual
(5)

--------------------------------------------------------------------------------

   Vesting
(6)

--------------------------------------------------------------------------------

    Based On
Accrual
(7)

--------------------------------------------------------------------------------

   Vesting
(8)

--------------------------------------------------------------------------------

    Based On
Benefit
(9)

--------------------------------------------------------------------------------

   Based On
Custom
(10)

--------------------------------------------------------------------------------

Oct 2028

   6.25 %   50,000    462,935    100 %   49,396    100 %   49,396    100 %  
468,599    50,000

Jun 2029

   6.25 %   50,000    488,483    100 %   50,000    100 %   50,000    100 %  
488,483    50,000

 

June 1, 2029 Retirement; July 1, 2029 First Payment Date

 

1 The first line reflects 6 months of data, May 2005 to October 2005.

 

2 The pre-retirement death benefit is equal to the accrual balance in plan years
1 through 10, this annual benefit is payable monthly for 180 months. In plan
year 11 the pre-retirement death benefit changes to equal the projected annual
benefit of $50,000, payable monthly for 15 years.

 

* The purpose of this hypothetical illustration is to show the participant’s
annual benefit based on various termination assumptions. Actual benefits are
based on the terms and provisions of the plan agreement executed between the
company and participant and may differ from those shown.

 

Salary Continuation Plan for Greer State Bank - Greer, SC   Securities offered
through Clark Securities, Inc., 450636 27699 209747 v5.36.52 06/27/2005:11
SCP-E, F NB   Member NASD & SIPC, Los Angeles, CA 90071, (213) 486-6300.