Exhibit 10.13
F IRST S OUTH B ANCORP , I NC .
D EFERRED B ONUS C OMPENSATION P LAN
(amending and restating the
Deferred Compensation Plan)
Providing for annual incentive bonus
awards that become vested and payable in annual installments, the
purpose of this Deferred Bonus Compensation Plan is both to (
x ) maximize stockholder returns and promote the
profitability and success of the Corporation by providing a bonus
incentive to those executives who are primarily responsible for the
Corporation’s profitability and success and ( y
) provide for deferred taxation of bonuses for participating
executives through a nonqualified deferred compensation plan.
Amending and restating in its entirety the First South Bancorp,
Inc. Deferred Compensation Plan that was implemented by First South
Bancorp, Inc. effective January 1, 2007, this Plan is
effective January 1, 2007. This Plan is intended to be
considered an unfunded arrangement maintained primarily to provide
supplemental benefits for selected executives and to be considered
a non-qualified benefit plan for purposes of the Employee
Retirement Income Security Act of 1974, as amended.
This Plan provides for annual bonus
awards but for deferred payment of each annual award over a period
of five years. Participation in this Plan is limited to executive
officers selected by the Plan administrator. Plan participants have
no right to elect payment dates for bonus awards or to defer
payment of bonus awards beyond the payment dates provided by the
Plan.
A RTICLE 1
D EFINITIONS
1.1 “ Beneficiary ” means each
designated person, or the estate of the deceased Participant,
entitled in accordance with Article 5 to benefits, if any, upon the
death of the Participant.
1.2 “ Beneficiary Designation Form
” means the form established from time to time by the Plan
Administrator that the Participant completes, signs, and returns to
the Plan Administrator to designate one or more
Beneficiaries.
1.3 Board means the Corporation’s board of
directors.
1.4 Change in Control
means a change in control as defined
in Internal Revenue Code section 409A, including –
(1) Change in ownership : a
change in ownership of the Corporation occurs on the date any one
person or group accumulates ownership of Corporation stock
constituting more than 50% of the total fair market value or total
voting power of the stock,
(2) 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 Corporation stock possessing 30% or more of the total
voting power of the Corporation, or ( y ) a majority of
the Corporation’s Board is replaced during any 12-month
period by directors whose appointment or election is not endorsed
in advance by a majority of the Board, or
(3) Change in ownership of a
substantial portion of assets : a change in ownership of a
substantial portion of the Corporation’s assets occurs if in
a 12-month period any one person or more than one person acting as
a group acquires from the Corporation assets having a total gross
fair market value equal to or exceeding 40% of the total gross fair
market value of all of the Corporation’s assets immediately
before the acquisition or acquisitions. For this purpose, gross
fair market value means the value of the Corporation’s
assets, or the value of the assets being disposed of, determined
without regard to any liabilities associated with the
assets.
1.5 Corporation
means First South Bancorp, Inc., a
South Carolina corporation.
1.6 Covered Executive
means any individual who is or who
is determined by the Plan Administrator to be likely to become a
covered employee within the meaning of Internal Revenue Code
section 162(m).
1.7 Disability
means, because of a medically
determinable physical or mental impairment that can be expected to
result in death or that can be expected to last for a continuous
period of at least 12 months, ( x ) the Participant is
unable to engage in any substantial gainful activity, or ( y
) the Participant is receiving income replacement benefits for
a period of at least three months under an accident and health plan
of the employer. Medical determination of disability may be made
either by the Social Security Administration or by the provider of
an accident or health plan covering employees of the Corporation or
subsidiaries, provided the impairment constitutes a disability as
defined in Internal Revenue Code section 409A. Upon request of the
Plan Administrator, the Participant must submit proof to the Plan
Administrator of the Social Security Administration’s or
provider’s determination.
1.8 Effective Date
means January 1,
2007.
1.9 ERISA means the Employee Retirement Income Security
Act of 1974, as amended.
1.10 Internal Revenue
Code means the Internal
Revenue Code of 1986, as amended, and all rules, regulations, and
guidance of general application issued thereunder by the Department
of the Treasury.
1.11 Participant
means an executive officer of First
South Bancorp, Inc. or a subsidiary who is selected by the Plan
Administrator for participation in the Plan.
1.12 Plan means this Deferred Bonus Compensation
Plan.
1.13 Plan
Administrator means the
administrator identified in Article 2.
1.14 Plan Year
means a twelve-month period
commencing on January 1 and ending on December 31 of each
year.
1.15 “ Termination with Cause ”
and “ Cause ” shall have the same meaning
specified in any effective severance or employment agreement
existing on the date hereof or hereafter entered into between the
Participant and the Corporation or between the Participant and a
subsidiary of the Corporation. If the Participant is not a party to
a severance or employment agreement containing a definition of
termination with cause, Termination with Cause means the
Corporation or a subsidiary terminates the Participant’s
employment because of –
(a) the Participant’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
Participant in the performance of duties, or a breach of the
Participant’s fiduciary duties for personal profit, in any
case whether in the Participant’s capacity as a director or
officer, or
(c) intentional wrongful damage by
the Participant to the business or property of the Corporation or a
subsidiary, including without limitation the reputation of the
Corporation or subsidiary, which in the judgement of the
Corporation causes material harm to the Corporation or subsidiary,
or
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(d) a willful violation by the
Participant of any applicable law or significant policy of the
Corporation or subsidiary that, in the Corporation’s
judgement, results in an adverse effect on the Corporation or
subsidiary, regardless of whether the violation leads to criminal
prosecution or conviction. For purposes of this Plan 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 Corporation or
subsidiary, or
(e) an intentional act of fraud,
embezzlement, or theft by the Participant in the course of
employment, or
(f) the occurrence of any event that
results in the Participant being excluded from coverage, or having
coverage limited for the Participant as compared to other
executives of the Corporation or subsidiary, under the
Corporation’s or subsidiary’s blanket bond or other
fidelity or insurance policy covering its directors, officers, or
employees, or
(g) removal of the Participant from
office or permanent prohibition of the Participant from
participating in the Corporation’s or subsidiary’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
(h) conviction of the Participant
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 Participant for seven consecutive days
or more.
A RTICLE 2
P LAN A DMINISTRATION
2.1 Plan Administrator
Duties . This Plan shall
be administered by a Plan Administrator consisting of the entire
Board or such Board committee as the Board shall appoint. No
Participant may be a member of the Plan Administrator. The Plan
Administrator shall have the discretion and authority to ( x
) make, amend, interpret, and enforce all appropriate rules
and regulations for the administration of this Plan and ( y
) decide or resolve any and all questions that may arise,
including interpretations of this Plan.
2.2 Agents
. The Plan Administrator may employ
agents and delegate to them such administrative duties as it sees
fit (including acting through a duly appointed representative) and
may from time to time consult with counsel, who may be counsel to
the Corporation.
2.3 Binding Effect of
Decisions . The decisions
and actions of the Plan Administrator having to do with the
administration, interpretation, and application of the Plan and the
rules and regulations promulgated hereunder shall be final and
conclusive and binding upon all persons having any interest in the
Plan. No Participant or Beneficiary shall be deemed to have any
right, vested or nonvested, regarding the continued use of any
previously adopted assumptions employed by the Plan
Administrator.
2.4 Indemnity of Plan
Administrator . The
Corporation shall indemnify and hold harmless the members of the
Plan Administrator against any and all claims, losses, damages,
expenses, or liabilities arising from any action or failure to act
with respect to this Plan, except in the case of willful misconduct
by the Plan Administrator or any of its members.
2.5 Corporation
Information . To enable
the Plan Administrator to perform its functions, the Corporation
shall supply full and timely information to the Plan Administrator
on all matters relating to the date and circumstances of the
retirement, Disability, death, or Separation from Service of
Participants and such other pertinent information as the Plan
Administrator may reasonably require.
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A RTICLE 3
A WARDS
3.1 Participants
. Full-time employees of the
Corporation and subsidiaries eligible to become Participants are,
in addition to the President and Chief Executive Officer and the
Chief Financial Officer of the Corporation, those executive
officers of the Corporation and its subsidiaries who are
participants in the Corporation’s separate short-term cash
incentive plan and who are selected for participation in this Plan
by the Plan Administrator because, by the nature and scope of their
positions, they are materially responsible for the management,
growth, and success of the Corporation. An executive officer
selected for participation more than 90 days after the beginning of
a Plan Year shall not become a Participant in this Plan until the
next Plan Year. Regardless of when during a Plan Year a Covered
Executive is selected for participation, however, a Covered
Executive may not become a Participant until the Plan Year after
the year in which he or she is selected for participation. If an
executive officer who is not a Covered Executive is selected for
participation within 90 days after the beginning of a Plan Year and
therefore becomes a Participant for that Plan Year, the Plan
Administrator may provide that his or her bonus award shall be
prorated based on the portion of the Plan Year in which he or she
was a Participant.
3.2 Award Levels
. (a) Participant
categories . Participants shall be classified by the
Board’s Compensation Committee into categories and the
Compensation Committee shall determine the maximum potential bonus
award for each category as a percentage of the Participant’s
salary. The Compensation Committee may change a Participant’s
maximum potential bonus award as a percentage of salary but the
change shall not be effective until the Plan Year after the year in
which the change is made.
(b) Bonus performance
criteria . The performance criteria to be applied by the Plan
Administrator to determine whether a Participant is entitled to a
bonus award under this Plan for a Plan Year shall be identical to
the criteria employed for purposes of the Corporation’s
short-term cash incentive plan for that Plan Year. The criteria
that are applicable as of the Effective Date are set forth in
Schedule A. Schedule A is attached to this Plan for illustrative
purposes only, does not form part of this Plan, and may in the Plan
Administrator’s discretion be updated from time to time. The
performance criteria employed for purposes of the short-term cash
incentive plan for the Chief Executive Officer of the Corporation
are determined annually by the Board’s Compensation
Commi
