AMENDMENT TO THE PEACHTREE BANK EXECUTIVE SALARY CONTINUATION AGREEMENT
Exhibit
10.21
AMENDMENT
TO THE
PEACHTREE
BANK
This
AMENDMENT is made and entered into on the 16 day of December, 2008, by and
between Peachtree Bank (the “Bank”), a bank organized and existing under the
laws of the State of Alabama, and Xxxxxx Xxxxx, an executive of the Bank (the
“Executive”).
WITNESSETH:
WHEREAS, the Bank and the Executive
previously entered into that certain Executive Salary Continuation Agreement,
dated September 6, 2006, (the “Agreement”); and
WHEREAS,
the Bank and the Executive desire to amend the Agreement to comply with the
final regulations issued under Internal Revenue Code Section 409A.
NOW, THEREFORE, in consideration of the
mutual covenants contained herein, the Bank and the Executive do hereby agree,
effective as of January 1, 2009, to amend the Agreement as follows:
1.
By deleting the first WHEREAS clause in the
introduction to the Agreement and substituting the phrase “Holding Company” for
the word “Bancorp” wherever it appears in the Agreement.
2.
By deleting Paragraph IV(A) in its
entirety and substituting therefor the following:
“A. Retirement
Date:
‘Retirement
Date’ shall mean the date the Executive experiences a Separation from Service on
or after the Executive’s Normal Retirement Age.”
3.
By deleting from Paragraph IV(D) the phrase “without
cause” and substituting therefor the phrase “other than for cause”.
4.
By deleting Paragraph IV(F) in its entirety and substituting
therefor the following:
“F. Change of
Control:
‘Change
of Control’ means (1) with respect to the Bank or Southcrest Financial Group,
Inc. (the ‘Holding Company’) a ‘change in ownership of a corporation’ as defined
under Code Section 409A; (2) with respect to the Holding Company, a ‘change in
effective control of a corporation’ as defined under Code Section 409A; or (3)
with respect to the Bank or the Holding Company, a ‘change in ownership of a
substantial portion of a corporation’s assets’ as defined under Code Section
409A, but substituting ‘eighty-five percent (85%)’ for the phrase ‘40 percent’
in Treasury Regulation Section 1.409A-3(i)(5)(vii)(A), or any successor
thereto.”
5. By
adding the following new Paragraphs IV(H), IV(I), and IV(J):
“H. Separation from
Service:
‘Separation
from Service’ shall mean a termination of the Executive’s employment where
either (1) the Executive has ceased to perform any services for the Bank and all
affiliated companies that, together with the Bank, constitute the ‘service
recipient’ within the meaning of Code Section 409A and the regulations
thereunder (collectively, the ‘Service Recipient’) or (2) the level of bona fide
services the Executive performs for the Service Recipient after a given date
(whether as an employee or as an independent contractor) permanently decreases
(excluding either a decrease as a result of military leave, sick leave, or other
bona fide leave of absence if the period of such leave does not exceed six (6)
months, or if longer, so long as the Executive retains a right to reemployment
with the Service Recipient under an applicable statute or by contract or any
other decrease permitted under Code Section 409A) to no more than twenty percent
(20%) of the average level of bona fide services performed for the Service
Recipient (whether as an employee or an independent contractor) over the
immediately preceding thirty-six-(36)-month period (or the full period of
service if the Executive has been providing services to the Service Recipient
for less than thirty-six (36) months).
I.
Restriction on Timing of
Distribution:
Notwithstanding
any provision in the Agreement to the contrary, to the extent necessary to avoid
the imposition of tax on the Executive under Code Section 409A, any payments
that are otherwise payable to the Executive within the first six (6) months
following the effective date of his Separation from Service, shall be suspended
and paid as soon as practicable following the end of the six-month period
following such effective date if, immediately prior to the Executive’s
Separation from Service, the Executive is determined to be a “specified
employee” (within the meaning of Code Section 409A(a)(2)(B)(i)) of the Bank (or
any related “service recipient” within the meaning of Code Section 409A and the
regulations thereunder). Any payments suspended by operation of the
foregoing sentence shall be paid as a lump sum to the Executive during the
seventh month following the date of his Separation from
Service. Payments (or portions thereof) that would be paid latest in
time during the six-month period will be suspended first.
J. Accrued Liability Retirement
Account:
‘Accrued
Liability Retirement Account’ means the bookkeeping account established and
maintained by the Bank to reflect the liability that should be accrued by the
Bank under generally accepted accounting principles (“GAAP”) for the Bank’s
obligation to the Executive under this Agreement.”
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6.
By capitalizing the phrase “accrued
liability retirement account” wherever it appears in the Agreement.
7.
By inserting into the second sentence of Paragraph V the
phrase “commencing on the first day of the second month following the
Executive’s Retirement Date and continuing” immediately prior to the phrase
“until the death of the Executive”.
8.
By deleting the second paragraph of
Paragraph V in its entirety.
9.
By deleting Paragraph VII in its
entirety and substituting therefor the following:
“VII. DISABILITY
In the
event the Executive becomes subject to a Disability and the Executive
experiences a Separation from Service because of such Disability prior to the
Executive’s Normal Retirement Age, the Executive shall become one hundred
percent (100%) vested in the balance of the Accrued Liability Retirement
Account. Said balance shall be paid in a lump sum on the first day of
the second month following the Executive’s Separation from
Service.”
10. By
deleting Paragraph VIII in its entirety and substituting therefor the
following:
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“VIII. [RESERVED]”
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11. By
deleting the first paragraph of Paragraph X in its entirety and substituting
therefor the following:
“Subject
to Subparagraph IV(E), in the event that the employment of the Executive shall
terminate prior to Normal Retirement Age, as provided in Subparagraph IV(B), by
the Executive’s voluntary action, or by the Executive’s discharge by the Bank
other than for cause, then this Agreement shall terminate upon the date of such
Termination of Employment and the Bank shall pay to the Executive an amount of
money equal to the balance of the Executive’s Accrued Liability Retirement
Account on the date of said termination, multiplied by the Executive’s
cumulative vested percentage (Paragraph IX). Such amount shall be
paid to the Executive in one (1) lump sum payment on the first day of the second
month following the Executive’s Separation from Service on or after the date of
such Termination of Employment.”
12. By
deleting the second paragraph of Paragraph X in its entirety.
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13. By
deleting Paragraph XI in its entirety and substituting therefor the
following:
“XI. CHANGE
OF CONTROL
If the
Executive experiences a Separation from Service on or after the date of the
Executive’s Termination of Employment (voluntarily or involuntarily), except a
termination for cause, within two (2) years after a Change of Control, but prior
to the Executive’s Normal Retirement Age, then the Bank shall pay to the
Executive the annual benefit described in Paragraph V upon attaining Normal
Retirement Age as if the Executive had been continuously employed by the Bank
until the Executive’s Normal Retirement Age. Said benefit shall be
paid in equal monthly installments (1/12th of the
annual benefit) commencing on the first day of the second month following the
month in which the Executive attains his Normal Retirement Age and continuing
until the death of the Executive. Nothing in this Paragraph XI
precludes the Executive’s beneficiary(ies) from receiving any death benefits
provided by any other provisions of this Agreement.”
14. By
deleting Paragraph XIII(C) in its entirety and substituting therefor the
following:
“C. Amendment or
Termination:
This
Agreement may be amended, at any time, by mutual written consent of the
Executive and the Bank, except that no amendment may reduce the Executive’s
Accrued Liability Retirement Account. The Bank may unilaterally amend
the Agreement to conform with written directives to the Bank to comply with
legislative changes or tax law, including, without limitation, Section 409A of
the Code and any and all Treasury regulations and guidance promulgated
thereunder. No amendment shall provide for or otherwise permit any
acceleration of the time or schedule of any payment under the Agreement in a
manner that would be prohibited under Section 409A(a)(3) of the
Code.
The Bank
may, at any time, terminate the Agreement except that no termination may reduce
the Executive’s Accrued Liability Retirement Account. Except as
provided in this Subparagraph XIII(C), the termination of the Agreement shall
not cause a distribution of benefits. Rather, after such termination,
benefit distributions will be made in accordance with the provisions of this
Agreement as if no such termination had occurred. Notwithstanding the
preceding provisions of this Subparagraph XIII(C), the Bank may elect to
terminate the Agreement under any circumstances permitted by Treasury
Regulations Section 1.409A-3(j)(4)(ix). In any such event, the Bank
shall distribute the Executive’s Accrued Liability Retirement Account,
determined as of the date of the termination of the Agreement, to the Executive
in a lump sum at the earliest date permitted under such Treasury
guidance.”
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15. By
adding the following new Paragraphs XIII(K) and XIII(L):
“K. Tax
Withholding:
The
Executive is responsible for payment of all taxes applicable to compensation and
benefits paid or provided to the Executive under the Agreement, including
federal and state income tax withholding, except the Bank shall withhold any
taxes that, in its reasonable judgment, are required to be withheld, including
but not limited to taxes owed under Section 409A of the Code and regulations
thereunder and all employment taxes due to be paid by the Bank pursuant to
Section 3121(v) of the Code and regulations promulgated thereunder (i.e., Federal Insurance
Contributions Act (“FICA”) taxes on the present value of payments hereunder
which are no longer subject to vesting). The Bank’s sole liability
regarding taxes is to forward any amounts withheld to the appropriate taxing
authority(ies). By participating in the Agreement, the Executive
consents to the deduction of all tax withholdings attributable to participation
in the Agreement from the benefits due under the Agreement or other payments due
to the Executive by the Bank to satisfy the employee-portion of such
obligations. If insufficient cash wages are available or if the
Executive so desires, the Executive may remit payment in cash for the
withholding amounts.
Notwithstanding
any other provision in the Agreement to the contrary, payments due under the
Agreement may be accelerated to pay, where applicable, the FICA tax imposed
under Sections 3101, 3121(a), and 3121(v)(2) of the Code and any state, local,
and foreign tax obligations (the ‘Tax Obligations’) that may be imposed on
amounts deferred pursuant to the Agreement prior to the time such amounts are
paid or made available and to pay the income tax at source on wages imposed
under Section 3401 of the Code or the corresponding withholding provisions of
applicable state, local, or foreign tax laws as a result of an accelerated
payment of the Tax Obligations (the ‘Income Tax
Obligations’). Accelerated payments pursuant to this Subparagraph
XIII(K) shall not exceed the amount of the Tax Obligations and Income Tax
Obligations and shall be made as a payment directly to taxing authorities
pursuant to the applicable withholding provisions. Any accelerated
payments pursuant to this Subparagraph XIII(K) shall reduce the benefit
otherwise payable to the Executive pursuant to the Agreement.
L.
Accelerated Payouts in the
Event of 409A Violations.
Notwithstanding
any other provision of the Agreement to the contrary, the Bank shall make
payments hereunder before such payments are otherwise due if it determines that
the provisions of the Agreement fail to meet the requirements of Code Section
409A and the rules and regulations promulgated thereunder; provided, however,
that such payment(s) may not exceed the amount required to be included in income
as a result of such failure to comply the requirements of Code Section 409A and
the rules and regulations promulgated thereunder and, to the extent permissible
therein, any taxes, penalties, interest and costs attributable
thereto.”
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Except as
provided herein, the terms of the Agreement shall remain in full force and
effect.
IN
WITNESS WHEREOF, the parties hereto have caused this First Amendment to be
executed as of the date first above written.
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PEACHTREE
BANK
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Maplesville,
Alabama
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By:
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/s/ Xxxxxxx X. Xxxxx | ||
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Print
Name:
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Xxxxxxx X. Xxxxx | ||
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Title:
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Executive Vice President | ||
| /s/ Xxxxxx Xxxxx | |||
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[Executive]
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