Exhibit 10.4
THE PEOPLES NATIONAL BANK
Salary Continuation Agreement
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THE PEOPLES NATIONAL BANK
SALARY CONTINUATION AGREEMENT
THIS SALARY
CONTINUATION AGREEMENT
(the "Agreement") is
adopted this
24th day of October,
2006, by and between THE PEOPLES NATIONAL BANK, a national
commercial bank
located in Easley,
South Carolina (the "Bank") and William
Brooks West (the "Executive").
The purpose of this Agreement is to provide specified benefits to the
Executive, a member
of a select
group of management or highly compensated
employees who contribute materially to the continued
growth, development,
and
future business
success of the Bank.
This Agreement shall
be unfunded for tax
purposes and for purposes of Title I of the Employee Retirement Income Security
Act of 1974 ("ERISA"), as amended from time to time.
Article 1
Definitions
Whenever used in this Agreement, the following words and phrases
shall
have the meanings specified: 1.1 "Beneficiary" means each
designated person, or
the estate of the deceased Executive, entitled to benefits, if any, upon the
death of the Executive determined pursuant to Article 4.
1.2
"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.
1.3 "Board"
means the Board of
Directors of the Bank
as from time to time
constituted.
1.4 "Change in
Control" means, with
respect to an Executive, a "change in
ownership" or a
"change in effective control" of the Bank or an
affiliated
corporation, as
described in Treasury
Regulations Section
1.409A-3(g)(5) (which
events are
collectively
referred to herein
as
"Change in Control
events").
Notwithstanding any
provision herein to
the contrary, to
qualify as a Change in Control, the occurrence of the
Change in Control event must be objectively determinable and any
requirement that any
person, such as the Board or the Compensation
Committee, certify the
occurrence of a Change in Control event must be
strictly ministerial
and not involve any discretionary authority. To
constitute a Change in Control with respect to an Executive, the
Change
in Control
event must relate to (i) the corporation for which the
Executive is performing services at the time of the Change
in Control;
(ii) the corporation
that is liable for the
payment of the
deferred
compensation; or (iii)
a corporation that is a majority shareholder of
a corporation
identified in
subparagraph
(i) or (ii) above,
or any
corporation in a chain of corporations in which each corporation is a
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majority shareholder
of another corporation
in the chain, ending in a
corporation identified in subparagraph (i) or (ii) above.
(a) A "change
in ownership" of a
corporation
occurs on the date
that any one person,
or more than one person acting as a
group,
acquires ownership of stock of the
corporation that,
together with stock held by such person or group, constitutes
more than 50 percent of the total fair market value or total
voting power of the stock of such corporation. However, if any
one person,
or more than one
person acting as a group, is
considered to own more
than 50 percent of the total fair
market value
or total voting power of the stock of a
corporation, the
acquisition of additional stock by the same
person or persons is not considered to cause a change in
ownership of the
corporation
(or to cause a
change in the
effective control of
the corporation
(within the meaning
of
paragraph (b) below)).
(b)
Notwithstanding that a
corporation has not undergone a change
in ownership under paragraph (a) above, a "change in effective
control" of a corporation occurs on the date that either:
(i) Any one
person, or more than
one person acting as
a
group, acquires (or
has acquired during the 12-month
period ending
on the date of the most recent
acquisition by such
person or persons)
ownership of
stock of the
corporation possessing
35 percent or
more of the total
voting power of the
stock of such
corporation; or
(ii)
A majority of members of the corporation's board of
directors
is replaced during any
12-month period by
directors whose
appointment
or election is not
endorsed by
a majority of the members of the
corporation's board of directors prior to the date of
the appointment or election.
For purposes of this paragraph (b), the term corporation
refers solely
to the relevant corporation identified in the opening paragraph of
this
Section 1.4, for which no other corporation is a majority
shareholder.
1.5 "Code"
means the Internal Revenue Code of 1986, as amended.
1.6
"Disability" means the Executive's inability as a result of
physical or
mental incapacity to substantially perform his duties for the Bank
on a
full-time basis for a
period of six (6)
months as determined by an
independent physician
selected with the approval of both the Executive
and the Bank.
1.7 "Early
Termination"
means Separation from Service before Normal
Retirement Age
except when such Separation from Service occurs
following a
Change in Control or due to death, Disability, or
Termination for Cause.
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1.8 "Effective
Date" means October 1, 2006.
1.9 "Final
Pay" means the Executive's highest annualized base salary
(before reduction for compensation deferred pursuant to all
qualified,
non-qualified, and
Code Section
125 plans)
from the three (3)
years
prior to Separation
from Service,
including the year such Separation
from Service occurs.
1.10
"Normal Retirement
Age" means the
Executive attaining
age sixty-five
(65).
1.11
"Normal Retirement
Date" means the later
of Normal Retirement
Age or
Separation from Service.
1.12
"Plan Administrator" means the plan administrator described in Article
6.
1.13
"Plan Year" means each
twelve-month period
commencing on October
1st
and ending on September 30th of each year. The initial
Plan Year shall
commence on the
Effective Date of this Agreement and end on the
following
September 30th.
1.14
"Projected Benefit" means fifteen percent (15%) of Projected Final
Pay.
1.15
"Projected Final Pay"
means Final Pay
increased by four
percent (4%)
annually, until Normal Retirement Age.
1.16
"Separation from
Service" means the
termination
of the Executive's
employment with the Bank and all affiliated entities within the
meaning
of Sections
414(b) and
414(c) of the Code,
for reasons other than
death. Whether a
Separation
from Service
takes place is
determined
based on the facts and circumstances surrounding the termination of
the
Executive's employment
and whether the Bank and the Executive intended
for the Executive to provide significant services for the Bank
following such
termination. A
termination of
employment will not
be
considered a Separation from Service if:
(a) the
Executive continues to
provide services as an employee of
the Bank 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, illness, such lesser period), or
(b) the
Executive continues to
provide services to
the Bank in a
capacity other than as
an employee
of the Bank 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
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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).
1.17
"Specified Employee" means a key employee (as defined in Section
416(i)
of the Code without
regard to paragraph 5
thereof) of the Bank or any
affiliated entity
within the meaning of Sections 414(b) and 414(c) of
the Code, if any stock of such entity is publicly traded on an
established securities market or otherwise.
1.18
"Termination for Cause" means Separation from Service for:
(a) any
act that constitutes, on the part of the Executive,
continued failure
to implement or follow the directives,
policies or procedures of the Board, willful violation of any
state or federal law
or regulation
applicable
to the Bank,
mis-, mal- or non-feasance of duty, conduct inappropriate to
the Executive's
office, or a willful violation of this
Agreement which is
demonstrably
likely to lead to
injury to
the business or reputation of the Bank; or
(b) any act
that resulted or was
intended to result in
direct or
indirect gain to or
personal enrichment
of the Executive
at
the expense, direct or indirect, of the Bank; or
(c) any act
that constitutes, on the part of the Executive, fraud,
dishonesty, moral
turpitude, gross negligence, or intentional
damage to the property or business of the Bank; or
(d) the
conviction
(from which no appeal may be or is timely
taken) of the Executive of a felony; or
(e) the
suspension or removal of the Executive by federal or state
banking regulatory
authorities acting
under lawful authority
pursuant to provisions
of federal or state
law or regulation
which may be in effect from time to time;
provided, however,
that in the case of clauses (a) and (b) above, such
conduct shall not constitute Cause:
(x) unless
(i) there shall have been delivered to the
Executive a
written notice setting forth with
specificity the
reasons that the Board
believes the
Executive's conduct
meets the criteria set
forth in
clause (a) or clause (b), (ii) the Executive shall
have been provided
the opportunity to be heard in
person by the Board (with assistance of the
Executive's counsel if the Executive so desires), and
(iii) after
such hearing, the termination is
evidenced by a
resolution
adopted in good faith
by
two-thirds of the
members of the Board
(other than
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the Executive);
provided further,
however, that, if
the Executive's employment is terminated by operation
of the Bylaws of the Bank as the result of a
Disqualification
Notice (as defined in the Bylaws),
as used in this paragraph (x), "Board of the Company"
shall mean
the board of directors of Peoples
Bancorporation, Inc.
Article 2
Distributions During Lifetime
2.1 Normal
Retirement
Benefit. Upon the Normal Retirement Date,
the Bank
shall distribute to the Executive the benefit described in this
Section
2.1 in lieu of any other benefit under this Article.
2.1.1
Amount of Benefit. The
annual benefit under
this Section 2.1
is fifteen percent (15%) of Final Pay.
2.1.2
Distribution of Benefit. The Bank shall distribute the
annual
benefit to
the Executive in twelve (12) equal monthly
installments
commencing on
the first day of the month
following Normal
Retirement Date. The annual benefit shall be
distributed to the Executive for fifteen (15) years.
2.2 Early
Termination
Benefit. Upon Early Termination, the Bank shall
distribute to the
Executive the benefit
described in this Section 2.2
in lieu of any other benefit under this Article.
2.2.1
Amount of Benefit. The
benefit under this
Section 2.2 is the
vested percentage,
determined as of the
end of the Plan Year
preceding Separation from Service, of the benefit described in
Section 2.1.1 subject to the following vesting schedule:
Date
Percent Vested
----
--------------
10/31/2006 - 10/30/2007
0.61%
10/31/2007 - 10/30/2008
3.98%
10/31/2008 - 10/30/2009
9.74%
10/31/2009 - 10/30/2010
17.58%
10/31/2010 - 10/30/2011
27.30%
10/31/2011 - 10/30/2012
38.78%
10/31/2012 - 10/30/2013
52.03%
10/31/2013 - 10/30/2014
67.37%
10/31/2014 - 1/30/2015
85.85%
1/31/2015 or Later
100.00%
2.2.2
Distribution of Benefit. The Bank shall distribute the
annual
benefit to
the Executive in twelve (12) equal monthly
installments
commencing on
the first day of the month
following Normal
Retirement Age. The
annual benefit shall be
distributed to the Executive for fifteen (15) years.
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2.3 Disability
Benefit. If Executive experiences a Disability which results
in a Separation from
Service prior to Normal Retirement Age, the Bank
shall distribute to the Executive the benefit described in this
Section
2.3 in lieu of any other benefit under this Article.
2.3.1
Amount of Benefit. The
benefit under this
Section 2.3 is the
vested percentage,
determined as of the
end of the Plan Year
preceding Separation from Service, of the benefit described in
Section 2.1.1 subject to the following vesting schedule:
Date
Percent Vested
----
--------------
10/31/2006 - 10/30/2007
6.10%
10/31/2007 - 10/30/2008
19.91%
10/31/2008 - 10/30/2009
32.46%
10/31/2009 - 10/30/2010
43.96%
10/31/2010 - 10/30/2011
54.60%
10/31/2011 - 10/30/2012
64.63%
10/31/2012 - 10/30/2013
74.33%
10/31/2013 - 10/30/2014
84.21%
10/31/2014
- 1/30/2015
95.39%
1/31/2015 or Later
100.00%
2.3.2
Distribution of Benefit. The Bank shall distribute the benefit
to the Executive
in twelve (12) equal
monthly installments
commencing on the
first day of the
month following Normal
Retirement Age. The annual benefit shall be distributed to the
Executive for fifteen (15) years.
2.4 Change in
Control Benefit. Upon a Change in Control followed by a
Separation from Service, the Bank shall distribute to the Executive
the
benefit described
in this Section 2.4 in lieu of any other
benefit
under this Article.
2.4.1
Amount of Benefit. The
benefit under this
Section 2.4 is one
hundred percent (100%) of the Projected Benefit.
2.4.2
Distribution of Benefit. The Bank shall distribute the
annual
benefit to
the Executive in twelve (12) equal monthly
installments
commencing on
the first day of the month
following Normal
Retirement Age. The
annual benefit shall be
distributed to the Executive for fifteen (15) years.
2.5
Restriction on Timing of Distribution. Notwithstanding any
provision of
this Agreement
to the contrary, if the Executive is considered a
Specified Employee at
Separation from Service under such procedures as
established by the
Bank in accordance
with Section 409A of
the Code,
benefit distributions
that are made upon
Separation from
Service may
not commence
earlier than six (6) months after the date of such
Separation from
Service. 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
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Separation from
Service shall be accumulated and paid to the Executive
in a lump sum on the
first day of the
seventh month following the
Separation from Service. 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 portion of the benefits 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
liability accrued
to satisfy the Bank's obligations to Executive
pursuant to this Agreement, 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. For distribution of benefits
under this Article 2, the Executive and the Bank may, subject to the
terms of Section 8.1, amend the Agreement to delay the timing or
change
the form of distributions. Any such amendment:
(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, be made at
least twelve
(12) months prior to the
first scheduled distribution;
(c) 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
(d) must take
effect not less than
twelve (12) months
after the
amendment is made.
Article 3
Distribution at Death
3.1 Death
During Active Service.
If the Executive dies while in the active
service of the Bank, the Bank shall distribute to the Beneficiary the
benefit
described in
this Section 3.1. This benefit shall be
distributed in lieu of the benefits under Article 2.
3.1.1 Amount of Benefit.
The benefit
under this Section 3.1
is the
Projected Benefit.
3.1.2
Distribution of Benefit. The Bank shall distribute the benefit
to the Beneficiary
in a lump sum within sixty (60) days
following receipt
by the Bank of the Executive's death
certificate.
3.2 Death
During Distribution of a Benefit. If the Executive dies after
any
benefit distributions
