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EXHIBIT 10.3
XXXXXX BANK AND TRUST
EXECUTIVE SALARY CONTINUATION AGREEMENT
THE AGREEMENT, made and entered into this 30th day of March, 1995, by
and between Xxxxxx Bank and Trust, a Tennessee commercial bank (hereinafter
called "Bank"), and Xxxxx Xxxxxxxxx (hereinafter called the "Executive").
WITNESSETH:
WHEREAS, the Executive has been and continues to be a valued executive
of the Bank, and is now serving the Bank as its Vice President and Senior Loan
Officer; and
WHEREAS, it is the consensus of the Board of Directors that the
Executive's services to the Bank in the past have been of exceptional merit and
have constituted an invaluable contribution to the general welfare of the Bank
and in bringing it to its present status of operating efficiency, and its
present position in its field of activity; and
WHEREAS, the experience of the Executive, his knowledge of the affairs
of the Bank, his reputation and contacts in the industry are so valuable that
assurance of his continued services is essential for the future growth and
profits of the Bank and it is in the best interests of the Bank to arrange terms
of continued employment for the Executive so as to reasonably assure his
remaining in the Banks employment during his lifetime or until the age of
retirement; and
WHEREAS, it is the desire of the Bank that his services be retained as
herein provided; and
WHEREAS, the Executive is willing to continue in the employ of the Bank
provided the Bank agrees to pay to him or his beneficiaries certain benefits in
accordance with the terms and conditions hereinafter set forth:
ACCORDINGLY, it is the desire of the Bank and the Executive to enter
into this agreement under which the Bank will agree to make certain payments to
the Executive at retirement or his beneficiary in the event of his premature
death while employed by the Bank; and
FURTHERMORE, it is the intent of the parties hereto that this agreement
be considered an unfunded arrangement maintained primarily to provide
supplemental benefits for the Executive, as a member of a select group of
management or highly compensated employees of the Bank for purposes of the
Employee Retirement Income Security Act of 1974.
NOW, THEREFORE, in consideration of services performed in the past and
to be performed in the future as well as of the mutual promises and covenants
herein contained it is agreed as follows:
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EMPLOYMENT
1. The Executive is an employee at will of the Bank. Except as
otherwise expressly provided herein, this Agreement does not
alter or affect the Executive's employment relations with the
Bank. Nothing contained herein shall be construed as conferring
upon the Executive the right to be retained as an employee of the
Bank. The Executive agrees to serve the Bank, under the direction
of the Board of Directors, faithfully, diligently, competently
and to the best of his abilities.
FRINGE BENEFITS
2. The salary continuation benefits provided by this agreement are
granted by the Bank as a fringe benefit to the Executive and are
not part of any salary reduction plan or an arrangement deferring
a bonus or a salary increase. The Executive has no option to take
any current payment or bonus in lieu of these salary continuation
benefits except as set forth hereinafter.
RETIREMENT DATE
3. If Executive remains in the continuous employ of the Bank, he
shall retire from active employment with the Bank as of the
December 31st nearest his sixty-fifth (65th) birthday, unless by
action of the Board of Directors his period of active employment
shall be shortened or extended.
RETIREMENT BENEFIT AND POST-RETIREMENT DEATH BENEFIT
4. (a) Upon retirement the Bank in accordance with Paragraph 3
and subject to Paragraphs 4(b) and 8, commencing with the
first day of the month following the date of such
retirement, shall pay Executive an annual benefit equal to
$43,500 in equal monthly installments (of 1/12 of the annual
benefit) for a period of one hundred eighty (180) months.
(b) The Executive's Retirement Benefit and Post Retirement Death
Benefit as provided for in Paragraph 4(a) shall be reduced
if the Bank's average return on assets is below one percent
(1%) upon Executive's termination of service. Average return
on assets shall be calculated from the effective date of
this Agreement to the Executive's termination of service.
Return on assets for this purpose shall be the return on
assets of the Bank as defined and disclosed in the Bank's
annual report. If the Bank's average return on assets during
the term of this agreement is below one percent (1%) then
the benefit due to the Executive under Paragraph 4(a) shall
be receive a certain percentage of such benefit in
accordance with the following schedule:
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Average Percentage
Return on Assets Of Benefit
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1% or greater 100%
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0.90% - 0.99% 90%
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0.80% - 0.89% 80%
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0.70% - 0.79% 70%
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Below 0.70% 0%
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(c) If the Executive should die subsequent to termination of
service but prior to receiving all one hundred eighty (180)
monthly payments under this Agreement, then Executive's
designated beneficiary shall continue to receive such
monthly payments until one hundred eighty (180) payments
have been made by the Bank under this Agreement. Such
beneficiary designation shall be accomplished on Exhibit 2
to this Agreement and filed with the Bank. In the absence of
any effective designation of beneficiary, any such amounts
becoming due and payable upon the death of the Executive
subsequent to termination of service shall be payable to the
duly qualified executor or administrator of his estate.
DEATH BENEFIT PRIOR TO RETIREMENT
5. In the event the Executive should die while actively employed by
the Bank at any time after the date of this Agreement but prior
to his retirement upon attaining the age of sixty-five (65) years
(or such later date as may be agreed upon), the Bank will pay an
annual benefit equal to $43,500 in equal monthly installments
(each equal to 1/12 of the annual benefit) for a period of one
hundred eighty (180 months to such individual or individuals as
the Executive may have designated as his beneficiary on Exhibit 2
and filed with the Bank. The said monthly payments shall begin
the first day of the third month following the month of the
decease of the Executive. In the absence of any effective
designation of beneficiary, any such amount becoming due and
payable upon the death of the Executive shall be payable to the
duly qualified executor or administrator of his estate. Provided,
however, that anything hereinabove to the contrary
notwithstanding no death benefit shall be payable hereunder if it
is determined that the Executive's death was caused by suicide.
DISABILITY BENEFIT PRIOR TO RETIREMENT
6. In the event the Executive should become disabled while actively
employed by the Bank at anytime after the effective date of this
Agreement but prior to his attaining the age of sixty-five (65)
years (or such later date as may be agreed upon), the Bank will
pay an annual benefit equal to $43,500 in equal monthly
installments (of 1/12 of the annual benefit) for a period of one
hundred eighty (180) months. "Disabled" for purposes of this
Paragraph 6 shall mean the Executive's medically determined
physical or mental impairment which qualifies him for disability
benefits as determined by the Social Security Administration. The
said monthly payments shall begin the first day of the third
month following the month that the Executive becomes disabled. If
the Executive should die prior
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to receiving all one hundred eighty (180) monthly payments
pursuant to this Paragraph 6, then the Executive's designated
beneficiary, as listed on Exhibit 2 to this Agreement, shall
continue to receive such monthly payments until one hundred
eighty (180) payments have been made by the Bank under this
Agreement. In the absence of any effective designation of
beneficiary, any such amounts becoming due and payable upon the
death of the Executive subsequent to becoming disabled shall be
payable to the duly qualified executor or administrator of his
estate.
OTHER TERMINATION OF EMPLOYMENT
7. (a) In the event that the Executive's employment shall terminate
for any reason other than death, disability (as defined in
paragraph 6) or retirement (in accordance with Paragraph 3),
by his voluntary action or his discharge by the Bank without
cause, the Bank shall pay to the Executive the vested
portion of his retirement benefit, as provided for in
Paragraphs 4(a) and 8 and subject to any reduction in
accordance with Paragraph 4(b), commencing upon the earlier
of the Executive's death or by his attaining sixty-five (65)
years of age, such payment to be paid in one hundred eighty
(180) equal monthly payments. Such payments shall commence
on the first day of the month after the Executive attains
age sixty-five (65) or if the Executive should die before
that time, the first day of the third month following the
month of the decease of the Executive. In the event the
Executive's death should occur after such severance but
prior to the commencement or completion of the monthly
payments provided for in this Paragraph 7(a), the remaining
installments shall be paid to such individual or individuals
as the Executive may have designated in writing, and filed
with the Bank. In the absence of any effective designation
of beneficiary, any such amounts shall be payable to the
duly qualified executor or administrator of his estate.
(b) In the event the Executive shall be discharged by the Bank
for cause, then all of the Executive's rights under this
Agreement shall terminate and he shall forfeit all benefits
under this Agreement. For purposes of this Paragraph 7(b),
"for cause" shall mean gross negligence or willful
misconduct, the commission of a felony or gross-misdemeanor
involving moral turpitude, fraud, dishonesty, embezzlement,
willful violation of any law or any other behavior or act
that results in any adverse effect on the Bank as may be
determined by the Bank in its sole discretion.
VESTING
8. Except for such benefits provided in Paragraphs 5 and 6, the
Executive shall vest in the benefits which are the subject of
this Agreement in accordance with the schedule listed in Exhibit
1 to this Agreement. The Executive will be credited with a year
of participation for each anniversary thereafter of the effective
date of this Agreement for which the Executive remains in the
employ of the Bank.
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BENEFIT ACCOUNTING
9. The Bank shall account for this benefit using the regulatory
accounting principles of the Bank's primary federal regulators.
The Bank shall establish an accrued liability retirement account
for the Executive into which appropriate reserves shall be
accrued.
PARTICIPATION IN OTHER PLANS
10. The benefits provided hereunder shall be in addition to
Executive's annual salary as determined by the Board of
Directors, and shall not affect the right of Executive to
participate in any current or future Bank Retirement Plan, group
insurance, bonus, or in any supplemental compensation arrangement
which constitutes a part of the Bank's regular compensation
structure.
NON-COMPETE
11. The payment of benefits under this Agreement shall be contingent
upon the Executive's not engaging in any activity that directly
or indirectly competes with the Bank's interests for a period of
three (3) years commencing on the date the Executive's employment
with the Bank is terminated, within Wilson, Davidson, Xxxxxx,
Trousdale, Smith, DeKalb, Xxxxxx, Xxxxxxxxxx and Xxxxxxxxxx
counties in the State of Tennessee; provided, however, that the
Bank shall not be entitled to injunctive enforcement of the
non-compete provisions of this Paragraph 11, its sole remedy for
a violation by the Executive of the non-compete provisions of
this Paragraph 11 being the right to cease the payments of
benefits under this Agreement. In the event there is a change of
control as defined in Paragraph 12, the provisions of this
Paragraph 11 shall not apply, and the Executive shall be entitled
to the payment of benefits as set forth in Paragraph 12.
CHANGE OF CONTROL
12. The Bank agrees that if there is a change in control of the
ownership of the Bank or its parent company, Xxxxxx Bank Holding
Company, or if the Bank or Xxxxxx Bank Holding Company merges or
consolidates with any other company or organization, or permits
its business activities to be taken over by any other
organization, or ceases its business activities or terminates its
existence, the Executive will then be considered to be vested in
one hundred percent (100%) of the retirement benefit to be paid
to the Executive pursuant to Paragraph 4(a) above and shall not
be subject to any reduction as provided for in Paragraph 4(b) and
shall not be subject to the non-compete provisions of Paragraph
11. For purposes of this Paragraph 12, "change of control" means
that 50% or more of the outstanding common stock of the Bank or
Xxxxxx Bank Holding Company shall be held by persons who did not
hold such stock immediately prior to the transaction or series of
related transactions in which such stock was acquired by such
person or persons, unless such shares were acquired in an
underwritten public offering.
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ALIENABILITY
13. It is agreed that neither Executive nor his/her spouse nor any
designated beneficiary, shall have any right to commute, sell,
assign, transfer or otherwise convey the right to receive any
payments hereunder, which payments and the right thereto are
expressly declared to be non-assignable and non-transferable;
and, in the event of any attempted assignment or transfer, the
Bank shall have no further liability hereunder.
RESTRICTIONS ON FUNDING
14. The Bank shall have no obligation to set aside earmark, or
entrust any fund or money with which to pay its obligations under
this Agreement. The Bank reserves the absolute right at its sole
discretion to either fund the obligations undertaken by this
Agreement or to refrain from funding the same and determine the
extent, nature, and method of such funding.
GENERAL ASSETS OF THE BANK
15. The rights of the Executive under this Agreement and of any
beneficiary of the Executive shall be solely those of an
unsecured creditor of the Bank. If the Bank shall acquire an
insurance policy or any other asset in connection with the
liabilities assumed by it hereunder, it is expressly understood
and agreed that neither Executive nor any beneficiary of
Executive shall have any right with respect to, or claim against,
such policy or other asset. Such policy or asset shall not be
deemed to be held under any trust for the benefit of Executive or
his beneficiaries or to be held in any way as collateral security
for the fulfilling of the obligations of the Bank under this
Agreement. It shall be, and remain, a general, unpledged
unrestricted asset of the Bank and Executive or any of his
beneficiaries shall not have a greater claim to the insurance
policy or other assets, or any interest in either of them, than
any other general creditor of the Bank.
CLAIMS PROCEDURE
16. (a) In the event that benefits under this Agreement are not paid
to the Executive (or his beneficiary in the case of the
Executive's death), and such person feels entitled to
receive them, a claim shall be made in writing to the Board
of Directors of the Bank within sixty (60) days from the
date payments are not made. Such claim shall be reviewed by
the Board of Directors of the Bank and the Bank. If the
claim is denied, in full or in part, the Board of Directors
of the Bank shall provide a written notice within ninety
(90) days setting forth the specific reasons for denial
specific reference to the provisions of this Agreement upon
which the denial is based, and any additional material or
information necessary to perfect the claim, if any. Also,
such written notice shall indicate the steps to be taken if
a review of the denial is desired.
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If a claim is denied and a review is desired, the Executive
(or his beneficiary in the case of the Executive's death),
shall notify the Board of Directors of the Bank in writing
within sixty (60) days [and a claim shall be deemed denied
if the Plan Administrator does not take any action with the
aforesaid ninety (90)-day period]. In requesting a review,
the Executive or his beneficiary may review this Agreement
or any documents relating to it and submit any written issue
and comments he or she may feel appropriate. In its sole
discretion the Plan Administrator shall then review the
claim and provide a written decision within sixty (60) days.
This decision likewise shall state the specific provisions
of the Agreement on which the decision is based.
(b) For purposes of implementing this claims procedure, the
Board of Directors of the Bank shall be responsible for the
management, control, and administration of the Agreement as
established herein. The Bank may delegate to certain aspects
of the management a operation responsibilities of the
Agreement including the employment of advisors and the
delegation of ministerial duties to qualified individuals.
AMENDMENT
17. This Agreement may be amended in whole or in part from time to
time by the Bank. However, any modification to this Agreement
must be in writing.
INTERPRETATION
18. The Bank, acting in good faith, shall have reasonable discretion
to interpret this Agreement. The Bank's interpretation and
actions hereunder, if made in the exercise of good faith
discretion and not in an arbitrary and capricious manner, shall
be conclusive and binding upon all persons for all purposes.
Unless the Board of Directors of the Bank determines otherwise
regarding the interpretation of this Agreement or the review of
claims pursuant to Paragraph 16, the Chairman of the Board shall
interpret this agreement and review any claim acting on behalf of
the Bank. Neither the Bank nor any of its officers, employees or
members of the Board of Directors (including the Chairman of the
Board) shall be liable to the Executive or any other person for
any action taken in connection with the interpretation of the
Agreement.
HEADINGS
19. Headings and subheadings of this Agreement are inserted for
reference and convenience only and shall not be deemed a part of
this Agreement.
APPLICABLE LAW
20. The validity and interpretation of this Agreement shall be
governed by the laws of the State of Tennessee.
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BINDING EFFECT
21. Except as herein otherwise expressly stipulated to the contrary,
this Agreement shall be binding upon and inure to the benefit of
the Executive and the Bank and their respective successors and
permitted assigns.
EFFECTIVE DATE
22. The effective date of this Agreement shall be March 30, 1995.
IN WITNESS WHEREOF, Xxxxxx Bank and Trust has caused this Agreement to
be signed in its corporate name by its duly authorized officer, and attested by
its Secretary, and the Executive has hereunto set his hand, all on the day and
year first above written.
XXXXXX BANK AND TRUST
By: /s/ Xxxxxxx Xxxxxxx
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Title: President
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ATTEST:
/s/ Xxxxx Xxxxxx
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Secretary
/s/ Xxxxx Xxxxxxxxx
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Executive
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EXHIBIT 1
VESTING SCHEDULE
YEAR(S) OF AMOUNT OF RETIREMENT BENEFIT
PARTICIPATION IN WHICH VESTING OCCURS
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1 6%
2 12%
3 18%
4 24%
5 30%
6 36%
7 42%
8 48%
9 54%
10 60%
11 66%
12 72%
13 78%
14 84%
15 90%
16 96%
17 and thereafter 100%
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EXHIBIT 2
DESIGNATION OF BENEFICIARY
Pursuant to the terms of the Xxxxxx Bank Holding Company Salary
Continuation Agreement (the "Agreement"), dated ______________, 19__ between
myself and Xxxxxx Bank Holding Company, I hereby designated the following
beneficiary(ies) to receive payments which may be due under such Agreement after
my death:
Primary Beneficiary:
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Name Address Relationship
Secondary Beneficiary(ies)
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Name Address Relationship
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Name Address Relationship
The Primary Beneficiary named above shall be the designated
beneficiary referred to in Paragraphs 4 and 5 of the Agreement if he or she is
living at the time a death benefit payment thereunder becomes due and payable,
and the Secondary Beneficiary named above shall be the designated beneficiary
referred to in Paragraphs 4 and 5 of the Agreement only if he or she is living
at the time a death benefit payment becomes payable and the Primary Beneficiary
is not then living.
This designation hereby revokes any prior designation which may have
been in effect.
Date:
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Witness Executive
Acknowledged by:
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(Bank Officer)
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