Crescent State Bank Amended Salary Continuation Agreement
EXHIBIT
10(xi)
Crescent
State Bank
Amended
Salary Continuation Agreement
This
Amended
Salary Continuation Agreement
(this
“Agreement”) is entered into as of this 24 day of October, 2007, by and between
Crescent State Bank, a North Carolina-chartered commercial bank (the “Bank”),
and Xxxxx X. Xxxxx, its Senior Vice President and Chief Financial Officer (the
“Executive”).
Whereas,
the
Executive has contributed substantially to the Bank’s success and the Bank
desires that the Executive continue in its employ,
Whereas,
to
encourage the Executive to remain an employee, the Bank is willing to provide
salary continuation benefits to the Executive, payable from the Bank’s general
assets,
Whereas,
none of
the conditions or events included in the definition of the term “golden
parachute payment” that is set forth in section 18(k)(4)(A)(ii) of the Federal
Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal Deposit
Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.1(f)(1)(ii)] exists
or,
to the best knowledge of the Bank, is contemplated insofar as the Bank is
concerned,
Whereas,
the
parties hereto intend that this Agreement shall be considered an unfunded
arrangement maintained primarily to provide supplemental retirement benefits
for
the Executive, and to be considered a non-qualified benefit plan for purposes
of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The
Executive is fully advised of the Bank’s financial status, and
Whereas,
the
Bank and the Executive intend that this Agreement shall amend and restate in
its
entirety the October 1, 2003 Salary Continuation Agreement between the Bank
and
the Executive, effective immediately.
Now
Therefore,
in
consideration of these premises and other good and valuable consideration,
the
receipt and sufficiency of which are hereby acknowledged, the Executive and
the
Bank hereby agree as follows.
Article
1
Definitions
1.1 “Accrual
Balance”
means
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, applying Accounting Principles Board Opinion No. 12, as amended
by Financial Accounting Standard No. 106, and the calculation method and
discount rate specified hereinafter. The Accrual Balance shall be calculated
such that when it is credited with interest each month the Accrual Balance
at
Normal Retirement Age (or such later date as the Executive is entitled under
section 2.1 to receive the normal retirement benefits) equals the present value
of the normal retirement benefits. The discount rate means the rate used by
the
Plan Administrator for determining the Accrual Balance. The rate is based on
the
yield on a 20-year corporate bond rated Aa by Moody’s, rounded to the nearest
¼%. In its sole discretion, the Plan Administrator may adjust the discount rate
to maintain the rate within reasonable standards according to GAAP.
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 according to
Article 4.
1.3 “Beneficiary
Designation Form”
means
the form established from time to time by the Plan Administrator that the
Executive completes, signs, and returns to the Plan Administrator to designate
one or more Beneficiaries.
1.4 “Change
in Control”
means
a
change in control as defined in Internal Revenue Code section 409A and rules,
regulations, and guidance of general application thereunder issued by the
Department of the Treasury, including -
(a) Change
in ownership:
a
change in ownership of Crescent Financial Corporation, a North Carolina
corporation of which the Bank is a wholly owned subsidiary, occurs on the date
any one person or group accumulates ownership of Crescent Financial Corporation
stock constituting more than 50% of the total fair market value or total voting
power of Crescent Financial Corporation stock,
(b) Change
in effective control:
(x)
any one
person or more than one person acting as a group acquires within a 12-month
period ownership of Crescent Financial Corporation stock possessing 30% or
more
of the total voting power of Crescent Financial Corporation stock, or
(y)
a
majority of Crescent Financial Corporation’s board of directors is replaced
during any 12-month period by directors whose appointment or election is not
endorsed in advance by a majority of Crescent Financial Corporation’s board of
directors, or
(c) Change
in ownership of a substantial portion of assets:
a
change in the ownership of a substantial portion of Crescent Financial
Corporation’s assets occurs if in a 12-month period any one person or more than
one person acting as a group acquires from Crescent Financial Corporation assets
having a total gross fair market value equal to or exceeding 40% of the total
gross fair market value of all of Crescent Financial Corporation’s assets
immediately before the acquisition or acquisitions. For this purpose, gross
fair
market value means the value of Crescent Financial Corporation’s assets, or the
value of the assets being disposed of, determined without regard to any
liabilities associated with the assets.
1.5 “Code”
means
the Internal Revenue Code of 1986, as amended, and rules, regulations, and
guidance of general application issued thereunder by the Department of the
Treasury.
1.6 “Disability”
means,
because of a medically determinable physical or mental impairment that can
be
expected to result in death or that can be expected to last for a continuous
period of at least 12 months, (x)
the
Executive is unable to engage in any substantial gainful activity, or
(y)
the
Executive is receiving income replacement benefits for a period of at least
three months under an accident and health plan of the employer. Medical
determination of disability may be made either by the Social Security
Administration or by the provider of an accident or health plan covering
employees of the Bank. Upon request of the Plan Administrator, the Executive
must submit proof to the Plan Administrator of the Social Security
Administration’s or provider’s determination.
1.7 “Early
Termination”
means
Separation from Service before Normal Retirement Age for reasons other than
death, Disability, or Termination for Cause. Early Termination excludes a
Separation from Service governed by section 2.4.
1.8 “Effective
Date”
means
October 1, 2003.
1.9 “Intentional,”
for
purposes of this Agreement, no act or failure to act on the Executive’s part
shall be deemed to have been intentional if it was due primarily to an error
in
judgment or negligence. An act or failure to act on the Executive’s part shall
be considered intentional if it is not in good faith and if it is without a
reasonable belief that the action or failure to act is in the best interests
of
the Bank.
1.10 “Normal
Retirement Age”
means
the Executive’s 62nd
birthday.
1.11 “Plan
Administrator”
or
“Administrator”
means
the plan administrator described in Article 8.
1.12 “Plan
Year”
means
a
twelve-month period commencing on January 1 and ending on December 31 of each
year. The initial Plan Year shall commence on the effective date of this
Agreement.
2
1.13 “Separation
from Service”
means
the Executive’s service as an executive and independent contractor to the Bank
and any member of a controlled group, as defined in Code section 414, terminates
for any reason, other than because of a leave of absence approved by the Bank
or
the Executive’s death. For purposes of this Agreement, if there is a dispute
about the employment status of the Executive or the date of the Executive’s
Separation from Service, the Bank shall have the sole and absolute right to
decide the dispute unless a Change in Control shall have occurred.
1.14 “Termination
for Cause”
and
“Cause”
shall
have the same meaning specified in any effective severance or employment
agreement existing on the date hereof or hereafter entered into between the
Executive and the Bank. If the Executive is not a party to a severance or
employment agreement containing a definition of termination for cause,
Termination for Cause means the Bank terminates the Executive’s employment for
any of the following reasons –
(a) the
Executive’s gross negligence or gross neglect of duties or intentional and
material failure to perform stated duties after written notice thereof,
or
(b) disloyalty
or dishonesty by the Executive in the performance of the Executive’s duties, or
a breach of the Executive’s fiduciary duties for personal profit, in any case
whether in the Executive’s capacity as a director or officer, or
(c) intentional
wrongful damage by the Executive to the business or property of the Bank or
its
affiliates, including without limitation the reputation of the Bank, which
in
the judgement of the Bank causes material harm to the Bank or affiliates,
or
(d) a
willful
violation by the Executive of any applicable law or significant policy of the
Bank or an affiliate that, in the Bank’s judgement, results in an adverse effect
on the Bank or the affiliate, regardless of whether the violation leads to
criminal prosecution or conviction. For purposes of this Agreement, applicable
laws include any statute, rule, regulatory order, statement of policy, or final
cease-and-desist order of any governmental agency or body having regulatory
authority over the Bank, or
(e) the
occurrence of any event that results in the Executive being excluded from
coverage, or having coverage limited for the Executive as compared to other
executives of the Bank, under the Bank’s blanket bond or other fidelity or
insurance policy covering its directors, officers, or employees, or
(f) the
Executive is removed from office or permanently prohibited from participating
in
the Bank’s affairs by an order issued under section 8(e)(4) or section 8(g)(1)
of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1),
or
(g) conviction
of the Executive for or plea of no contest to a felony or conviction of or
plea
of no contest to a misdemeanor involving moral turpitude, or the actual
incarceration of the Executive for 45 consecutive days or more.
1.15 “Voluntary
Termination with Good Reason”
means
a
voluntary Separation from Service by the Executive within 24 months after a
Change in Control if the following conditions (x)
and
(y)
are
satisfied: (x)
a
voluntary Separation from Service by the Executive will be considered a
Voluntary Termination for Good Reason if any of the following occur without
the
Executive’s advance written consent –
1) a
material diminution of the Executive’s base salary,
2) a
material diminution of the Executive’s authority, duties, or
responsibilities,
3) a
material diminution in the authority, duties, or responsibilities of the
supervisor to whom the Executive is required to report,
3
4) a
material diminution in the budget over which the Executive retains
authority,
5) a
material change in the geographic location at which the Executive must perform
services for the Bank, or
6) any
other
action or inaction that constitutes a material breach by the Bank of the
agreement under which the Executive provides services to the Bank.
(y) the
Executive must give notice to the Bank of the existence of one or more of the
conditions described in clause (x)
within
90 days after the initial existence of the condition, and the Bank shall have
30
days thereafter to remedy the condition. In addition, the Executive’s voluntary
termination because of the existence of one or more of the conditions described
in clause (x)
must
occur within 24 months after the earlier of the initial existence of the
condition or the date of the Change in Control.
Article
2
Lifetime
Benefits
2.1 Normal
Retirement.
For
Separation from Service on or after the date the Executive attains Normal
Retirement Age, the Bank shall pay to the Executive the benefit described in
this section 2.1 instead of any other benefit under this Agreement. However,
if
the Executive’s Separation from Service is a Termination for Cause or if this
Agreement terminates under Article 5, no benefits shall be paid.
2.1.1 Amount
of benefit.
The
annual benefit under this section 2.1 is $103,500.
2.1.2 Payment
of benefit.
Beginning with the seventh month after the month in which the Executive’s
Separation from Service occurs, the Bank shall pay the annual benefit to the
Executive in equal monthly installments on the first day of each month. The
annual benefit shall be paid to the Executive for the Executive’s
lifetime.
2.2 Early
Termination.
If
Early Termination occurs on or after the date the Executive attains age 55,
the
Bank shall pay to the Executive the benefit described in this section 2.2
instead of any other benefit under this Agreement. If Early Termination occurs
before the Executive attains age 55, no benefit shall be payable. However,
if a
Change in Control occurs before Separation from Service the benefit described
in
this section 2.2 for Early Termination shall no longer be conditional on the
Executive having first attained age 55 before Early Termination occurs. Neither
the Bank nor the Executive shall be entitled to elect in the 24-month period
after a Change in Control between the benefit under section 2.4 versus the
Early
Termination benefit under this section 2.2. If the Executive’s Separation from
Service within 24 months after a Change in Control is an involuntary termination
without Cause or a Voluntary Termination with Good Reason, no benefit shall
be
payable under this section 2.2 and the Executive shall instead be entitled
to
the benefit under section 2.4 or, if the Executive first attained Normal
Retirement Age, section 2.1. No benefits shall be payable under this Agreement
if the Executive’s Separation from Service is a Termination for Cause or if this
Agreement terminates under Article 5.
2.2.1 Amount
of benefit.
The
annual benefit under this section 2.2 is calculated as the amount that fully
amortizes the Accrual Balance existing at the end of the month immediately
before the month in which Separation from Service occurs, amortizing that
Accrual Balance over the period beginning with the Executive’s Normal Retirement
Age and taking into account interest at the discount rate or rates established
by the Plan Administrator.
2.2.2 Payment
of benefit.
Beginning with the later of (x)
the
seventh month after the month in which the Executive’s Separation from Service
occurs, or (y)
the
month immediately after the month in which the Executive attains Normal
Retirement Age, the Bank shall pay the annual benefit to the Executive in equal
monthly installments on the first day of each month. The annual benefit shall
be
paid to the Executive for the Executive’s lifetime.
4
2.3 Disability.
If
Separation from Service occurs because of Disability before Normal Retirement
Age, the Bank shall pay to the Executive the benefit described in this section
2.3 instead of any other benefit under this Agreement.
2.3.1 Amount
of benefit.
The
annual benefit under this section 2.3 is calculated as the amount that fully
amortizes the Accrual Balance existing at the end of the month immediately
before the month in which Separation from Service occurs, amortizing that
Accrual Balance over the period beginning with the Executive’s Normal Retirement
Age and taking into account interest at the discount rate or rates established
by the Plan Administrator.
2.3.2 Payment
of benefit.
Beginning with the later of (x)
the
seventh month after the month in which the Executive’s Separation from Service
occurs, or (y)
the
month immediately after the month in which the Executive attains Normal
Retirement Age, the Bank shall pay the annual benefit to the Executive in equal
monthly installments on the first day of each month. The annual benefit shall
be
paid to the Executive for the Executive’s lifetime.
2.4 Change
in Control.
If the
Executive’s Separation from Service is an involuntary termination without Cause
or a Voluntary Termination with Good Reason, in either case within 24 months
after a Change in Control, the Bank shall pay to the Executive the benefit
described in this section 2.4 instead of any other benefit under this Agreement.
Neither the Bank nor the Executive shall be entitled to elect in the 24-month
period after a Change in Control between the benefit under this section 2.4
versus the Early Termination benefit under section 2.2. If the Executive’s
Separation from Service within 24 months after a Change in Control is an
involuntary termination without Cause or a Voluntary Termination with Good
Reason, no benefit shall be payable under section 2.2 and the Executive shall
instead be entitled to the benefit under this section 2.4. But if the Executive
shall have attained Normal Retirement Age when Separation from Service within
24
months after a Change in Control occurs, whether Separation from Service is
voluntary or involuntary for any reason other than Termination for Cause, the
Executive shall be entitled solely to the benefit provided by section 2.1,
not
this section 2.4 or section 2.2. No benefits shall be payable under this
Agreement if the Executive’s Separation from Service is a Termination for Cause
or if this Agreement terminates under Article 5.
2.4.1 Amount
of benefit.
The
benefit under this section 2.4 is the greater of (x)
$1,033,193 or (y)
the
Accrual Balance on the first day of the seventh month after the month in which
the Executive’s Separation from Service occurs, in either case without reduction
for the time value of money or other discount.
2.4.2 Payment
of benefit.
The
Bank shall pay the benefit under this section 2.4 to the Executive in a single
lump sum on the first day of the seventh month after the month in which the
Executive’s Separation from Service occurs.
2.5 Change-in-Control
Payout of Normal Retirement Benefit, Early Termination Benefit, or Disability
Benefit Being Paid to the Executive at the Time of a Change in
Control.
If a
Change in Control occurs while the Executive is receiving the Normal Retirement
Age benefit under section 2.1 or is receiving or is entitled at Normal
Retirement Age to receive the Early Termination benefit under section 2.2 or
the
Disability benefit under section 2.3, the Bank shall pay the remaining salary
continuation benefits to the Executive in a single lump sum on the later of
(x)
the
date of the Change in Control or (y)
the
first day of the seventh month after the month in which the Executive’s
Separation from Service occurs. The lump-sum payment due to the Executive as
a
result of a Change in Control shall be an amount equal to the Accrual Balance
amount corresponding to the particular benefit when the Change in Control
occurs.
2.6 Contradiction
Between the Agreement and Schedule A.
If
there is a contradiction between this Agreement and Schedule A attached hereto
concerning the amount of a particular benefit due the Executive under sections
2.2, 2.3, or 2.4, the amount of the benefit determined under this Agreement
shall control.
5
2.7 Savings
Clause Relating to Compliance with Code Section 409A.
Despite
any contrary provision of this Agreement, if when the Executive’s employment
terminates the Executive is a specified employee, as defined in Code section
409A, and if any payments under Article 2 of this Agreement will result in
additional tax or interest to the Executive because of section 409A, the
Executive shall not be entitled to the payments under Article 2 until the
earliest of (x)
the
date that is at least six months after termination of the Executive’s employment
for reasons other than the Executive’s death, (y)
the
date of the Executive’s death, or (z)
any
earlier date that does not result in additional tax or interest to the Executive
under section 409A. If any provision of this Agreement would subject the
Executive to additional tax or interest under section 409A, the Bank shall
reform the provision. However, the Bank shall maintain to the maximum extent
practicable the original intent of the applicable provision without subjecting
the Executive to additional tax or interest, and the Bank shall not be required
to incur any additional compensation expense as a result of the reformed
provision.
2.8 One
Benefit Only.
Despite
anything to the contrary in this Agreement, the Executive and Beneficiary are
entitled to one benefit only under this Agreement, which shall be determined
by
the first event to occur that is dealt with by this Agreement. Except as
provided in section 2.5 or Article 3, subsequent occurrence of events dealt
with
by this Agreement shall not entitle the Executive or Beneficiary to other or
additional benefits under this Agreement.
Article
3
Death
Benefits
3.1 Death
Before Separation from Service.
Except
as provided in section 5.2, if the Executive dies before Separation from
Service, at the Executive’s death the Executive’s Beneficiary shall be entitled
to (x)
an
amount in cash equal to the Accrual Balance existing at the Executive’s death,
unless the Change-in-Control benefit shall have been paid to the Executive
under
section 2.4 or unless a Change-in-Control payout shall have occurred under
section 2.5, and (y)
the
benefit described in the October 1, 2003 Endorsement Split Dollar Agreement
attached to this Agreement as Addendum A. No benefit shall be paid under clause
(x)
if the
Change-in-Control benefit shall have been paid to the Executive under section
2.4 or if a Change-in-Control payout shall have occurred under section 2.5.
If a
benefit is payable to the Executive’s Beneficiary under clause (x),
the
benefit shall be paid in a single lump sum 90 days after the Executive’s death.
However, no benefits under this Agreement or under the Endorsement Split Dollar
Agreement shall be paid or payable to the Executive or the Executive’s
Beneficiary if this Agreement is terminated under Article 5.
3.2 Death
after Separation from Service.
If the
Executive dies after Separation from Service and if Separation from Service
was
not a Termination for Cause, at the Executive’s death the Executive’s
Beneficiary shall be entitled to (x)
an
amount in cash equal to the Accrual Balance existing at the Executive’s death,
unless the Change-in-Control benefit shall have been paid to the Executive
under
section 2.4 or unless a Change-in-Control payout shall have occurred under
section 2.5, and (y)
the
benefit described in the October 1, 2003 Endorsement Split Dollar Agreement
attached to this Agreement as Addendum A. No benefit shall be paid under clause
(x)
if the
Change-in-Control benefit shall have been paid to the Executive under section
2.4 or if a Change-in-Control payout shall have occurred under section 2.5.
If a
benefit is payable to the Executive’s Beneficiary under clause (x),
the
benefit shall be paid in a single lump sum 90 days after the Executive’s death.
However, no benefits under this Agreement or under the Endorsement Split Dollar
Agreement shall be paid or payable to the Executive or the Executive’s
Beneficiary if this Agreement is terminated under Article 5.
Article
4
Beneficiaries
4.1 Beneficiary
Designations.
The
Executive shall have the right to designate at any time a Beneficiary to receive
any benefits payable under this Agreement at the Executive’s death. The
Beneficiary designated under this Agreement may be the same as or different
from
the beneficiary designation under any other benefit plan of the Bank in which
the Executive participates.
6
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 before 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.
4.5 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 the benefit to the guardian, legal representative, or person having
the
care or custody of the minor, incapacitated person, or incapable person. The
Bank may require proof of incapacity, minority, or guardianship as it may deem
appropriate before distribution of the benefit. Distribution shall completely
discharge the Bank from all liability for the benefit.
Article
5
General
Limitations
5.1 Termination
for Cause.
Despite
any contrary provision of this Agreement, the Bank shall not pay any benefit
under this Agreement and this Agreement shall terminate if Separation from
Service is a Termination for Cause. Likewise, the Beneficiary shall be entitled
to no benefits under the Endorsement Split Dollar Agreement attached to this
Agreement as Addendum A and the Endorsement Split Dollar Agreement also shall
terminate if Separation from Service is a Termination for Cause.
5.2 Misstatement.
The
Bank shall not pay any benefit under this Agreement and the Beneficiary shall
be
entitled to no benefits under the Endorsement Split Dollar Agreement attached
as
Addendum A if the Executive makes any material misstatement of fact on any
application or resume provided to the Bank or on any application for benefits
provided by the Bank.
5.3 Removal.
If the
Executive is removed from office or permanently prohibited from participating
in
the Bank’s affairs by an order issued under section 8(e)(4) or (g)(1) of the
Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1), all obligations
of the Bank under this Agreement shall terminate as of the effective date of
the
order and the Endorsement Split Dollar Agreement also shall terminate as of
the
effective date of the order.
5.4 Default.
Despite
any contrary provision of this Agreement, if the Bank is in “default” or “in
danger of default,” as those terms are defined in section 3(x) of the Federal
Deposit Insurance Act, 12 U.S.C. 1813(x), all obligations under this Agreement
shall terminate.
5.5 FDIC
Open-Bank Assistance.
All
obligations under this Agreement shall terminate, except to the extent
determined that continuation of the contract is necessary for the continued
operation of the Bank, when the Federal Deposit Insurance Corporation enters
into an agreement to provide assistance to or on behalf of the Bank under the
authority contained in Federal Deposit Insurance Act section 13(c). 12 U.S.C.
1823(c). Rights of the parties that have already vested shall not be affected
by
such action, however.
7
Article
6
Claims
and Review Procedures
6.1 Claims
Procedure.
A
person or beneficiary (“claimant”) who has not received benefits under the
Agreement that he or she believes should be paid shall make a claim for such
benefits as follows –
6.1.1 Initiation –
written claim.
The
claimant initiates a claim by submitting to the Administrator a written claim
for the benefits. If the claim relates to the contents of a notice received
by
the claimant, the claim must be made within 60 days after the notice was
received by the claimant. All other claims must be made within 180 days after
the date of the event that caused the claim to arise. The claim must state
with
particularity the determination desired by the claimant.
6.1.2 Timing
of Bank response.
The
Bank shall respond to the claimant within 90 days after receiving the claim.
If
the Bank determines that special circumstances require additional time for
processing the claim, the Bank may extend the response period by an additional
90 days by notifying the claimant in writing before the end of the initial
90-day period that an additional period is required. The notice of extension
must state the special circumstances and the date by which the Bank expects
to
render its decision.
6.1.3 Notice
of decision.
If the
Bank denies part or all of the claim, the Bank shall notify the claimant in
writing of the denial. The Bank shall write the notification in a manner
calculated to be understood by the claimant. The notification shall set forth
-
|
6.1.3.1
|
the
specific reasons for the denial,
|
|
6.1.3.2
|
a
reference to the specific provisions of the Agreement on which the
denial
is based,
|
|
6.1.3.3
|
a
description of any additional information or material necessary for
the
claimant to perfect the claim and an explanation of why it is
needed,
|
|
6.1.3.4
|
an
explanation of the Agreement’s review procedures and the time limits
applicable to such procedures, and
|
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6.1.3.5
|
a
statement of the claimant’s right to bring a civil action under ERISA
section 502(a) following an adverse benefit determination on
review.
|
6.2 Review
Procedure.
If the
Bank denies part or all of the claim, the claimant shall have the opportunity
for a full and fair review by the Bank of the denial, as follows -
6.2.1 Initiation –
written request.
To
initiate the review, within 60 days after receiving the Bank’s notice of denial
the claimant must file with the Bank a written request for review.
6.2.2 Additional
submissions – information access.
The
claimant shall then have the opportunity to submit written comments, documents,
records, and other information relating to the claim. Upon request and free
of
charge, the Bank shall also provide the claimant 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.
8
6.2.3 Considerations
on review.
In
considering the review, the Bank shall take into account all materials and
information the claimant submits relating to the claim, without regard to
whether the information was submitted or considered in the initial benefit
determination.
6.2.4 Timing
of Bank response.
The
Bank shall respond in writing to the claimant within 60 days after receiving
the
request for review. If the Bank determines that special circumstances require
additional time for processing the claim, the Bank may extend the response
period by an additional 60 days by notifying the claimant in writing before
the
end of the initial 60-day period that an additional period is required. The
notice of extension must state the special circumstances and the date by which
the Bank expects to render its decision.
6.2.5 Notice
of decision.
The
Bank shall notify the claimant in writing of its decision on review. The Bank
shall write the notification in a manner calculated to be understood by the
claimant. The notification shall set forth –
|
6.2.5.1
|
the
specific reason for the denial,
|
|
6.2.5.2
|
a
reference to the specific provisions of the Agreement on which the
denial
is based,
|
|
6.2.5.3
|
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
|
|
6.2.5.4
|
a
statement of the claimant’s right to bring a civil action under ERISA
section 502(a).
|
Article
7
Miscellaneous
7.1 Amendments
and Termination.
Subject
to section 7.14 of this Agreement, this Agreement may be amended solely by
a
written agreement signed by the Bank and by the Executive, and except for
termination occurring under Article 5 this Agreement may be terminated solely
by
a written agreement signed by the Bank and by the Executive.
7.2 Binding
Effect.
This
Agreement shall bind the Executive, the Bank, and their beneficiaries,
survivors, executors, successors, administrators, and transferees.
7.3 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 or interfere with the Executive’s right to
terminate employment at any time.
7.4 Non-Transferability.
Benefits under this Agreement may not be sold, transferred, assigned, pledged,
attached, or encumbered.
7.5 Successors;
Binding Agreement.
By an
assumption agreement in form and substance satisfactory to the Executive, the
Bank shall require any successor (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the business
or assets of the Bank to expressly assume and agree to perform this Agreement
in
the same manner and to the same extent that the Bank would be required to
perform this Agreement had no succession occurred.
9
7.6 Tax
Withholding.
The
Bank shall withhold any taxes that are required to be withheld from the benefits
provided under this Agreement.
7.7 Applicable
Law.
This
Agreement and all rights hereunder shall be governed by the laws of the State
of
North Carolina, except to the extent preempted by the laws of the United States
of America.
7.8 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 benefits. Rights to benefits are not subject 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.
7.9 Entire
Agreement.
This
Agreement and the October 1, 2003 Endorsement Split Dollar Agreement attached
as
Addendum A constitute the entire agreement between the Bank and the Executive
concerning the subject matter. No rights are granted to the Executive under
this
Agreement other than those specifically set forth. This Agreement amends and
restates in its entirety the October 1, 2003 Salary Continuation
Agreement.
7.10 Severability.
If any
provision of this Agreement is held invalid, such invalidity shall not affect
any other provision of this Agreement not held invalid, and each such other
provision shall continue in full force and effect to the full extent consistent
with law. If any provision of this Agreement is held invalid in part, such
invalidity shall not affect the remainder of the provision not held invalid,
and
the remainder of such provision together with all other provisions of this
Agreement shall continue in full force and effect to the full extent consistent
with law.
7.11 Headings.
Caption
headings and subheadings herein are included solely for convenience of reference
and shall not affect the meaning or interpretation of any provision of this
Agreement.
7.12 Notices.
All
notices, requests, demands, and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed, certified or registered mail, return receipt requested, with postage
prepaid, to the following addresses or to such other address as either party
may
designate by like notice. If to the Bank, notice shall be given to the board
of
directors, Crescent State Bank, 1005 High House Road, P.O. Box 5809, Xxxx,
Xxxxx
Xxxxxxxx 00000, or to such other or additional person or persons as the Bank
shall designate to the Executive in writing. If to the Executive, notice shall
be given to the Executive at the Executive’s address appearing on the Bank’s
records or to such other or additional person or persons as the Executive shall
designate to the Bank in writing.
7.13 Payment
of Legal Fees.
The
Bank is aware that after a Change in Control management of the Bank could cause
or attempt to cause the Bank to refuse to comply with its obligations under
this
Agreement, or could institute or cause or attempt to cause the Bank to institute
litigation seeking to have this Agreement declared unenforceable, or could
take
or attempt to take other action to deny Executive the benefits intended under
this Agreement. In these circumstances the purpose of this Agreement would
be
frustrated. The Bank desires that the Executive not be required to incur the
expenses associated with the enforcement of rights under this Agreement, whether
by litigation or other legal action, because the cost and expense thereof would
substantially detract from the benefits intended to be granted to the Executive
hereunder. The Bank desires that the Executive not be forced to negotiate
settlement of rights under this Agreement under threat of incurring expenses.
Accordingly, if after a Change in Control occurs it appears to the Executive
that (x)
the
Bank has failed to comply with any of its obligations under this Agreement,
or
(y)
the
Bank or any other person has taken any action to declare this Agreement void
or
unenforceable, or instituted any litigation or other legal action designed
to
deny, diminish, or to recover from the Executive the benefits intended to be
provided to the Executive hereunder, the Bank irrevocably authorizes the
Executive from time to time to retain counsel of the Executive’s choice, at the
Bank’s expense as provided in this section 7.13, to represent the Executive in
the initiation or defense of any litigation or other legal action, whether
by or
against the Bank or any director, officer, stockholder, or other person
affiliated with the Bank, in any jurisdiction. Despite any existing or previous
attorney-client relationship between the Bank and any counsel chosen by the
Executive under this section 7.13, the Bank irrevocably consents to the
Executive entering into an attorney-client relationship with that counsel,
and
the Bank and the Executive agree that a confidential relationship shall exist
between the Executive and that counsel. The fees and expenses of counsel
selected from time to time by the Executive as provided in this section shall
be
paid or reimbursed to the Executive by the Bank on a regular, periodic basis
upon presentation by the Executive of a statement or statements prepared by
counsel in accordance with counsel’s customary practices, up to a maximum
aggregate amount of $25,000, whether suit be brought or not, and whether or
not
incurred in trial, bankruptcy, or appellate proceedings. The Bank’s obligation
to pay the Executive’s legal fees provided by this section 7.13 operates
separately from and in addition to any legal fee reimbursement obligation the
Bank may have with the Executive under any separate employment, severance,
or
other agreement between the Executive and the Bank. Despite anything in this
section 7.13 to the contrary however, the Bank shall not be required to pay
or
reimburse the Executive’s legal expenses if doing so would violate section 18(k)
of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)] and Rule 359.3 of
the
Federal Deposit Insurance Xxxxxxxxxxx [00 XXX 359.3].
10
7.14 Termination
or Modification of Agreement Because of Changes in Law, Rules or
Regulations.
The
Bank is entering into this Agreement on the assumption that certain existing
tax
laws, rules, and regulations will continue in effect in their current form.
If
that assumption materially changes and the change has a material detrimental
effect on this Agreement, then the Bank reserves the right to terminate or
modify this Agreement accordingly, subject to the written consent of the
Executive, which shall not be unreasonably withheld. This section 7.14 shall
become null and void effective immediately if a Change in Control
occurs.
7.15 Automatic
Review Procedure.
On the
third year anniversary of the Effective Date and every third year thereafter
the
Bank will automatically review this Agreement for reasonableness of benefits
with the intent that the Executive’s target benefit shall be 75% of compensation
less the Bank-provided benefits. For purposes of this Agreement, Bank-provided
benefits include but are not limited to (x)
the
Bank 401(k) match and (y)
the
Bank portion of Social Security benefits. As used in this section 7.15, the
term
compensation means the base annual salary of the Executive projected at the
Executive’s Normal Retirement Age. Base Annual Salary means compensation of the
type that would, according to the Securities and Exchange Commission’s
Regulation S-K Item 402(c) (17 CFR 229.402(c)), be required to be reported
as
salary in that rule’s Summary Compensation Table. The term Base Annual Salary
specifically excludes director fees and other director compensation, bonus,
option grants and any other compensation that would be reported in separate
columns in the Summary Compensation Table, but it includes salary deferred
at
the election of the Executive.
Article
8
Administration
of Agreement
8.1 Plan
Administrator Duties.
This
Agreement shall be administered by a Plan Administrator consisting of the board
or such committee or person(s) as the board shall appoint. The Executive may
not
be a member of the Plan Administrator. The Plan Administrator shall have the
discretion and authority to (x)
make,
amend, interpret, and enforce all appropriate rules and regulations for the
administration of this Agreement and (y)
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 Bank.
8.3 Binding
Effect of Decisions.
The
decision or action of the Plan Administrator concerning any question arising
out
of 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 and calculation method described in section
1.1.
11
8.4 Indemnity
of Plan Administrator.
The
Bank shall indemnify and hold harmless the members of the Plan Administrator
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.
8.5 Bank
Information.
To
enable the Plan Administrator to perform its functions, the Bank 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 Separation
from Service of the Executive and such other pertinent information as the Plan
Administrator may reasonably require.
In
Witness Whereof,
the
Executive and a duly authorized officer of the Bank have executed this Amended
Salary Continuation Agreement as of the date first written above.
|
Executive:
|
Bank:
|
|
|
Crescent
State Bank
|
||
|
/s/ Xxxxx X. Xxxxx
|
By:
|
|
|
Xxxxx
X. Xxxxx
|
||
|
Its:
|
||
|
And
By:
|
||
|
Its:
|
12
Beneficiary
Designation
Crescent
State Bank
Amended
Salary Continuation Agreement
I,
Xxxxx
X. Xxxxx, designate the following as beneficiary of any death benefits under
this Amended 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 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 and our marriage is subsequently
dissolved.
Signature:
Xxxxx
X.
Xxxxx
|
Date:
|
____________________,
200
|
Accepted
by the Bank this ___________
day of
_____________________,
200
By:
Print
Name:
Title:
13
Schedule
A
Crescent
State Bank
Amended
Salary Continuation Agreement
Xxxxx
X. Xxxxx
|
Plan
Year
|
Plan Year
ending December 31, |
Age at
Plan Year end |
Accrual
Balance @ 6.25% (1) |
Early
Termination annual benefit payable at Normal Retirement Age (2) |
Disability
annual benefit payable at Normal Retirement Age (2) |
Change-in-
Control benefit payable in a lump sum (3) |
|||||||||||||
|
4
|
2006
|
44
|
$
|
62,391
|
$
|
0
|
$
|
16,123
|
$
|
1,033,193
|
|||||||||
|
5
|
2007
|
45
|
$
|
99,240
|
$
|
0
|
$
|
24,096
|
$
|
1,033,193
|
|||||||||
|
6
|
2008
|
46
|
$
|
138,460
|
$
|
0
|
$
|
31,586
|
$
|
1,033,193
|
|||||||||
|
7
|
|
2009
|
47
|
$
|
180,202
|
$
|
0
|
$
|
38,624
|
$
|
1,033,193
|
||||||||
|
8
|
2010
|
48
|
$
|
224,630
|
$
|
0
|
$
|
45,237
|
$
|
1,033,193
|
|||||||||
|
9
|
2011
|
49
|
$
|
271,914
|
$
|
0
|
$
|
51,450
|
$
|
1,033,193
|
|||||||||
|
10
|
2012
|
50
|
$
|
322,241
|
$
|
0
|
$
|
57,288
|
$
|
1,033,193
|
|||||||||
|
11
|
2013
|
51
|
$
|
375,804
|
$
|
0
|
$
|
62,773
|
$
|
1,033,193
|
|||||||||
|
12
|
2014
|
|
52
|
$
|
432,813
|
$
|
0
|
$
|
67,926
|
$
|
1,033,193
|
||||||||
|
13
|
2015
|
53
|
$
|
493,488
|
$
|
0
|
$
|
72,768
|
$
|
1,033,193
|
|||||||||
|
14
|
2016
|
54
|
$
|
558,067
|
$
|
0
|
$
|
77,317
|
$
|
1,033,193
|
|||||||||
|
15
|
2017
|
55
|
$
|
626,799
|
$
|
81,592
|
(4)
|
$
|
81,592
|
$
|
1,033,193
|
||||||||
|
16
|
2018
|
56
|
$
|
699,952
|
$
|
85,608
|
$
|
85,608
|
$
|
1,033,193
|
|||||||||
|
17
|
2019
|
57
|
$
|
777,811
|
$
|
89,381
|
$
|
89,381
|
$
|
1,033,193
|
|||||||||
|
18
|
2020
|
58
|
$
|
860,677
|
$
|
92,926
|
$
|
92,926
|
$
|
1,033,193
|
|||||||||
|
19
|
2021
|
59
|
$
|
948,874
|
$
|
96,258
|
$
|
96,258
|
$
|
1,033,193
|
|||||||||
|
20
|
2022
|
60
|
$
|
1,042,743
|
$
|
99,387
|
$
|
99,387
|
$
|
1,042,743
|
|||||||||
|
21
|
2023
|
61
|
$
|
1,142,651
|
$
|
102,328
|
$
|
102,328
|
$
|
1,142,651
|
|||||||||
|
|
May
2024
|
62
|
$
|
1,186,152
|
(5)
|
$
|
103,500
|
$
|
103,500
|
||||||||||
(1)
Calculations
are approximations. Benefit calculations are based on prior year-end accrual
balances for illustrative purposes. The accrual balance reflects payment at
the
beginning of each month during retirement. For purposes of this illustration,
the accrual balance figures do not take account of the six-month delay under
Internal Revenue Code section 409A and section 2.1 of the Amended Salary
Continuation Agreement between Normal Retirement Age and the date when benefits
under section 2.1 commence.
(2)
The
Early
Termination and Disability benefits are calculated as the annual amount that
fully amortizes the Accrual Balance existing at the end of the month immediately
before the month in which Separation from Service occurs, amortizing that
Accrual Balance over the period beginning with the Executive’s Normal Retirement
Age and taking into account interest at the discount rate or rates established
by the Plan Administrator. Using a standard discount rate (6.25%), Early
Termination and Disability benefits are shown for illustrative purposes only.
The Early Termination and Disability benefits shown assume the Executive’s
Separation from Service occurs more than six months before the Executive’s
Normal Retirement Age and that the Early Termination benefit and the Disability
benefit therefore become payable beginning in the month after the Executive
attains Normal Retirement Age.
14
(3) The
change-in-control benefit under section 2.4 of the Salary Continuation Agreement
is the greater of (x)
$1,033,193 or (y)
the
accrual balance seven months after Separation from Service occurs, in either
case without reduction for the time value of money or other
discount.
(4) Xx.
Xxxxx
becomes vested in the Early Termination benefit on May 12, 2017, when he attains
age 55.
(5) Projected
retirement occurs on May 12, 2024, with the first monthly normal retirement
benefit payment on the first day of the seventh month after retirement, or
December 1, 2024. For purposes of this illustration, the accrual balance figure
as of May 2024 does not take account of the six-month delay under Internal
Revenue Code section 409A and section 2.1 of the Amended Salary Continuation
Agreement between Normal Retirement Age and the date when benefits under section
2.1 commence.
If
there
is a contradiction between the terms of the Agreement and Schedule A concerning
the amount of a benefit due the Executive under sections 2.2, 2.3, or 2.4 of
the
Agreement, the amount of the benefit determined under the Agreement shall
control.
15
