SUMMIT NATIONAL BANK
SALARY CONTINUATION AGREEMENT
THIS AGREEMENT is made this 9th day of September, 1998, by and between
Summit National Bank, a national bank located in Greenville, South Carolina (the
"Company") and Xxxxxx X. Xxxxxxxxxx (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
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 "Change of Control" A change of control occurs if: (i) any person
or entity acting directly or indirectly or through or in concert (other than
persons who are presently on the Board of Directors for the Employer) with one
or more persons, acquires the power, directly or indirectly, to vote twenty-five
(25%) percent or more of any class of voting securities of the Employer; or (ii)
the Employer becomes a subsidiary of another corporation or is merged or
consolidated into another corporation.
1.1.2 "Code" means the Internal Revenue Code of 1986, as amended.
1.1.3 "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 which,
in the judgment of a physician satisfactory to 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.
1.1.4 "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.
1.1.5 "Early Termination Date" means the month, day and year in which Early
Termination occurs.
1.1.6 "Effective Date" means January 1, 1998.
1.1.7 "Normal Retirement Age" means the Executive's sixty-fifth (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 twelve-month period commencing on January 1st and
ending on December 31st of each year. The initial Plan Year shall commence on
the Effective Date of this Agreement.
1.1.10 "Termination for Cause" See Section 5.2.
1.1.11 "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 which 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 Company 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 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
twenty-one thousand six hundred and twenty-four dollars ($21,624), increased by
two percent (2.0%) each successive Plan Year until Termination of Employment.
The Company's Board of Directors, in its sole discretion, may increase the
annual benefit under this Section 2.1.1; however, any increase shall require the
recalculation of Schedule A.
2.1.2 Payment of Benefit. The Company 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 two hundred thirty-nine (239) additional months.
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 of this
Agreement for the Plan Year ending immediately prior to the Early Termination
Date. Schedule A reflects a percentage vesting of the benefit level beginning
with 10% at the end of the first Plan Year and increasing by 10% each Plan Year
end thereafter until the benefit level is 100% vested at the end of the tenth
Plan Year.
2.2.2 Payment of Benefit. The Company 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 Age and
continuing for two hundred thirty-nine (239) additional months.
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 of this Agreement for
the Plan Year ending immediately prior to the date in which the Termination of
Employment occurs.
2.3.2 Payment of Benefit. The Company 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 two hundred thirty-nine (239) additional months.
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 benefit under this Section 2.4 is the Change of
Control Annual Benefit amount set forth in Schedule A of this Agreement for the
Plan Year ending immediately prior to the Termination of Employment. Schedule A
reflects that the benefit level upon a Change of Control is 100% vested.
2.4.2 Payment of Benefit. The Company 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 Normal Retirement Age and
continuing for two hundred thirty-nine (239) additional months.
ARTICLE 3
DEATH BENEFITS
3.1 Death During Active Service. If the Executive dies while in the active
service of 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
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 that the Executive
would have received had the Executive lived to Normal Retirement Age.
3.1.2 Payment of Benefit. The Company 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 two hundred thirty-nine (239) additional months.
3.2 Death During Benefit Period. If the Executive dies after the
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 Before Benefit Payments
Commence. If the Executive is entitled to benefit payments under this
Agreement, but dies prior to the commencement of said benefit payments, the
Company shall make the benefit payments to the Executive's beneficiary that the
Executive was entitled to prior to death except that the benefit payments shall
commence on the first day of the month following the date of the Executive's
death.
ARTICLE 4
BENEFICIARIES
4.1 Beneficiary Designations. The Executive shall designate a 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 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, 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, the Company
shall not pay any benefit under this Agreement:
5.1 Excess Parachute Payment. To the extent the benefit would create
or add to an excise tax under the excess parachute rules of Section 280G of the
Code. In such event, the benefit amount payable will be reduced to an amount
which will not create or add to such excise tax penalty.
5.2 Termination for Cause. If the Company terminates the Executive's
employment for cause, with "cause" being defined under this Agreement to mean
either:
5.2.1 Willful failure of the Executive to substantially perform prescribed
duties other than as a result of disability; or
5.2.1 The willful engaging in misconduct significantly detrimental to the
Employer.
5.3 Competition After Termination of Employment. No benefits shall be
payable if, for a period of three years following the Executive's Termination of
Employment, the Executive, without the prior written consent of the Company,
engages in, directly or indirectly, owning, managing, operating, or being
employed by, participates in or is connected in any manner with the ownership,
management, and operation of any business similar to that type of business then
conducted by the Employer or by any subsidiary for which the Employee is then
actively engaged within a 20 mile radius from the Company's main office or a 5
mile radius from any branch office of the Company. This section shall not apply
following a Change of Control.
5.4 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 Company.
ARTICLE 6
CLAIMS AND REVIEW PROCEDURES
6.1 Claims Procedure. The Company shall notify any person or entity that
makes a claim against the Agreement (the "Claimant") in writing, within ninety
(90) days of 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-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-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 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 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 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.
8.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
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 extent
preempted by the laws of the United States of America.
8.7 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.
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 of the
plan including the employment of advisors and the delegation of ministerial
duties to qualified individuals.
IN WITNESS WHEREOF, the Executive and a duly authorized Company officer
have signed this Agreement.
EXECUTIVE: COMPANY:
Summit National Bank
/s/ Xxxxxx X. Xxxxxxxxxx By: /s/ J. Xxxxxxxx Xxxxxx
Title: President and CEO
