Exhibit 10.4.6
FIRST SOUTH BANK SALARY CONTINUATION AGREEMENT
THIS SALARY CONTINUATION AGREEMENT (the "Agreement") is made this 19th
day November, 1999, by and between FIRST SOUTH BANK, a state bank with a
principal office in Spartanburg, South Carolina (the "Company") and V.
XXXXX XXXXXX (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
Now, therefore, in consideration of the mutual covenants and agreements
herein, 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 "Accrual Balance "means the amount of death benefits
payable to the Executive pursuant to Section 3.1 of this Agreement and
set forth in the attached Schedule A.
1.1.2 "Board" or "Board of Directors" means the Board of
Directors of the Company.
1.1.3 "Change of Control" means
(i) the acquisition by any person, group of persons or
entities of the beneficial ownership or power to vote
more than twenty (20%) percent of the Company's
outstanding stock, or
(ii) during any period of two (2) consecutive years, a
change in the majority of the Board unless the
election of each new director was approved by at
least two-thirds of the directors then still in
office who were directors at the beginning of such
two (2) year period, or
(iii) a reorganization, merger, exchange of shares,
combination or consolidation of the Company with one
or more other corporations or other legal entities in
which the Company is not surviving the corporation,
or a transfer of all or substantially all of the
assets of the Company to another person or entity.
(iv) Notwithstanding any other provision in this Agreement,
"Change of Control" shall not be construed to mean the
formation of a bank holding company or other entity
approved in advance by the Board or any changes in
ownership of the Company's assets or stock as the result
of the formation of such an entity.
1.1.4 "Code" means the Internal Revenue Code of 1986, as
amended. References to a Code section shall be deemed to be that
section as it now exists and to any successor provision.
1.1.5 "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 that, in the judgment of a physician
appointed and paid by 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.
1.1.6 "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.
1.1.7 "Early Termination Date" means the month, day and year
in which Early Termination occurs.
1.1.8 "Effective Xxxx "means January 1, 1999.
1.1.9 "Normal Retirement Age" means the Executive's
sixty-fifth (65th ) birthday.
1.1.10 "Normal Retirement Date" means the later of the Normal
Retirement Age or Termination of Employment.
1.1.11 "Plan Year" means a twelve-month period commencing on
January 1st and ending on December 31st of each year. The first Plan
Year shall commence on the Effective Date of this Agreement.
1.1.12 'Termination for Cause "shall have the meaning set
forth in Section 5.2.
1.1.13 '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 that 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 Board shall have the sole and absolute
right to decide the dispute.
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Article 2 Lifetime
Benefits
2.1 Normal Retirement Benefit. Upon Termination of Employment on or after
the Normal Retirement Age for reasons other than the Executive's 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
for the first Plan Year is twenty thousand four hundred eighty-four
($20,484) dollars as stated on the attached Schedule A. The annual benefit
will be increased two (2.0%) percent each Plan Year thereafter, until
Termination of Employment. The Board, in its sole discretion, may increase
the annual benefit under this Section 2.1.1 beyond the annual two (2.0%)
percent increase; however, any such increase shall require the restatement
of Schedule A.
2.1.2 Payment of Benefit. The Company shall pay the annual benefit
to the Executive in equal and consecutive 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 fifteen
(215) additional months, for a total of two hundred sixteen (216) monthly
payments.
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 for
the Plan Year ending immediately prior to the Early Termination Date.
2.2.2 Payment of Benefit. The Company shall pay the annual
benefit to the Executive in equal and consecutive monthly installments
payable on the first day of each month commencing with the month
following the Executive's Normal Retirement Age and continuing for two
hundred fifteen (215) additional months, for a total of two hundred
sixteen (216) monthly payments.
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 for the Plan Year
ending immediately prior to the date in which the Termination of
Employment occurs. However, any increase in the annual benefit under
Section 2.1.1 would require the recalculation of the Disability benefit on
Schedule A. The Disability Annual Benefit amount is determined by
calculating a fixed annuity which is payable in one hundred seventy-nine
(179) equal monthly installments, crediting interest on the unpaid balance
of the Accrual Balance at an annual rate of seven and one-half (7.5%)
percent, compounded monthly.
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2.3.2 Payment of Benefit. The Company shall pay the annual benefit
amount to the . Executive in equal and consecutive monthly installments
payable on the first day of each month commencing with the month following
the Termination of Employment and continuing for two hundred fifteen (215)
additional months, for a total of two hundred sixteen (216) monthly
payments. Upon petition by the Executive, the Company, in its sole
discretion, may instead pay the benefit in an amount equal to the Accrual
Balance in a lump sum within sixty (60) days of Termination of Employment in
lieu of any other benefit under this Agreement.
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 annual benefit under this Section
2.4 is the Change of Control Annual Benefit amount set forth on Schedule
A for the Plan Year in which Termination of Employment occurs.
2.4.2 Payment of Benefit. The Company shall pay the annual
benefit amount to the Executive in equal and consecutive monthly
installments payable on the first day of each month commencing with the
month following the Normal Retirement Date and continuing for two
hundred fifteen (215) additional months, for a total of two hundred
sixteen (216) monthly payments.
Article 3 Death
Benefits
3.1 Death Benefits. If the Executive dies while employed by the Company
and prior to commencement of any benefits due under Article 2, 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 any other benefit under this
Agreement.
3.1.1 Amount of Benefit. The benefit under this Section 3.1 is
the Accrual Balance set forth in Schedule A for the Plan Year ending
immediately prior to the Executive's death.
3.1.2 Payment of Benefit, The Company shall pay the benefit to
the Executive's beneficiary in a lump sum within sixty (60) days
following the Executive's death.
Article 4
Beneficiaries
4.1 Beneficiary Designations. The Executive shall designate a primary
and contingent 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
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without a valid beneficiary designation, all payments shall be made to the
Executive's surviving spouse, if any, and if none, to the Executive's surviving
descendants, per stirpes, and if no surviving spouse and descendants, to the
Executive's estate. If Executive dies and subsequently the beneficiary receiving
benefit payments dies, then any remaining payments shall be paid pursuant to a
written beneficiary designation filed with the Company made by such beneficiary,
or if none to such beneficiary's estate.
4.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incapacitated, or to a person incapable of handling the disposition of
his or her property, the Company may pay such benefit to the guardian,
conservator, 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,
Executive shall irrevocably forfeit and the Company shall not pay any benefit
under this Agreement if any of the events described in Sections 5.1 - 5.3 below
occur:
5.1 Excess Parachute Payment. In the event that the benefit payable to
the Executive pursuant to this Agreement should cause a "parachute payment,(11)
as defined in Code section 280G(b)(2) of the Code, then such benefit shall be
reduced One Dollar (SI.00) at a time until the payment will not constitute a
parachute payment. In the event the benefit the Executive receives under this
Agreement should be incorrectly calculated so that such amount constitutes a
parachute payment, then the Executive will promptly refund to Company the
excess amount. Excess amount shall mean the amount in excess of the Executive's
base amount, as defined in Code Section 280G(b)(3), multiplied by 2.999.
5.2 Termination for Cause. If the Company terminates the Executive's
employment for:
5.2.1 any willful act of misconduct or gross negligence, prior
to a Change of Control, which is materially injurious to the Company
monetarily or otherwise;
5.2.2 a criminal conviction of the Executive for any act
involving the business and affairs of the Company; or
5.2.3 a criminal conviction of the Executive for commission of
a felony, the circumstances of which substantially relate to the
Executive's position with the Company.
5.3 Suicide or Misstatement. If the Executive commits suicide within two
(2) 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.
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5.4 No Duplication of Benefits. Each of the benefits described in
Articles 2 and 3 are intended to be separate benefits and mutually exclusive of
the other so that once benefit payments commence under one Section the
Executive (or his beneficiary, as the case may be) shall not thereafter receive
payments or become entitled to benefits under another Section.
Article 6 Claims and Review
Procedures
6.1 Claims Procedure. The Company shall notify any person or entity
that makes a claim pursuant to this Agreement (the "Claimant") in writing,
within ninety (90) days of the 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 (90) 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 (60) 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 (60) day period is not sufficient, the decision
may be deferred for up to another sixty (60) 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 heirs, beneficiaries, survivors, legal representatives,
personal representatives, assigns, successors, administrators and transferees.
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8.2 No Guarantee of Employment. This Agreement is not an employment
policy or contract. This Agreement 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. This Agreement also does not require the
Executive to remain an employee nor interfere with the Executive's right to
terminate employment at any time. Nothing in this Agreement shall be construed
as an employment agreement, either express or implied.
8.3 Non-Transferability. No amounts payable under this Agreement shall
be transferable by the Executive. Further, the Executive may not sell, assign,
alienate, pledge or otherwise encumber any benefits under this Agreement.
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 any beneficiary of the
Executive are general unsecured creditors of the Company for the payment of
benefits under this Agreement. This Agreement shall always be an unfunded
arrangement. 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, if any, is a
general asset of the Company to which the Executive and the Executive's
beneficiary have no preferred or secured claim. Title to and beneficial
ownership of any cash or assets Company may earmark to pay the Executive or his
beneficiary shall at all times remain with Company.
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;
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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 under
this Agreement including the employment of advisors
and the delegation of ministerial duties to qualified
individuals.
8.11 No Trust Created. Nothing contained in this Agreement, and no
action taken pursuant to its provisions by either party hereto, shall create,
nor be construed to create, a trust of any kind or a fiduciary relationship
between the Company and the Executive, his designated beneficiary, any other
beneficiary of the Executive or any other person.
8.12 Date of Birth. The Executive hereby represents to the Company that
his date of birth is June 8, 1943.
IN WITNESS WHEREOF, the Executive and a duly authorized Company officer
have executed and sealed this Agreement as of the date first above written.
Witnesses: COMPANY:
FIRST SOUTH BANK
s/ Xxxx X. Xxxxxxx By: s/ Xxxxx X. Slider
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s/ Xxxxxxx X. Xxxxxxxxxxx Its: President/CEO
------------------------- --------------------------
EXECUTIVE:
s/ Xxxx X. Xxxxxxx s/ V. Xxxxx Xxxxxx
------------------ -----------------------
V. Xxxxx Xxxxxx
s/ Xxxxxxx X Xxxxxxxxxxx
------------------------
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First South Bank
V. Xxxxx Xxxxxx
Salary Continuation Plan - Schedule A
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Early Term. Early Termination Change of Control Disability
Plan Benefit Accrual Vesting Vested Annual Benefit Annual Benefit Annual Benefit
Year Level Balance Schedule Benefit Payable at 65 Payable at 65 Payable Immediately
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1 20,484 16,338 100% 20,484 20,484 20,484 1,657
2 20,894 34,328 100% 20,894 20,894 20,894 3,481
3 21,312 54,179 100% 21,312 21,312 21,312 5,494
4 21,738 76,148 100% 21,738 21,738 21,738 7,721
5 22,173 100,557 100% 22,173 22,173 22,173 10,196
6 22,616 127,835 100% 22,616 22,616 22,616 12,962
7 23,068 158,608 100% 23,068 23,068 23,068 16,082
8 23,530 193,959 100% 23,530 23,530 23,530 19,667
9 24,000 236,697 100% 24,000 24,000 24,000 24,000
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BENEFICIARY DESIGNATION
FIRST SOUTH BANK SALARY CONTINUATION AGREEMENT
V. XXXXX XXXXXX
I designate the following as beneficiary of any death benefits under this
Salary Continuation Agreement:
Primary: Xxxx X. Xxxxxx
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Contingent: Xxxxxxx X. Xxxxxx and Xxxx X. Xxxxxx, Equally
------------------------------------------------
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 Company. 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 s/ V. Xxxxx Xxxxxx
-------------------------
Date 11/19/99
Accepted by the Company this 19th day of November, 1999
----- ---------
By s/ Xxxxx X. Slider
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Title President/CEO
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FIRST AMENDMENT TO
FIRST SOUTH BANK
SALARY CONTINUATION AGREEMENT
THIS AMENDMENT is made this 27 day of April, 2000, by and between the
First South Bank, a state bank located in Spartanburg, South Carolina
(the "Company"), and V. XXXXX XXXXXX (the "Executive).
WITNESSETH:
WHEREAS, the Executive and the Company entered into a Salary Continuation
Agreement (the "Agreement") dated November 19, 1999; and
WHEREAS, the Executive and the Company are desirous of amending the
language to the Agreement.
NOW, THEREFORE, in consideration of the premises, the Executive and the
Company agree to amend the "Agreement" as follows:
Paragraph 1.1.8 is amended to read as follows:
1.1.8 "Effective Date" means November 1, 1999. Except as amended
herein, the Agreement remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have entered into this Amendment
on the date and year first above written.
EXECUTIVE: COMPANY:
FIRST SOUTH BANK
s/ V. Xxxxx Xxxxxx By s/ Xxxxx X. Slider
------------------ ------------------
V. XXXXX XXXXXX Title President & CEO
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SECOND AMENDMENT FIRST SOUTH BANK SALARY
CONTINUATION AGREEMENT
THIS SECOND AMENDMENT executed on this 19th day of June , 2001, by and between
FIRST SOUTH BANK, located in Spartanburg, South Carolina (the "Company") and V.
XXXXX XXXXXX (the "Executive").
WITNESSETH:
WHEREAS, the Executive and the Company entered into the FIRST SOUTH BANK
SALARY CONTINUATION AGREEMENT on November 19, 1999, and on April 27, 2000 the
Company and the Executive executed a FIRST AMENDMENT TO THE FIRST SOUTH BANK
SALARY CONTINUATION AGREEMENT (the "Agreement").
WHEREAS, the Executive and the Company are desirous of amending the
language to the Agreement.
NOW, THEREFORE, in consideration of the premises, the Executive and the
Company agree to amend the "Agreement" as follows:
Paragraph 1.1.11 is amended to read as follows:
LI.11 "Plan Year" means a twelve-month period commencing on November 1
and ending on October 31 of each year. The first Plan Year shall commence on the
Effective Date of this Agreement.
Paragraph 2.3.1 is amended to read as follows:
2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the
Disability Annual Benefit amount set forth in Schedule A for the Plan Year
ending immediately prior to the date in which the Termination of Employment
occurs.
Except as amended herein, the Agreement remains in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have entered into this Second
Amendment on the date and year first above written.
EXECUTIVE: COMPANY:
FIRST SOUTH BANK
s/ V. Xxxxx Xxxxxx By s/ Xxxxx X. Slider
------------------ ------------------
V. Xxxxx Xxxxxx Title President/CEO
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THIRD AMENDMENT
TO THE
FIRST SOUTH BANK SALARY CONTINUATION AGREEMENT
DATED NOVEMBER 19,1999 AND AMENDED
APRIL 27,2000 AND JUNE 19,2001
FOR V. XXXXX XXXXXX
THIS THIRD AMENDMENT is adopted this 20th day of March, 2007, effective
as of January 1, 2005, by and between First South Bank, a state bank located in
Spartanburg, South Carolina (the "Company") and V. Xxxxx Xxxxxx (the
"Executive").
The Company and the Executive executed the Salary Continuation
Agreement on November 19, 1999 effective as of November 1, 1999, and executed a
First Amendment on April 27, 2000, and a Second Amendment on June 19, 2001 (the
"Agreement").
The parties intend this Third Amendment to be a material modification
of the Agreement such that all amounts earned and vested prior to December 31,
2004 shall be subject to the provisions of Code Section 409A.
The undersigned hereby amend the Agreement for the purpose of bringing
the Agreement into compliance with Section 409A of the Internal Revenue Code.
Therefore, the following changes shall be made:
Section 1.1.5 of the Agreement shall be deleted in its entirety and
replaced by the following:
1.1.5 "Disability" means the Executive: (i) is unable to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death
or can be expected to last for a continuous period of not less than
twelve (12) months; or (ii) is, by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of
not less than twelve (12) months, receiving income replacement
benefits for a period of not less than three (3) months under an
accident and health plan covering employees or directors of the
Company. Medical determination of Disability may be made by either the
Social Security Administration or by the provider of an accident or
health plan covering employees or directors of the Company provided
that the definition of "disability" applied under such insurance
program complies with the requirements of the preceding sentence. Upon
the request of the Plan Administrator, the Executive must submit proof
to the Plan Administrator of the Social Security Administration's or
the provider's determination.
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The following Section 1.1.11a shall be added to the Agreement
immediately following Section 1.1.11:
1.1.1 l a "Specified Employee" means a key employee (as defined in Section
416(i) of the Code without regard to paragraph 5 thereof) of the
Company if any stock of the Company is publicly traded on an
established securities market or otherwise.
Section 1.1.13 of the Agreement shall be deleted in its entirety and
replaced by the following:
1.1.13 " Termination of Employment" means the termination of the Executive's
employment with the Company for reasons other than death. Whether a
Termination of Employment takes place is determined based on the facts
and circumstances surrounding the termination of the Executive's
employment and whether the Company and the Executive intended for the
Executive to provide significant services for the Company following
such termination. A change in the Executive's employment status will
not be considered a Termination of Employment if:
(a) the Executive continues to provide services as an employee of
the Company at an annual rate that is twenty percent (20%) or
more of the services rendered, on average, during the
immediately preceding three full calendar years of employment
(or, if employed less than three years, such lesser period)
and the annual remuneration for such services is twenty
percent (20%) or more of the average annual remuneration
earned during the final three full calendar years of
employment (or, if less, such lesser period), or
(b) the Executive continues to provide services to the Company in
a capacity other than as an employee of the Company at an
annual rate that is fifty percent (50%) or more of the
services rendered, on average, during the immediately
preceding three full calendar years of employment (or if
employed less than three years, such lesser period) and the
annual remuneration for such services is fifty percent (50%)
or more of the average annual remuneration earned during the
final three full calendar years of employment (or if less,
such lesser period).
The following Section 1.1.14 shall be added to the Agreement
immediately following Section 1.1.13:
1.1.14 " Unforeseeable Emergency" means a severe financial hardship to the
Executive resulting from an illness or accident of the Executive, the
Executive's spouse, or the Executive's dependent (as defined in
Section 152(a) of the Code), loss of the Executive's property due to
casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Executive.
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Section 2.3.2 of the Agreement shall be deleted in its entirety and
replaced by the following:
2.3.2 Payment of Benefit. The Company shall pay the annual benefit amount to
the Executive in equal and consecutive monthly installments payable on
the first day of each month commencing with the month following
Termination of Employment and continuing for two-hundred fifteen (215)
additional months, for a total of two-hundred sixteen (216) monthly
payments.
The following Sections 2.5, 2.6, 2.7 and 2.8 shall be added to the
Agreement immediately following Section 2.4.2:
2.5 Restriction on Timing of Distributions. Notwithstanding any
provision of this Agreement to the contrary, if the Executive
is considered a Specified Employee at Termination of
Employment under such procedures as established by the Company
in accordance with Section 409A of the Code, benefit
distributions that are made upon Termination of Employment may
not commence earlier than six (6) months after the date of
such Termination of Employment. Therefore, in the event this
Section 2.5 is applicable to the Executive, any distribution
which would otherwise be paid to the Executive within the
first six months following the Termination of Employment shall
be accumulated and paid to the Executive in a lump sum on the
first day of the seventh month following the Termination of
Employment. All subsequent distributions shall be paid in the
manner specified.
2.6 Distributions Upon Income Inclusion Under Section 409A of the
Code. Upon the inclusion of any amount into the Executive's
income as a result of the failure of this non qualified
deferred compensation plan to comply with the requirements of
Section 409A of the Code, to the extent such tax liability can
be covered by the entire amount accrued by the Company with
respect to the Company's obligations hereunder, a distribution
shall be made as soon as is administratively practicable
following the discovery of the plan failure.
2.7 Change in Form or Timing of Distributions. All changes in the
form or timing of distributions hereunder must comply with the
following requirements. The changes:
(a) may not accelerate the time or schedule of any
distribution, except as provided in Section 409A of
the Code and the regulations thereunder;
(b) must, for benefits distributable under Sections 2.1,
2.2, 2.3 and 2.4, delay the commencement of
distributions for a minimum of five (5) years from
the date the first distribution was originally
scheduled to be made; and
(c) must take effect not less than twelve (12) months
after the election is made.
2.8 Hardship Distribution. The Company may make a hardship distribution
under the circumstances described in Section 2.8.1 below. Any such
distribution shall require the adjustment described in Section 2.8.2
to any amounts to be paid under Article 2 or 3.
15
2.8.1 Application for and Amount of Hardship Distribution. If an
Unforeseeable Emergency occurs, the Executive would then be
entitled to receive a distribution under the Agreement, but
not before January 1, 2008. The Company's Board of Directors
("the Board") shall make such distribution upon application by
the Executive. If applied for by Executive, the Executive
shall receive, within sixty (60) days, a Hardship Distribution
from the Agreement (i) only to the extent deemed necessary by
the Board to remedy the Unforeseeable Emergency, plus an
amount necessary to pay taxes reasonably anticipated as a
result of the distribution; and (ii) after taking into account
the extent to which such Unforeseeable Emergency is or may be
relieved through reimbursement or compensation by insurance or
otherwise or by liquidation of the Executive's assets (to the
extent the liquidation would not itself cause severe financial
hardship). In any event, the maximum amount which may be paid
out pursuant to this Section 2.8 is the amount the Company has
accrued with respect to the Company's obligations hereunder as
of the day that the Executive petitioned the Board to receive
a Hardship Distribution under this Section.
2.8.2 Benefit Adjustment. At the time of any Hardship Distribution,
the amount the Company has accrued with respect to the
Company's obligations hereunder shall be reduced by the amount
of the Hardship Distribution and the benefits to be paid under
Article 2 or Article 3 hereof shall reflect such reduced
amount.
Section 5.1 of the Agreement shall be deleted in its entirety.
Article 7 of the Agreement shall be deleted in its entirety and
replaced by the following:
Article 7
Amendments and Termination
7.1 Amendments. This Agreement may be amended only by a written agreement
signed by the Company and the Executive. However, the Company may
unilaterally amend this Agreement to conform with written directives to
the Company from its auditors or banking regulators or 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.
7.2 Plan Termination Generally. The Company and Executive may terminate
this Agreement at any time. The benefit hereunder shall be the amount
the Company has accrued with respect to the obligations hereunder as of
the date the Agreement is terminated. Except as provided in Section
7.3, the termination of this Agreement shall not cause a distribution
of benefits under this Agreement. Rather, after such termination
benefit distributions will be made at the earliest distribution event
permitted under Article 2 or Article 3.
7.3 Plan Terminations Under Section 409A. Notwithstanding anything to the
contrary in Section 7.2, if this Agreement terminates in the following
circumstances:
16
(a) Within thirty (30) days before, or twelve (12) months after a
change in the ownership or effective control of the Company,
or in the ownership of a substantial portion of the assets of
the Company as described in Section 409A(a)(2)(A)(v) of the
Code, provided that all distributions are made no later than
twelve (12) months following such termination of the Agreement
and further provided that all the Company's arrangements which
are substantially similar to the Agreement are terminated so
the Executive and all participants in the similar arrangements
are required to receive all amounts of compensation deferred
under the terminated arrangements within twelve (12) months of
the termination of the arrangements;
(b) Upon the Company's dissolution or with the approval of a
bankruptcy court provided that the amounts deferred under the
Agreement are included in the Executive's gross income in the
latest of (i) the calendar year in which the Agreement
terminates; (ii) the calendar year in which the amount is no
longer subject to a substantial risk of forfeiture; or (iii)
the first calendar year in which the distribution is
administratively practical; or
(c) Upon the Company's termination of this and all other
non-account balance plans (as referenced in Section 409A of
the Code or the regulations thereunder), provided that all
distributions are made no earlier than twelve (12) months and
no later than twenty-four (24) months following such
termination, and the Company does not adopt any new
non-account balance plans for a minimum of five (5) years
following the date of such termination;
the Company may distribute the entire amount accrued by the Company
with respect to the Company's obligations hereunder, determined as of
the date of the termination of the Agreement, to the Executive in a
lump sum subject to the above terms.
The following Section 8.13 shall be added to the Agreement immediately
following Section 8.12:
8.13 Compliance with Section 409A. This Agreement shall at all times be
administered and the provisions of this Agreement shall be interpreted
consistent with the requirements of Section 409A of the Code and any
and all regulations thereunder, including such regulations as may be
promulgated after the Effective Date of this Agreement.
IN WITNESS OF THE ABOVE, the Company and the Executive hereby consent
to this Third Amendment.
Executive: First South Bank
s/ V. Xxxxx Xxxxxx By Xxxxxxx X. Xxxxxxx
--------------------------------- ----------------------------
V. Xxxxx Xxxxxx Title HR and Training Director
17
FOURTH AMENDMENT
TO THE
FIRST SOUTH BANK SALARY CONTINUATION AGREEMENT
DATED NOVEMBER 19,1999
AND AMENDED APRIL 27,2000 AND
JUNE 19,2001 AND MARCH 20,2007
FOR V. XXXXX XXXXXX
THIS FOURTH AMENDMENT is adopted this 28th day of September, 2007, by
and between First South Bank, a state bank located in Spartanburg, South
Carolina (the "Company") and V. Xxxxx Xxxxxx (the "Executive").
The Company and the Executive executed the Salary Continuation
Agreement on November 19, 1999 effective as of November 1,1999, and executed a
First Amendment on April 27, 2000, and a Second Amendment on June 19, 2001 and
a Third Amendment on March 20, 2007 (the "Agreement").
The parties intend this Fourth Amendment to be a material modification
of the Agreement such that all amounts earned and vested prior to December 31,
2004 shall be subject to the provisions of Code Section 409A.
The undersigned hereby amend the Agreement to reflect the final 409A
Treasury Regulations. Therefore, the following changes shall be made:
Section 1.13 of the Agreement shall be deleted in its entirety and
replaced by the following:
1.13 "Termination of Employment* means termination of the Executive's
employment with the Company for reasons other than death or
Disability. Whether a termination of employment has occurred is
determined based on whether the facts and circumstances indicate that
the Company and the Executive reasonably anticipated that no further
services would be performed after a certain date or that the level of
bona fide services the Executive would perform after such date
(whether as an employee or as an independent contractor) would
permanently decrease to no more than twenty percent (20%) of the
average level of bona fide services performed (whether as an employee
or an Independent contractor) over the immediately preceding
thirty-six (36) month period (or the full period of services to the
Company if the Executive has been providing services to the Company
less than thirty-six (36) months).
Sections 2.3, 2.3.1 and 2,3.2 of the Agreement shall be deleted in
their entirety and replaced by the
following;
2.3 Disability Benefit. If the Executive experiences a 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.
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2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the
Disability Annual Benefit amount set forth on Schedule A for the Plan
Year ending immediately prior to such Disability.
2.3.2 Payment of Benefit. The Company shall pay the annual benefit amount to
the Executive in equal and consecutive monthly installments payable on
the first day of each month commencing with the month following such
Disability and continuing for two-hundred fifteen (215) additional
months, for a total of two-hundred sixteen (216) monthly payments.
Section 2.4.2 of the Agreement shall be deleted in their entirety and
replaced by the following:
2.4.2 Payment of Benefit. The Company shall pay the annual benefit amount to
the Executive in equal and consecutive monthly installments payable on
the first day of each month commencing with the month following Normal
Retirement Age and continuing for two hundred fifteen (215) additional
months, for a total of two hundred sixteen (216) monthly payments.
Section 2.7 of the Agreement shall be deleted in its entirety and
replaced by the following:
2.7 Change in Form or Timing of Distributions. All changes in the form or
timing of distributions hereunder must comply with the following
requirements. The changes:
(a) may not accelerate the time or schedule of any distribution,
except as provided in Section 409 A of the Code and the
regulations thereunder;
(b) must, for benefits distributable under Sections 2.2 and 2.4,
be made at least twelve (12) months prior to the first
scheduled distribution;
(c) must, for benefits distributable under Sections 2.1, 2.2 and
2.4, delay the commencement of distributions for a minimum of
five (5) years from the date the first distribution was
originally scheduled to be made; and
(d) must take effect not less than twelve (12) months after the
election is made.
Section 7.3 of the Agreement shall be deleted in its entirety and
replaced by the following:
13 Plan Terminations Under Section 409A. Notwithstanding anything to the
contrary in Section 7.2, if this Agreement terminates in the following
circumstances:
(a) Within thirty (30) days before, or twelve (12) months after a
change in the ownership or effective control of the Company,
or in the ownership of a substantial portion of the assets of
the Company as described in Section 409A(a)(2)(A)(v) of the
Code, provided that all distributions are made no later than
twelve (12) months following such termination of the Agreement
and further provided that all the Company's arrangements which
are substantially similar to the Agreement are terminated so
the Executive and all participants in the similar arrangements
19
are required to receive all amounts of compensation deferred
under the terminated arrangements within twelve (12) months of
the termination of the arrangements;
(b) Upon the Company's dissolution or with the approval of a
bankruptcy court provided that the amounts deferred under the
Agreement are included in the Executive's gross income in the
latest of (i) the calendar year in which the Agreement
terminates; (ii) the calendar year in which the amount is no
longer subject to a substantial risk of forfeiture; or (iii)
the first calendar year in which the distribution is
administratively practical; or
(c) Upon the Company's termination of this and all other
arrangements that would be aggregated with this Agreement
pursuant to Treasury Regulations Section 1.409A-l(c) if the
Executive participated in such arrangements ("Similar
Arrangements"), provided that (i) the termination and
liquidation does not occur proximate to a downturn in the
financial health of the Company, (ii) all termination
distributions are made no earlier than twelve (12) months and
no later than twenty-four (24) months following such
termination, and (iii) the Company does not adopt any new
arrangement that would be a Similar Arrangement for a minimum
of three (3) years following the date the Company takes all
necessary action to irrevocably terminate and liquidate the
Agreement;
the Company may distribute the amount the Company has accrued with
respect to the Company's obligations hereunder, determined as of the
date of the termination of the Agreement, to the Executive in a lump
sum subject to the above terms.
Schedule A shall be deleted in its entirety and replaced with the
following Schedule A.
IN WITNESS OF THE ABOVE, the Company and the Executive hereby consent
to this Fourth Amendment.
Executive: First South Bank
s/ V. Xxxxx Xxxxxx By s/ Xxxxx X. Slider
------------------ ------------------
V. Xxxxx Xxxxxx
Title President/CEO
-------------
20
Plan Year Reporting
Salary Continuation Plan
Schedule A
V. Xxxxx Xxxxxx
------------------------------------------------------------------------------------------------------------------------------------
Birth Date; 6/8/1943 Early Termination Disability Change in Control Pre-retire.
Plan Anniversary Date: 11/1/2000 Death
Normal Retirement: 6/8/2008, Age 65 Annual Annual Annual Benefit
Benefit (3) Benefit (3) Benefit (3)
Normal Retirement Payment: Amount Payable at Amount Payable at Amount Payable at Lump Sum
Monthly for 18 years Normal Retirement Age Separation from Service Normal Retirement Age Benefit
------------------------------------------------------------------------------------------------------------
Discount Benefit Accrual Based On Based On Based On Based On
Rate Level z Balance Vesting Benefit Vesting Accrual Vesting Benefit Accrual
Values --------------------------------------------------------------------------------------------------------------------------
as of (1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
------------------------------------------------------------------------------------------------------------------------------------
Oct 2000 7.50% 20,484 16,338 100% 20,484 100% 1,657 100% 20,484 16,338
Oct 2001 7.50% 20,894 34,328 100% 20,894 100% 3,481 100% 20,894 34,328
Oct 2002 7.50% 21,312 54,179 100% 21,312 100% 5,494 100% 21,312 54,179
Oct 2003 7.50% 21,738 76,148 100% 21,738 100% 7,721 100% 21,738 76,148
Oct 2004 7.50% 22,173 100,557 100% 22,173 100% 10,196 100% 22,173 100,557
Oct 2005 7.50% 22,616 127,835 100% 22,616 100% 12,962 100% 22,616 127,835
Oct 2006 7.50% 23,068 158,608 100% 23,068 100% 16,082 100% 23,068 158,608
Oct 2007 7.50% 23,530 193,959 100% 23,530 100% 19,667 100% 23,530 193,959
Jun 2008 7.50% 24,000 238,176 100% 24,000 100% 24,000 100% 24,000 238,176
1 June 8, 2008 Retirement; July 1, 2008 First Payment Date
2 The benefit amount is based on a $20,484 beginning benefit, inflating at
2.00% each year to $24,000 at retirement.
3 The annual benefit amount will be distributed in 12 equal monthly payments
for a total of 216 monthly payments.
" IF THERE IS A CONFLICT IN ANY TERMS OR PROVISIONS BETWEEN THIS SCHEDULE A AND
THE AGREEMENT, THE TERMS AND PROVISIONS OF THE AGREEMENT SHALL PREVAIL. IF A
TRIGGERING EVENT OCCURS, REFER TO THE AGREEMENT TO DETERMINE THE ACTUAL
BENEFIT AMOUNT BASED ON THE DATE OF THE EVENT.
21
