FIRST NATIONAL SOUTH
SALARY CONTINUATION AGREEMENT
THIS AGREEMENT is made this ____ day of , 1997, by and between FIRST
NATIONAL SOUTH, a national banking association located at 000 Xxxxx Xxxx Xxxxxx,
Xxxxxx, Xxxxx Xxxxxxxx (the "Bank") and Xxxxxxx X. Xxxx (the "Executive").
INTRODUCTION
To encourage the Executive to remain an employee of the Bank, the Bank
is willing to provide salary continuation benefits to the Executive. The Bank
will pay the benefits from its general assets.
AGREEMENT
The Executive and the Bank 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"Change of Control" means the transfer of more than 50% of
the Company's outstanding voting common stock or if the Company is
merged or consolidated with another corporation in an acquisition
transaction or the Company sells substantially all of the assets of
the Company, or the Bank which employs the Executive is merged or
consolidated with another bank which is not owned at least 50% by the
Company or its subsidiary or the Bank has a change of control in which
more than 50% of the stock of the Bank is acquired or the Bank sells
substantially all of its assets.
1.1.2 "Code" means the Internal Revenue Code of 1986, as amended.
1.1.3 "Company" means M&M Financial Corporation, a South Carolina
corporation, which owns 100% of the outstanding capital stock of the
Bank.
1.1.4 "Disability" means the Executive's inability to engage in
any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve (12) months.
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1.1.5 "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.
1.1.6 "Early Termination Date" means the month, day and year in
which Early Termination occurs.
1.1.7 "Normal Retirement Age" means the Executive's 65th
birthday.
1.1.8 "Normal Retirement Date" means the later of the Normal
Retirement Age or Termination of Employment.
1.1.9 "Plan Year" means a 12 month calendar year. The initial
Plan Year shall begin as of August 1, 1997.
1.1.10 "Termination for Cause" See Section 5.1(b).
1.1.11 "Termination of Employment" means that the Executive
ceases to be employed by the Bank for any reason whatsoever other than
by reason of a leave of absence which is approved by the Bank. 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 Bank 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 death, the Bank 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 $48,785, increased 3% of the amount of such benefit for the
preceding year, each year between the date of this Agreement and the
Executive's Normal Retirement Date.
2.1.2 Payment of Benefit. The Bank shall pay the annual benefit
to the Executive in 12 equal monthly installments payable on the first
day of each month commencing with the month following the Executive's
Normal Retirement Date and continuing for 227 additional months.
2.1.3 Benefit Increases. Commencing on the first anniversary of
the first benefit payment, and continuing on each subsequent
anniversary, the Bank's Board of Directors, in its sole discretion,
may increase the benefit.
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2.2 Early Termination Benefit. Upon Early Termination, the Bank 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 annual benefit under this Section
2.2 is the Early Termination Benefit Payable at 65 set forth in
Schedule A, for the Plan Year ending immediately prior to the Early
Termination Date.
2.2.2 Payment of Benefit. The Bank shall pay the annual benefit
to the Executive in 12 equal monthly installments payable on the first
day of each month commencing with the month following the Normal
Retirement Date and continuing for 227 additional months.
2.2.3 Benefit Increases. Benefit payments may be increased as
provided in Section 2.1.3.
2.3 Disability Benefit. If the Executive terminates employment due to
Disability prior to Normal Retirement Age, the Bank 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 annual benefit under this Section
2.3 is the Disability Benefit Payable Immediately on Termination of
Employment as set forth in Schedule A, for the Plan Year ending
immediately prior to the date in which Termination of Employment
occurs.
2.3.2 Payment of Benefit. The Bank shall pay the annual benefit
amount to the Executive in 12 equal monthly installments payable on
the first day of each month commencing with the month following the
Termination of Employment and continuing for 227 additional months.
2.3.3 Benefit Increases. Benefit payments may be increased as
provided in Section 2.1.3.
2.4 Change of Control Benefit. If the Executive is in the active
service of the Bank at the time of a Change of Control, the Bank 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 is the accrual account
balance at the Normal Retirement Age ($585,131) discounted to the date
of the Change of Control at 8% compounded monthly.
2.4.2 Payment of Benefit. The Bank shall pay the benefit to the
Executive in a lump sum within 60 days alter the date of the Change of
Control.
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Article 3
Death Benefits
3.1 Death During Active Service. If the Executive dies while in the
active service of the Bank, the Bank shall pay to the Executive's beneficiary
the benefit described in this Section 3.1. This benefit shall be paid in lieu of
the Lifetime Benefits of Article 2.
3.1.1 Amount of Benefit. The annual benefit under this Section
3.1 is the Normal Retirement Benefit amount described in Section
2.1.1, calculated as if the date of death was the Normal Retirement
Age.
3.1.2 Payment of Benefit. The Bank shall pay the annual benefit
to the beneficiary in 12 equal monthly installments payable on the
first day of each month commencing with the month following the
Executive's death and continuing for 227 additional months. 3.2 Death
During Benefit Period. If the Executive dies after the benefit
payments have commenced under this Agreement, the Bank shall pay the
benefits to the Executive's beneficiary at the same time and in the
same amounts as they would have been paid to the Executive for the
remainder of the nineteen year period from the commencement of
benefits.
Article 4
Beneficiaries
4.1 Beneficiary Designations. The Executive shall designate a
beneficiary by filing a written designation with the Bank. 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 Bank 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 children and the
descendants of any deceased child by right of representation, and if no children
or descendants survive, to the Executive's estate. If a beneficiary dies after
beginning to receive payments hereunder, then such payments shall continue to be
paid to the 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 Bank may pay such benefit to the
guardian, legal representative or person having the care or custody of such
minor, incapacitated person or incapable person. The Bank 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
Bank from all liability with respect to such benefit.
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Article 5
General Limitations
5.1 Notwithstanding any provision of this Agreement to the contrary,
the Bank shall not pay any benefit under this Agreement:
(a) To the extent the benefit would be an "excess parachute
payment" as that term is defined under Section 28OG of the Code; or
(b) If the Bank terminates the Executive's employment for
"cause," which shall include:
(i) Gross negligence or gross neglect of duties;
(ii) Commission of felony or of a misdemeanor involving
moral turpitude; or
(iii) Fraud, disloyalty, dishonesty or wilful violation of
any law or significant Bank policy or commission or omission of
any act committed in connection with the Executive's employment
and resulting in an adverse effect on the Bank.
5.2 Competition After Termination of Employment. No benefits shall be
payable if the Executive during a period of three (3) years following the
Executive's termination or retirement, without the prior written consent of the
Bank, engages in, becomes interested in, directly or indirectly, as a sole
proprietor, as a partner in a partnership, or as a substantial shareholder in a
corporation, or becomes associated with, in the capacity of employee, director,
officer, principal, agent, trustee or in any other capacity whatsoever, any
enterprise conducted in the trading area (a fifty (50) mile radius) of the
business of the Bank, which enterprise is, or may deemed to be, competitive with
any business carried on by the Bank as of the date of termination of the
Executive's employment or his retirement. This section shall not apply following
a Change of Control.
5.3 Suicide or Misstatement. No benefits shall be payable if the
Executive commits suicide within two 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 Bank.
Article 6
Claims and Review Procedures
6.1 Claims Procedure. The Bank shall notify any person or entity that
makes a claim against the Agreement (the "Claimant") in writing, within ninety
(90) days of his or her written application for benefits, of his or her
eligibility or noneligibility for benefits under the Agreement. If the Bank
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
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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
Bank determines that there are special circumstances requiring additional time
to make a decision, the Bank 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-day period.
6.2 Review Procedure. If the Claimant is determined by the Bank 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 Bank by filing a petition for review with the
Bank within sixty (60) days after receipt of the notice issued by the Bank. 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 alter receipt by the Bank of the petition, the Bank shall afford the
Claimant (and counsel, if any) an opportunity to present his or her position to
the Bank orally or in writing, and the Claimant (or counsel) shall have the
right to review the pertinent documents. The Bank shall notify the Claimant of
its decision in writing within the sixty-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-day period is not
sufficient, the decision may be deferred for up to another sixty-day period at
the election of the Bank, 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 Bank and the Executive.
Article 8
Miscellaneous
8.1 Binding Effect. This Agreement shall bind the Executive and the
Bank, and their beneficiaries, survivors, executors, successors, administrators
and transferees.
8.2 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 Bank, nor does it interfere with the Bank'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.
8.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
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8.4 Tax Withholding. The Bank shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
8.5 Applicable 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.
8.6 Unfunded Arrangement. The Executive and beneficiary are general
unsecured creditors of the Bank for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Bank 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 Bank to which the Executive and beneficiary have no preferred or
secured claim.
8.7 Recovery of Estate Taxes. If the Executive's gross estate for
federal estate tax purposes includes any amount determined by reference to and
on account of this Agreement, and if the beneficiary is other than the
Executive's estate, then the Executive's estate shall be entitled to recover
from the beneficiary receiving such benefit under the terms of the Agreement, an
amount by which the total estate tax due by the Executive's estate, exceeds the
total estate tax which would have been payable if the value of such benefit had
not been included in the Executive's gross estate. If there is more than one
person receiving such benefit, the right of recovery shall be against each such
person. In the event the beneficiary has a liability hereunder, the beneficiary
may petition the Bank for a lump sum payment in an amount not to exceed the
beneficiary's liability hereunder.
8.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Bank 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 Bank shall have powers which are necessary to
administer this Agreement, including but not limited to:
(a) Interpreting the provisions of the Agreement;
(b) Establishing and revising the method of accounting for the
Agreement;
(c) Maintaining a record of benefit payments; and
(d) Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
IN WITNESS WHEREOF, the Executive and a duly authorized Bank officer
have signed this Agreement.
[SIGNATURES OMITTED]
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BENEFICIARY DESIGNATION
FIRST NATIONAL SOUTH
SALARY CONTINUATION AGREEMENT
Xxxxxxx X. Xxxx
I designate the following as beneficiary of any death benefits under the Salary
Continuation Agreement:
Primary:------------------------------------------------------------------------
--------------------------------------------------------------------------------
Contingent:---------------------------------------------------------------------
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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 Bank I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or, if I have
named my spouse as beneficiary, in the event of the dissolution of our marriage.
Signature-----------------------
Date----------------------------
Accepted by the Bank this ---- day of ------------- 199--
By -------------------------
Title ----------------------
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FIRST NATIONAL SOUTH
SALARY CONTINUATION AGREEMENT
SCHEDULE A
Xxxxxxx X. Xxxx
Early Termination Disability
Plan Accrual Benefit Benefit
Year Balance Payable at 65 Payable Immediately
1 $44,247 $7,928 $4,537
2 93,751 15,511 9,613
3 149,353 22,816 15,315
4 212,135 29,924 21,752
5 283,574 36,936 29,078
6 365,877 44,003 37,517
7 462,954 51,411 47,471
8 585,131 59,999 59,999
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