FIRST AMENDMENT TO THE FIRST NATIONAL BANK OF POLK COUNTY EXECUTIVE SALARY CONTINUATION AGREEMENT
Exhibit 10.11
FIRST
AMENDMENT TO THE
FIRST
NATIONAL BANK OF POLK COUNTY
EXECUTIVE
SALARY CONTINUATION AGREEMENT
This
FIRST AMENDMENT is made and entered into on the 9th day of
December, 2008, by and between The First National Bank of Polk County (the
“Bank”), a national banking association, and Xxxxx X. Xxxxxx, an executive of
the Bank (the “Executive”).
WITNESSETH:
WHEREAS, the Bank and the Executive
previously entered into that certain Executive Salary Continuation Agreement,
dated February 7, 2000, (the “Agreement”); and
WHEREAS,
the Bank and the Executive desire to amend the Agreement to comply with the
final regulations issued under Internal Revenue Code Section 409A.
NOW, THEREFORE, in consideration of the
mutual covenants contained herein, the Bank and the Executive do hereby agree,
effective as of January 1, 2009, to amend the Agreement as follows:
1.
By deleting Paragraph III(A) in its entirety and
substituting therefor the following:
“A. Retirement
Date:
‘Retirement
Date’ shall mean the date the Executive experiences a Separation from Service on
or after the Executive’s Normal Retirement Age.”
2.
By deleting from Paragraph III(D) the phrase
“without cause” and substituting therefor the phrase “other than for
cause”.
3.
By deleting Paragraph III(E) in its entirety and
substituting therefor the following:
“E. Separation from
Service:
‘Separation
from Service’ shall mean a termination of the Executive’s employment where
either (1) the Executive has ceased to perform any services for the Bank and all
affiliated companies that, together with the Bank, constitute the ‘service
recipient’ within the meaning of Code Section 409A and the regulations
thereunder (collectively, the ‘Service Recipient’) or (2) the level of bona fide
services the Executive performs for the Service Recipient after a given date
(whether as an employee or as an independent contractor) permanently decreases
(excluding either a decrease as a result of military leave, sick leave, or other
bona fide leave of absence if the period of such leave does not exceed six (6)
months, or if longer, so long as the Executive retains a right to reemployment
with the Service Recipient under an applicable statute or by contract or any
other decrease permitted under Code Section 409A) to no more than twenty percent
(20%) of the average level of bona fide services performed for the Service
Recipient (whether as an employee or an independent contractor) over the
immediately preceding thirty-six-(36)-month period (or the full period of
service if the Executive has been providing services to the Service Recipient
for less than thirty-six (36) months).”
4. By
deleting Paragraph III(G) in its entirety and substituting therefor the
following:
“G. Change of
Control:
‘Change
of Control’ means (1) with respect to the Bank or Southcrest Financial Group,
Inc. (the ‘Holding Company’) a ‘change in ownership of a corporation’ as defined
under Code Section 409A; (2) with respect to the Holding Company, a ‘change in
effective control of a corporation’ as defined under Code Section 409A; or (3)
with respect to the Bank or the Holding Company, a ‘change in ownership of a
substantial portion of a corporation’s assets’ as defined under Code Section
409A, but substituting ‘eighty-five percent (85%)’ for the phrase ‘40 percent’
in Treasury Regulation Section 1.409A-3(i)(5)(vii)(A), or any successor
thereto.”
5.
By deleting Paragraph III(H) in its entirety and substituting
therefor the following:
“H. Restriction on Timing of
Distribution:
Notwithstanding
any provision in the Agreement to the contrary, to the extent necessary to avoid
the imposition of tax on the Executive under Code Section 409A, any payments
that are otherwise payable to the Executive within the first six (6) months
following the effective date of his Separation from Service, shall be suspended
and paid as soon as practicable following the end of the six-month period
following such effective date if, immediately prior to the Executive’s
Separation from Service, the Executive is determined to be a “specified
employee” (within the meaning of Code Section 409A(a)(2)(B)(i)) of the Bank (or
any related “service recipient” within the meaning of Code Section 409A and the
regulations thereunder). Any payments suspended by operation of the
foregoing sentence shall be paid as a lump sum to the Executive during the
seventh month following the date of his Separation from
Service. Payments (or portions thereof) that would be paid latest in
time during the six-month period will be suspended first.”
6.
By adding the following new Paragraph III(J):
“J. Accrued Liability Retirement
Account:
‘Accrued
Liability Retirement Account’ means the bookkeeping account established and
maintained by the Bank to reflect the liability that should be accrued by the
Bank under generally accepted accounting principles (“GAAP”) for the Bank’s
obligation to the Executive under this Agreement.”
2
7.
By capitalizing the phrase “accrued liability retirement
account” wherever it appears in the Agreement.
8.
By adding to the end of Section IV the
following sentence:
“Each
subsequent annual payment shall be made on the anniversary of the original
payment.”
9.
By deleting from Paragraph V(A) the
phrase “Separation from Service” and substituting therefor the phrase “Normal
Retirement Age”.
10. By
inserting into the first sentence of Paragraph V(B) the phrase “following Normal
Retirement Age” after the word Executive and before the comma.
11. By
deleting Paragraph VI in its entirety and substituting therefor the
following:
|
|
VI. [RESERVED]”
|
12. By
deleting the first paragraph of Paragraph VIII in its entirety and substituting
therefor the following:
“In the
event that the employment of the Executive shall terminate prior to Normal
Retirement Age, by the Executive’s voluntary action, or by the Executive’s
discharge by the Bank other than for cause, then this Agreement shall terminate
upon the date of such Separation from Service and the Bank shall pay to the
Executive an amount of money equal to the balance of the Executive’s Accrued
Liability Retirement Account on the date of such Separation from Service,
multiplied by the Executive’s cumulative vested percentage (Paragraph
VII). This compensation shall be paid in one (1) lump sum on the
first day of the second month following said Separation from
Service.”
13. By
deleting the third paragraph of Paragraph VIII in its entirety and substituting
therefor the following:
“In the
event the Executive’s employment is terminated by the Bank for cause at any
time, this Agreement shall terminate and all benefits provided herein shall be
forfeited.”
14. By
deleting Paragraph X in its entirety and substituting therefor the
following:
“X. CHANGE
OF CONTROL
If the
Executive experiences a Separation from Service on or after the date of the
Executive’s Termination of Employment (voluntarily or involuntarily), except a
termination for cause, within two (2) years after a Change of Control, then the
Executive shall receive one hundred percent (100%) of the benefits in Paragraph
IV herein upon attaining Normal Retirement Age. Said benefit shall be
paid in equal annual installments commencing on the first day of the month
following the month in which the Executive attains the Executive’s Normal
Retirement Age.”
3
15. By
deleting Paragraph XI(C) in its entirety and substituting therefor the
following:
“C. Amendment or
Termination:
This
Agreement may be amended, at any time, by mutual written consent of the
Executive and the Bank, except that no amendment may reduce the Executive’s
Accrued Liability Retirement Account. The Bank may unilaterally amend
the Agreement to conform with written directives to the Bank to comply with
legislative changes or tax law, including, without limitation, Section 409A of
the Code and any and all Treasury regulations and guidance promulgated
thereunder. No amendment shall provide for or otherwise permit any
acceleration of the time or schedule of any payment under the Agreement in a
manner that would be prohibited under Section 409A(a)(3) of the
Code.
The Bank
may, at any time, terminate the Agreement except that no termination may reduce
the Executive’s Accrued Liability Retirement Account. Except as
provided in this Subparagraph XI(C), the termination of the Agreement shall not
cause a distribution of benefits. Rather, after such termination,
benefit distributions will be made in accordance with the provisions of this
Agreement as if no such termination had occurred. Notwithstanding the
preceding provisions of this Subparagraph XI(C), the Bank may elect to terminate
the Agreement under any circumstances permitted by Treasury Regulations Section
1.409A-3(j)(4)(ix). In any such event, the Bank shall distribute the
Executive’s Accrued Liability Retirement Account, determined as of the date of
the termination of the Agreement, to the Executive in a lump sum at the earliest
date permitted under such Treasury guidance.”
16. By
deleting Paragraph XI(I) in its entirety and substituting therefor the
following:
“I. Tax
Withholding:
The
Executive is responsible for payment of all taxes applicable to compensation and
benefits paid or provided to the Executive under the Agreement, including
federal and state income tax withholding, except the Bank shall withhold any
taxes that, in its reasonable judgment, are required to be withheld, including
but not limited to taxes owed under Section 409A of the Code and regulations
thereunder and all employment taxes due to be paid by the Bank pursuant to
Section 3121(v) of the Code and regulations promulgated thereunder (i.e., Federal Insurance
Contributions Act (“FICA”) taxes on the present value of payments hereunder
which are no longer subject to vesting). The Bank’s sole liability
regarding taxes is to forward any amounts withheld to the appropriate taxing
authority(ies). By participating in the Agreement, the Executive
consents to the deduction of all tax withholdings attributable to participation
in the Agreement from the benefits due under the Agreement or other payments due
to the Executive by the Bank to satisfy the employee-portion of such
obligations. If insufficient cash wages are available or if the
Executive so desires, the Executive may remit payment in cash for the
withholding amounts.
4
Notwithstanding
any other provision in the Agreement to the contrary, payments due under the
Agreement may be accelerated to pay, where applicable, the FICA tax imposed
under Sections 3101, 3121(a), and 3121(v)(2) of the Code and any state, local,
and foreign tax obligations (the ‘Tax Obligations’) that may be imposed on
amounts deferred pursuant to the Agreement prior to the time such amounts are
paid or made available and to pay the income tax at source on wages imposed
under Section 3401 of the Code or the corresponding withholding provisions of
applicable state, local, or foreign tax laws as a result of an accelerated
payment of the Tax Obligations (the ‘Income Tax
Obligations’). Accelerated payments pursuant to this Subparagraph
XII(I) shall not exceed the amount of the Tax Obligations and Income Tax
Obligations and shall be made as a payment directly to taxing authorities
pursuant to the applicable withholding provisions. Any accelerated
payments pursuant to this Subparagraph XII(I) shall reduce the benefit otherwise
payable to the Executive pursuant to the Agreement.”
17. By
adding the following new Paragraph XI(M):
“M. Accelerated Payouts in the
Event of 409A Violations.
Notwithstanding
any other provision of the Agreement to the contrary, the Bank shall make
payments hereunder before such payments are otherwise due if it determines that
the provisions of the Agreement fail to meet the requirements of Code Section
409A and the rules and regulations promulgated thereunder; provided, however,
that such payment(s) may not exceed the amount required to be included in income
as a result of such failure to comply the requirements of Code Section 409A and
the rules and regulations promulgated thereunder and, to the extent permissible
therein, any taxes, penalties, interest and costs attributable
thereto.”
18. By
deleting the last sentence of Paragraph XIV in its entirety.
[Signatures
on Next Page]
5
Except as
provided herein, the terms of the Agreement shall remain in full force and
effect.
IN
WITNESS WHEREOF, the parties hereto have caused this First Amendment to be
executed as of the date first above written.
|
THE
FIRST XXXXXXXX XXXX XX XXXX XXXXXX
|
|||
|
Xxxxxxxxx,
Xxxxxxx
|
|||
|
By:
|
/s/ Xxxxx Xxxxxxxx | ||
|
Print
Name:
|
Xxxxx Xxxxxxxx | ||
|
Title:
|
Vice President/Board Secretary | ||
| /s/ Xxxxx X. Xxxxxx | |||
|
[Executive]
|
|||
6
