FIRST SOUTH BANK
SALARY CONTINUATION AGREEMENT
THIS SALARY CONTINUATION AGREEMENT (the "Agreement") is made this _____
day of ____________________, 1999, by and between FIRST SOUTH BANK, a state bank
with a principal office in Spartanburg, South Carolina (the "Company") and XXXXX
X. SLIDER (the "Executive").
INTRODUCTION
To encourage the Executive to remain an employee of the Company, the
Company is willing to provide salary continuation benefits to the Executive. The
Company will pay the benefits from its general assets.
AGREEMENT
Now, therefore, in consideration of the mutual covenants and agreements
herein, the Executive and the Company agree as follows:
Article 1
Definitions
1.1 Definitions. Whenever used in this Agreement, the following words and
phrases shall have the meanings specified:
1.1.1 "Accrual Balance" means the amount of death benefits payable to
the Executive pursuant to Section 3.1 of this Agreement and set forth in
the attached Schedule A.
1.1.2 "Board" or "Board of Directors" means the Board of Directors of
the Company.
1.1.3 "Change of Control" means
(i) the acquisition by any person, group of persons or entities of
the beneficial ownership or power to vote more than twenty (20%)
percent of the Company's outstanding stock, or
(ii) during any period of two (2) consecutive years, a change in the
majority of the Board unless the election of each new director
was approved by at least two-thirds of the directors then still
in office who were directors at the beginning of such two (2)
year period, or
(iii)a reorganization, merger, exchange of shares, combination or
consolidation of the Company with one or more other corporations
or other legal entities in which the Company is not surviving the
corporation, or a transfer of all or substantially all of the
assets of the Company to another person or entity.
(iv) Notwithstanding any other provision in this Agreement, "Change of
Control" shall not be construed to mean the formation of a bank
holding company or other entity approved in advance by the Board
or any changes in ownership of the Company's assets or stock as
the result of the formation of such an entity.
1.1.4 "Code" means the Internal Revenue Code of 1986, as amended.
References to a Code section shall be deemed to be that section as it now
exists and to any successor provision.
1.1.5 "Disability" means, if the Executive is covered by a Company
sponsored disability policy, total disability as defined in such policy
without regard to any waiting period. If the Executive is not covered by
such a policy, Disability means the Executive suffering a sickness,
accident or injury that, in the judgment of a physician appointed and paid
by the Company, prevents the Executive from performing substantially all of
the Executive's normal 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.
1.1.6 "Early Termination" means the Termination of Employment before
Normal Retirement Age for reasons other than death, Disability, Termination
for Cause or following a Change of Control.
1.1.7 "Early Termination Date" means the month, day and year in which
Early Termination occurs.
1.1.8 "Effective Date" means January 1, 1999.
1.1.9 "Normal Retirement Age" means the Executive's sixty-fifth (65th)
birthday.
1.1.10 "Normal Retirement Date" means the later of the Normal
Retirement Age or Termination of Employment.
1.1.11 "Plan Year" means a twelve-month period commencing on January
1st and ending on December 31st of each year. The first Plan Year shall
commence on the Effective Date of this Agreement.
1.1.12 "Termination for Cause" shall have the meaning set forth in
Section 5.2.
1.1.13 "Termination of Employment" means that the Executive ceases to
be employed by the Company for any reason whatsoever other than by reason
of a leave of absence that is approved by the Company. For purposes of this
Agreement, if there is a dispute over the employment status of the
Executive or the date of the Executive's Termination of Employment, the
Board shall have the sole and absolute right to decide the dispute.
Article 2
Lifetime Benefits
2.1. Normal Retirement Benefit. Upon termination of Employment on or after
the Normal Retirement Age for reasons other than the Executive's 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 for
the first Plan Year is forty-five thousand two hundred thirty ($45,230)
dollars as stated on the attached Schedule A. The annual benefit will be
increased two (2.0%) percent each Plan Year thereafter, until Termination
of Employment. The Board, in its sole discretion, may increase the annual
benefit under this Section 2.1.1 beyond the annual two (2.0%) percent
increase; however, any such increase shall require the restatement of
Schedule A.
2.1.2 Payment of Benefit. The Company shall pay the annual benefit to
the Executive in equal and consecutive monthly installments payable on the
first day of each month commencing with the month following the Executive's
Normal Retirement Date and continuing for two hundred fifteen (215)
additional months, for a total of two hundred sixteen (216) monthly
payments.
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 Annual Benefit amount set forth in Schedule A for the
Plan Year ending immediately prior to the Early Termination Date.
2.2.2 Payment of Benefit. The Company shall pay the annual benefit to
the Executive in equal and consecutive monthly installments payable on the
first day of each month commencing with the month following the Executive's
Normal Retirement Age and continuing for two hundred fifteen (215)
additional months, for a total of two hundred sixteen (216) monthly
payments.
2.3 Disability Benefit. If the Executive terminates 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 Annual Benefit amount set forth in Schedule A for the Plan Year
ending immediately prior to the date in which the Termination of Employment
occurs. However, any increase in the annual benefit under Section 2.1.1
would require the recalculation of the Disability benefit on Schedule A.
The Disability Annual Benefit amount is determined by calculating a fixed
annuity which is payable in one hundred seventy-nine (179) equal monthly
installments, crediting interest on the unpaid balance of the Accrual
Balance at an annual rate of seven and one-half (7.5%) percent, compounded
monthly.
2.3.2 Payment of Benefit. The Company shall pay the annual benefit
amount to the Executive in equal and consecutive monthly installments
payable on the first day of each month commencing with the month following
the Termination of Employment and continuing for two hundred fifteen (215)
additional months, for a total of two hundred sixteen (216) monthly
payments. Upon petition by the Executive, the Company, in its sole
discretion, may instead pay the benefit in an amount equal to the Accrual
Balance in a lump sum within sixty (60) days of Termination of Employment
in lieu of any other benefit under this Agreement.
2.4 Change of Control Benefit. Upon Termination of Employment following a
Change of Control, 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 annual benefit under this Section 2.4 is
the Change of Control Annual Benefit amount set forth on Schedule A for the
Plan Year in which Termination of Employment occurs.
2.4.2 Payment of Benefit. The Company shall pay the annual benefit
amount to the Executive in equal and consecutive monthly installments
payable on the first day of each month commencing with the month following
the Normal Retirement Date and continuing for two hundred fifteen (215)
additional months, for a total of two hundred sixteen (216) monthly
payments.
Article 3
Death Benefits
3.1 Death Benefits. If the Executive dies while employed by the Company and
prior to commencement of any benefits due under Article 2, 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 any other benefit under this Agreement.
3.1.1 Amount of Benefit. The benefit under this Section 3.1 is the
Accrual Balance set forth in Schedule A for the Plan Year ending
immediately prior to the Executive's death.
3.1.2 Payment of Benefit. The Company shall pay the benefit to the
Executive's beneficiary in a lump sum within sixty (60) days following the
Executive's death.
Article 4
Beneficiaries
4.1 Beneficiary Designations. The Executive shall designate a primary and
contingent beneficiary by filing a written designation with the Company. The
Executive may revoke or modify the designation at any time by filing a new
designation. However, designations will only be effective if signed by the
Executive and accepted by the Company during the Executive's lifetime. 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. If the Executive dies
without a valid beneficiary designation, all payments shall be made to the
Executive's surviving spouse, if any, and if none, to the Executive's surviving
descendants, per stirpes, and if no surviving spouse and descendants, to the
Executive's estate. If Executive dies and subsequently the beneficiary receiving
payments dies, then any remaining payments shall be paid pursuant to a written
beneficiary designation filed with the Company made by such beneficiary, or if
none to such beneficiary's estate.
4.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incapacitated, or to a person incapable of handling the disposition of
his or her property, the Company may pay such benefit to the guardian,
conservator, legal representative or person having the care or custody of such
minor, incapacitated person or incapable person. The Company may require proof
of incapacity, minority or guardianship as it may deem appropriate prior to
distribution of the benefit. Such distribution shall completely discharge the
Company from all liability with respect to such benefit.
Article 5
General Limitations
Notwithstanding any provision of this Agreement to the contrary,
Executive shall irrevocably forfeit and the Company shall not pay any benefit
under this Agreement if any of the events described in Section 5.1 - 5.3 below
occur:
5.1 Excess Parachute Payment. In the event that the benefit payable to the
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 the Executive receives under this
Agreement should be incorrectly calculated so that such amount constitutes a
parachute payment, then the Executive will promptly refund to Company the excess
amount. Excess amount shall mean the amount in excess of the Executive's base
amount, as defined in Code Section 280G(b)(3), multiplied by 2.999.
5.2 Termination for Cause. If the Company terminates the Executive's
employment for:
5.2.1 any willful act of misconduct or gross negligence, prior to a
Change of Control, which is materially injurious to the Company monetarily
or otherwise;
5.2.2 a criminal conviction of the Executive for any act involving the
business and affairs of the Company; or
5.2.3 a criminal conviction of the Executive for commission of a
felony, the circumstances of which substantially relate to the Executive's
position with the Company.
5.3 Suicide or Misstatement. If the Executive commits suicide within two
(2) years after the date of this Agreement, or if the Executive has made any
material misstatement of fact on any application for life insurance purchased by
the Company.
5.4 No Duplication of Benefits. Each of the benefits described in Articles
2 and 3 are intended to be separate benefits and mutually exclusive of the other
so that once benefit payments commence under one Section the Executive (or his
beneficiary, as the case may be) shall not thereafter receive payments or become
entitled to benefits under another Section.
Article 6
Claims and Review Procedure
6.1 Claims Procedure. The Company shall notify any person or entity that
makes a claim pursuant to this Agreement (the "Claimant") in writing, within
ninety (90) days of the Claimant's written application for benefits, of his or
her eligibility or noneligibility for benefits under the Agreement. If the
Company determines that the Claimant is not eligible for benefits or full
benefits, the notice shall set forth (1) the specific reasons for such denial,
(2) a specific reference to the provisions of the Agreement on which the denial
is based, (3) a description of any additional information or material necessary
for the Claimant to perfect his or her claim, and a description of why it is
needed, and (4) an explanation of the Agreement's claims review procedure and
other appropriate information as to the steps to be taken if the Claimant wishes
to have the claim reviewed. If the Company determines that there are special
circumstances requiring additional time to make a decision, the Company shall
notify the Claimant of the special circumstances and the date by which a
decision is expected to be made, and may extend the time for up to an additional
ninety (90) day period.
6.2 Review Procedure. If the Claimant is determined by the Company not to
be eligible for benefits, or if the Claimant believes that he or she is entitled
to greater or different benefits, the Claimant shall have the opportunity to
have such claim reviewed by the Company by filing a petition for review with the
Company within sixty (60) days after receipt of the notice issued by the
Company. Said petition shall state the specific reasons which the Claimant
believes entitle him or her to benefits or to greater or different benefits.
Within sixty (60) days after receipt by the Company of the petition, the Company
shall afford the Claimant (and counsel, if any) an opportunity to present his or
her position to the Company orally or in writing, and the Claimant (or counsel)
shall have the right to review the pertinent documents. The Company shall notify
the Claimant of its decision in writing within the sixty (60) day period,
stating specifically the basis of its decision, written in a manner calculated
to be understood by the Claimant and the specific provisions of the Agreement on
which the decision is based. If, because of the need for a hearing, the sixty
(60) day period is not sufficient, the decision may be deferred for up to
another sixty (60) day period at the election of the Company, but notice of this
deferral shall be given to the Claimant.
Article 7
Amendments and Termination
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Executive.
Article 8
Miscellaneous
8.1 Binding Effect. This Agreement shall bind the Executive and the
Company, and their heirs, beneficiaries, survivors, legal representatives,
personal representatives, assigns, successors, administrators and transferees.
8.2 No Guarantee of Employment. This Agreement is not an employment policy
or contract. This Agreement 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. This Agreement also does not require the Executive to
remain an employee nor interfere with the Executive's right to terminate
employment at any time. Nothing in this Agreement shall be construed as an
employment agreement, either express or implied.
8.3 Non-Transferability. No amounts payable under this Agreement shall be
transferable by the Executive. Further, the Executive may not sell, assign,
alienate, pledge or otherwise encumber any benefits under this Agreement.
8.4 Reorganization. The Company 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.
8.5 Tax Withholding. The Company shall withhold any taxes that are required
to be withheld from the benefits provided under this Agreement.
8.6 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of the State of South Carolina, except to the extend
preempted by the laws of the United States of America.
8.7 Unfunded Arrangement. The Executive and any beneficiary of the
Executive are general unsecured creditors of the Company for the payment of
benefits under this Agreement. This Agreement shall always be an unfunded
arrangement. 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, if any, is a
general asset of the Company to which the Executive and the Executive's
beneficiary have no preferred or secured claim. Title to and beneficial
ownership of any cash or assets Company may earmark to pay the Executive or his
beneficiary shall at all times remain with the Company.
8.8 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.
8.9 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
8.9.1 Interpreting the provisions of the Agreement;
8.9.2 Establishing and revising the method of accounting for the
Agreement;
8.9.3 Maintaining a record of benefit payments; and
8.9.4 Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
8.10 Named Fiduciary. For purposes of the Employee Retirement Income
Security Act of 1974, if applicable, the Company shall be the named fiduciary
and plan administrator under the Agreement. The named fiduciary may delegate to
others certain aspects of the management and operation responsibilities under
this Agreement including the employment of advisors and the delegation of
ministerial duties to qualified individuals.
8.11 No Trust Created. Nothing contained in this Agreement, and no action
taken pursuant to its provisions by either party hereto, shall create, nor be
construed to create, a trust of any kind or a fiduciary relationship between the
Company and the Executive, his designated beneficiary, any other beneficiary of
the Executive or any other person.
8.12 Date of Birth. The Executive hereby represents to the Company that his
date of birth is November 17, 1952.
IN WITNESS WHEREOF, the Executive and a duly authorized Company officer
have executed and sealed this Agreement as of the date first above written.
Witnesses: COMPANY:
By:------------------------------------------
Its:---------------------------------------
EXECUTIVE:
BENEFICIARY DESIGNATION
FIRST SOUTH BANK
SALARY CONTINUATION AGREEMENT
XXXXX X. SLIDER
I designate the following as beneficiary of any death benefits under this Salary
Continuation Agreement:
Primary:
Contingent:
Note: To name a trust as beneficiary, please provide the name of the trustee(s)
and the exact name and date of the trust agreement.
I understand that I may change these beneficiary designations by filing a new
written designation with the Company. 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.
Signature:
Date:
Accepted by the Company this day of , 1999.
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By:
Title:
