Exhibit 99
SOUTHCOAST COMMUNITY BANK
AMENDED SALARY CONTINUATION AGREEMENT
This
AMENDED SALARY CONTINUATION AGREEMENT
(this "Agreement") is
entered into as of the 1st day of January,
2009 by and between Southcoast
Community Bank, a South Carolina-chartered
bank (the "Bank"), and L. Wayne
Pearson, its Chairman, Chief Executive Officer, and President (the
"Executive").
WHEREAS, the
Executive has contributed substantially to the success of
the Bank 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 to the Executive salary
continuation benefits 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
Bank and the Executive intend that this Agreement
shall
amend and restate in its entirety the
January 1, 2008 Salary Continuation
Agreement between the Executive and the Bank, and
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.
NOW
THEREFORE, in consideration of the
foregoing premises and other
good and valuable consideration, the receipt and sufficiency of
which are hereby
acknowledged, the parties hereto 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 Statement of Financial
Accounting Standards
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 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.
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.
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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" shall mean 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, as
modified below:
(a) Change in
ownership: a change in ownership of Southcoast Financial
Corporation, a South Carolina corporation of
which the Bank is a wholly owned
subsidiary, occurs on the date any one person or group
accumulates ownership of
Southcoast Financial Corporation stock constituting
more than 50% of the total
fair market value or total voting power of Southcoast
Financial Corporation's
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
Southcoast Financial Corporation stock
possessing 50% or more of the total
voting power of Southcoast Financial Corporation
stock, or (y) a majority of
Southcoast 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 Southcoast Financial Corporation's
board of directors,
or
(c) Change in
ownership of a substantial portion of assets: a change in
ownership of a substantial portion of Southcoast 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 Southcoast Financial
Corporation assets having a total
gross fair market value equal to or exceeding 50% of the total
gross fair market
value of all of Southcoast Financial Corporation's assets
immediately before the
acquisition or acquisitions. For this purpose, gross fair market
value means the
value of Southcoast 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 by
the Department
of the Treasury under the Internal Revenue Code of 1986, as
amended.
1.6 "Early
Termination" means Separation from Service before
Normal
Retirement Age for reasons other than death or Termination for
Cause, but Early
Termination excludes a Separation from
Service occurring after a Change in
Control.
1.7 "Effective Date" means January 1,
2008.
1.8 "Intentional,"
for purposes of this Agreement, no act or failure to
act on the part of the Executive 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.
1.9 "Normal Retirement Age" means age
70.5.
1.10
"Plan Administrator" or
"Administrator" means the plan
administrator described in Article 8.
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1.11 "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.
1.12
"Separation from Service" shall mean a separation from service
as
defined in Code section 409A, including termination of
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, 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.
1.13
"Termination for Cause" and "Cause"
shall have the meaning
specified in any effective severance or
employment agreement existing on the
date hereof or hereafter entered into between
the Executive and the Bank or
between the Executive and Southcoast Financial Corporation.
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 judgment of the Bank
causes material harm
to the Bank or its 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 judgment,
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 Southcoast Financial
Corporation, or
(e) the
occurrence of an event that results in the Executive's
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 liability 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
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(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.
ARTICLE 2
LIFETIME BENEFITS
2.1 Normal
Retirement Benefit. Unless Separation from Service
occurs
before or on or after the date the Executive attains Normal
Retirement Age or if
a Change in Control occurs on or before the date of the
Executive's Separation
from Service, when 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. If the Executive's
Separation from Service
thereafter is a Termination for Cause or if this
Agreement terminates under
Article 5, no benefits or further benefits shall be paid.
2.1.1 Amount of
benefit. The annual benefit under this section 2.1
is
$287,730.
2.1.2 Payment of
benefit. Beginning with the month immediately
after
the month in which
the Executive attains Normal Retirement
Age, the
Bank shall pay the
annual benefit described in this section 2.1 to the
Executive in equal
monthly installments on the first day of each month.
The annual benefit
shall be paid to the Executive for 15 years.
2.2 Early
Termination Benefit. Upon Early Termination the Bank
shall
pay to the Executive the benefit described in
this section 2.2 instead of any
other benefit under this Agreement.
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
Executive's Separation from Service, 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 15 years.
2.3 Annual Benefit
Statement. Within 60 days after the end of each Plan
Year the Plan Administrator shall provide
or cause to be provided to the
Executive and the Bank an annual benefit statement
showing benefits payable or
potentially payable to the Executive under this
Agreement. Each annual benefit
statement shall supersede the previous year's annual benefit
statement. If there
is a contradiction between this Agreement
and the annual benefit statement
concerning the amount of a particular benefit payable or
potentially payable to
the Executive under section 2.2, the amount of the benefit
determined under the
Agreement shall control.
2.4 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
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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
