Exhibit 10.27
DIRECTOR SUPPLEMENTAL RETIREMENT PLAN
DIRECTOR AGREEMENT
THIS AGREEMENT is made and entered into as of the 1st day of October,
2001, by and between First Federal of the South, a bank organized and existing
under the laws of the United States (hereinafter referred to as the "Bank"),
and _______________, a member of the Board of Directors of the Bank
(hereinafter referred to as the "Director").
WHEREAS, the Director is now serving on the Board of the Bank
(hereinafter referred to as the "Board") and has for many years faithfully
served the Bank. It is the consensus of the Board of Directors that the
Director's services have been of exceptional merit, in excess of the
compensation paid and an invaluable contribution to the profits and position of
the Bank in its field of activity. The Board further believes that the
Director's experience, knowledge of corporate affairs, reputation and industry
contacts are of such value, and the Director's continued services so essential
to the Bank's future growth and profits, that it would suffer severe financial
loss should the Director terminate his service on the Board;
ACCORDINGLY, the Board has adopted the First Federal of the South
Director Supplemental Retirement Plan (hereinafter referred to as the "Director
Plan") and it is the desire of the Bank and the Director to enter into this
Agreement under which the Bank will agree to make certain payments to the
Director upon the Director's retirement and to the Director's beneficiary(ies)
in the event of the Director's death pursuant to the Director Plan;
FURTHERMORE, it is the intent of the parties hereto that this Director
Plan be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Director, and to be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Director is fully advised of
the Bank's financial status and has had substantial input in the design and
operation of this benefit plan; and
NOW THEREFORE, in consideration of services the Director has performed
in the past and those to be performed in the future, and based upon the mutual
promises and covenants herein contained, the Bank and the Director agree as
follows:
I. DEFINITIONS
A. Effective Date:
The Effective Date of the Director Plan shall be October 1,
2001.
B. Plan Year:
Any reference to the "Plan Year" shall mean a calendar year
from January 1st to December 31st. In the year of
implementation, the term "Plan Year" shall mean the period
from the Effective Date to December 31st of the year of the
Effective Date.
C. Retirement Date:
Retirement Date shall mean retirement from service with the
Bank which becomes effective on the first day of the calendar
month following the month in which the Director reaches age
seventy (70) or such later date as the Director may actually
retire.
D. Termination of Service:
Termination of Service shall mean the Director's voluntary
resignation from service on the Board or failure to be
re-elected to the Board, prior to the Normal Retirement Age
(Subparagraph I [J]).
E. Pre-Retirement Account:
A Pre-Retirement Account shall be established as a liability
reserve account on the books of the Bank for the benefit of
the Director. Prior to the Director's Termination of Service
or the Director's retirement, whichever event shall first
occur, such liability reserve account shall be increased or
decreased each Plan Year, until the aforestated event occurs,
by the Index Retirement Benefit (Subparagraph I [F]).
F. Index Retirement Benefit:
The Index Retirement Benefit for each Director in the
Director Plan for each Plan Year shall be equal to the excess
(if any) of the Index (Subparagraph I [G]) for that Plan Year
over the Cost of Funds Expense (Subparagraph I [H]) for that
Plan Year.
G. Index:
The Index for any Plan Year shall be the aggregate annual
after-tax income from the life insurance contract(s)
described hereinbelow as defined by FASB Technical Bulletin
85-4. This Index shall be applied as if such insurance
contracts were purchased on the Effective Date of the
Director Plan.
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Insurance Company:
Policy Form:
Policy Name:
Insured's Age and Sex:
Riders:
Ratings:
Option:
Face Amount:
Premiums Paid:
Number of Premium Payments:
Assumed Purchase Date:
Insurance Company:
Policy Form:
Policy Name:
Insured's Age and Sex:
Riders:
Ratings:
Option:
Face Amount:
Premiums Paid:
Number of Premium Payments:
Assumed Purchase Date:
If such contracts of life insurance are actually purchased by
the Bank, then the actual policies as of the dates they were
actually purchased shall be used in calculations under this
Director Plan. If such contracts of life insurance are not
purchased or are subsequently surrendered or lapsed, then the
Bank shall receive annual policy illustrations that assume
the above-described policies were purchased, or had not
subsequently surrendered or lapsed. Said illustrations shall
be received from the respective insurance companies and will
indicate the increase in policy values for purposes of
calculating the amount of the Index.
In either case, references to the life insurance contracts
are merely for purposes of calculating a benefit. The Bank
has no obligation to purchase such life insurance and, if
purchased, the Director and the Director's beneficiary(ies)
shall have no ownership interest in such policy and shall
always have no greater interest in the benefits under this
Director Plan than that of an unsecured creditor of the Bank.
H. Cost of Funds Expense:
The Cost of Funds Expense for any Plan Year shall be
calculated by taking the after tax amount of the Interest
Cost of the Bank divided by the average balance of interest
bearing liabilities of the Bank.
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I. Change of Control:
Change of Control shall mean: (i) an increase in the
ownership of, or the holding of, or the power to vote, by any
person, or by any persons acting as a "group" (within the
meaning of Section 13(d) of the Securities Exchange Act of
1934, provided that any such "group" shall not include the
Director), the voting stock of the Bank or the voting stock
of SouthFirst Bancshares, Inc., the Bank's sole shareholder
(the "Holding Company"), to an amount which is more than 25%
of the issued and outstanding shares thereof; (ii) a change
in the ownership of, or possession of, the ability to control
the election of a majority of the Bank's or the Holding
Company's directors; (iii) a change in the ownership of, or
possession of, the ability to exercise a controlling
influence over the management or policies of the Bank or the
Holding Company, by any person, or by persons acting as a
"group" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, provided that any such
"group" shall not include the Director) (except in the case
of (i), (ii) and (iii) hereof, ownership or control of the
Bank, or its board of directors, by the Holding Company
itself shall not constitute a "change in control"); or (iv)
during any period of two consecutive years, individuals who
at the beginning of such period constitute the board of
directors of the Bank or the Holding Company (in each such
case, the "Continuing Directors") cease for any reason to
constitute at least two-thirds thereof, provided that any
individual whose election or nomination for election as a
member of the board of directors of the Holding Company was
approved by a vote of at least two-thirds of the Continuing
Directors then in office shall be considered a Continuing
Director. The term "person" means an individual (other than
the Director), individuals acting in concert or as a "group"
(provided that any such "group" shall not include the
Director), a corporation, partnership, trust, association,
joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not
specifically listed herein.
J. Normal Retirement Age:
Normal Retirement Age shall mean the date on which the
Director attains age seventy (70).
K. Average After-Tax Cost of Funds:
Average After-Tax Cost of Funds means, at any particular
time, a ratio, the numerator of which is the total annualized
interest expense and the denominator of which is an amount
equal to: the average balance of interest bearing
liabilities, which will be supplied by the Bank on an annual
basis, times the inverse of the Bank's combined marginal
income tax rate.
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II. INDEX BENEFITS
A. Retirement Benefits:
Subject to Subparagraph II (D) hereinafter, a Director who
remains on the Board until the Normal Retirement Age
(Subparagraph I [J]) shall be entitled to receive the balance
in the Pre-Retirement Account in fifteen (15) equal annual
installments commencing thirty (30) days following the
Director 's retirement. In addition to these payments and
commencing in conjunction therewith, the Index Retirement
Benefit (Subparagraph I [F]) for each Plan Year subsequent to
the Director's retirement, and including the remaining
portion of the Plan Year following said retirement, shall be
paid to the Director until the Director's death.
B. Vesting:
No Director will be vested in any amount of benefit until the
Director reaches Normal Retirement Age as defined in
Subparagraph I (J). Upon the Director attaining Normal
Retirement Age, the Director will be one hundred percent
(100%) vested.
C. Death:
Should the Director die while there is a balance in the
Director's Pre-Retirement Account (Subparagraph I [E]), said
unpaid balance shall be paid in a lump sum to the individual
or individuals the Director may have designated in writing
and filed with the Bank. In the absence of any effective
beneficiary designation, the unpaid balance shall be paid as
set forth herein to the duly qualified executor or
administrator of the Director's estate. Said payment due
hereunder shall be made the first day of the second month
following the decease of the Director. Provided, however,
that anything hereinabove to the contrary notwithstanding, no
death benefit shall be payable hereunder if the Director dies
on or before the 1st day of October, 2003.
D. Death Benefit:
Except as set forth above, there is no death benefit provided
under this Agreement.
III. RESTRICTIONS UPON FUNDING
The Bank shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Director
Plan. The Directors, their beneficiary(ies), or any successor in
interest shall be and remain simply a general creditor of the Bank in
the same manner as any other creditor having a general claim for
matured and unpaid compensation.
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The Bank reserves the absolute right, at its sole discretion, to
either fund the obligations undertaken by this Director Plan or to
refrain from funding the same and to determine the extent, nature and
method of such funding. Should the Bank elect to fund this Director
Plan, in whole or in part, through the purchase of life insurance,
mutual funds, disability policies or annuities, the Bank reserves the
absolute right, in its sole discretion, to terminate such funding at
any time, in whole or in part. At no time shall any Director be deemed
to have any lien nor right, title or interest in or to any specific
funding investment or to any assets of the Bank.
If the Bank elects to invest in a life insurance, disability or
annuity policy upon the life of the Director, then the Director shall
assist the Bank by freely submitting to a physical exam and supplying
such additional information necessary to obtain such insurance or
annuities.
IV. CHANGE OF CONTROL
Upon a Change of Control (Subparagraph I [I]), if the Director
subsequently suffers a Termination of Service (Subparagraph I [D]),
then the Director shall receive the benefits promised in this Director
Plan upon attaining Normal Retirement Age, as if the Director had been
continuously serving the Bank until the Director's Normal Retirement
Age. The Director will also remain eligible for all promised death
benefits in this Director Plan.
V. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
Neither the Director, nor the Director's surviving spouse,
nor any other beneficiary(ies) under this Director Plan shall
have any power or right to transfer, assign, anticipate,
hypothecate, mortgage, commute, modify or otherwise encumber
in advance any of the benefits payable hereunder nor shall
any of said benefits be subject to seizure for the payment of
any debts, judgments, alimony or separate maintenance owed by
the Director or the Director's beneficiary(ies), nor be
transferable by operation of law in the event of bankruptcy,
insolvency or otherwise. In the event the Director or any
beneficiary attempts assignment, commutation, hypothecation,
transfer or disposal of the benefits hereunder, the Bank's
liabilities shall forthwith cease and terminate.
B. Binding Obligation of the Bank and any Successor in Interest:
The Bank shall not merge or consolidate into or with another
bank or sell substantially all of its assets to another bank,
firm or person until such bank, firm or person expressly
agree, in writing, to assume and discharge the duties and
obligations of the Bank under this Director Plan. This
Director Plan shall be
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binding upon the parties hereto, their successors,
beneficiaries, heirs and personal representatives.
C. Amendment or Revocation:
It is agreed by and between the parties hereto that, during
the lifetime of the Director, this Director Plan may be
amended or revoked at any time or times, in whole or in part,
by the mutual written consent of the Director and the Bank.
D. Gender:
Whenever in this Director Plan words are used in the
masculine or neuter gender, they shall be read and construed
as in the masculine, feminine or neuter gender, whenever they
should so apply.
E. Effect on Other Bank Benefit Plans:
Nothing contained in this Director Plan shall affect the
right of the Director to participate in or be covered by any
qualified or non-qualified pension, profit-sharing, group,
bonus or other supplemental compensation or fringe benefit
plan constituting a part of the Bank's existing or future
compensation structure.
F. Headings:
Headings and subheadings in this Director Plan are inserted
for reference and convenience only and shall not be deemed a
part of this Director Plan.
G. Applicable Law:
The validity and interpretation of this Agreement shall be
governed by the laws of the State of Alabama, except to the
extent that federal law applies.
H. 12 U.S.C.ss.1828(k):
Any payments made to the Director pursuant to this Director
Plan, or otherwise, are subject to and conditioned upon their
compliance with 12 U.S.C. ss. 1828(k) or any regulations
promulgated thereunder.
I. Partial Invalidity:
If any term, provision, covenant, or condition of this
Director Plan is determined by an arbitrator or a court, as
the case may be, to be invalid, void, or unenforceable, such
determination shall not render any other term, provision,
covenant, or condition invalid, void, or unenforceable, and
the Director Plan shall remain in full force and effect
notwithstanding such partial invalidity.
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J. Continuation as Director:
Neither this Agreement nor the payment of any benefits
thereunder shall be construed as giving to the Director any
right to be retained as a member of the Board of Directors of
the Bank.
VI. ERISA PROVISION
A. Named Fiduciary and Plan Administrator:
The "Named Fiduciary and Plan Administrator" of this Director
Plan shall be First Federal of the South until its
resignation or removal by the Board. As Named Fiduciary and
Plan Administrator, the Bank shall be responsible for the
management, control and administration of the Director Plan.
The Named Fiduciary may delegate to others certain aspects of
the management and operation responsibilities of the Director
Plan including the employment of advisors and the delegation
of ministerial duties to qualified individuals.
B. Claims Procedure and Arbitration:
In the event a dispute arises over benefits under this
Director Plan and benefits are not paid to the Director (or
to the Director's beneficiary(ies) in the case of the
Director's death) and such claimants feel they are entitled
to receive such benefits, then a written claim must be made
to the Named Fiduciary and Plan Administrator named above
within sixty (60) days from the date payments are refused.
The Named Fiduciary and Plan Administrator shall review the
written claim and if the claim is denied, in whole or in
part, they shall provide in writing within sixty (60) days of
receipt of such claim the specific reasons for such denial,
reference to the provisions of this Director Plan upon which
the denial is based and any additional material or
information necessary to perfect the claim. Such written
notice shall further indicate the additional steps to be
taken by claimants if a further review of the claim denial is
desired. A claim shall be deemed denied if the Named
Fiduciary and Plan Administrator fail to take any action
within the aforesaid sixty-day period.
If claimants desire a second review they shall notify the
Named Fiduciary and Plan Administrator in writing within
sixty (60) days of the first claim denial. Claimants may
review this Director Plan or any documents relating thereto
and submit any written issues and comments it may feel
appropriate. In their sole discretion, the Named Fiduciary
and Plan Administrator shall then review the second claim and
provide a written decision within sixty (60) days of receipt
of such claim. This decision shall likewise state the
specific reasons for the decision and shall include reference
to specific provisions of the Plan Agreement upon which the
decision is based.
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If claimants continue to dispute the benefit denial based
upon completed performance of this Director Plan or the
meaning and effect of the terms and conditions thereof, then
claimants may submit the dispute to an arbitrator for final
arbitration. The arbitrator shall be selected by mutual
agreement of the Bank and the claimants. The arbitrator shall
operate under any generally recognized set of arbitration
rules. The parties hereto agree that they and their heirs,
personal representatives, successors and assigns shall be
bound by the decision of such arbitrator with respect to any
controversy properly submitted to it for determination.
Where a dispute arises as to the Bank's discharge of the
Director "for cause," such dispute shall likewise be
submitted to arbitration as above described and the parties
hereto agree to be bound by the decision thereunder.
VII. TERMINATION OR MODIFICATION OF AGREEMENT BY REASON OF CHANGES IN THE
LAW, RULES OR REGULATIONS
The Bank is entering into this Agreement upon the assumption that
certain existing tax laws, rules and regulations will continue in
effect in their current form. If any said assumptions should change
and said change has a detrimental effect on this Director Plan, then
the Bank reserves the right to terminate or modify this Agreement
accordingly. Upon a Change of Control (Subparagraph I [I]), this
paragraph shall become null and void effective immediately upon said
Change of Control.
IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully read
this Agreement and executed the original thereof on the first day set forth
hereinabove, and that, upon execution, each has received a conforming copy.
FIRST FEDERAL OF THE SOUTH
Sylacauga, Alabama
By:
-------------------------------- ----------------------------------------
Witness Title
-------------------------------- -------------------------------------------
Witness
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BENEFICIARY DESIGNATION FORM
FOR THE DIRECTOR SUPPLEMENTAL
RETIREMENT PLAN AGREEMENT
I. PRIMARY DESIGNATION
(Please refer to the beneficiary designation information prior to
completion of this form.)
A. PERSON(S) AS A PRIMARY DESIGNATION:
(Please indicate the percentage for each beneficiary.)
Name______________________________ Relationship___________________ / _______%
Address:_______________________________________________________________________
(Street) (City) (State) (Zip)
Name______________________________ Relationship___________________ / _______%
Address:_______________________________________________________________________
(Street) (City) (State) (Zip)
Name______________________________ Relationship___________________ / _______%
Address:_______________________________________________________________________
(Street) (City) (State) (Zip)
Name______________________________ Relationship___________________ / _______%
Address:_______________________________________________________________________
(Street) (City) (State) (Zip)
B. ESTATE AS A PRIMARY DESIGNATION:
My Primary Beneficiary is The Estate of
__________________________________________ as set forth in the last will and
testament dated the ____ day of __________, ____ and any codicils thereto.
C. TRUST AS A PRIMARY DESIGNATION:
Name of the Trust:
_______________________________________________________________________________
Execution Date of the Trust: _____ / _____ / _________
Name of the Trustee:
_______________________________________________________________________________
Beneficiary(ies) of the Trust (please indicate the percentage for each
beneficiary):
_______________________________________________________________________________
__________________________
_______________________________________________________________________________
__________________________
Is this an Irrevocable Life Insurance Trust? ________ Yes ________ No
(If yes and this designation is for a Split Dollar agreement, an Assignment of
Rights form should be completed.)
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II. SECONDARY (CONTINGENT) DESIGNATION
A. PERSON(S) AS A SECONDARY (CONTINGENT) DESIGNATION:
(Please indicate the percentage for each beneficiary.)
Name______________________________ Relationship___________________ / _______%
Address:_______________________________________________________________________
(Street) (City) (State) (Zip)
Name______________________________ Relationship___________________ / _______%
Address:_______________________________________________________________________
(Street) (City) (State) (Zip)
Name______________________________ Relationship___________________ / _______%
Address:_______________________________________________________________________
(Street) (City) (State) (Zip)
Name______________________________ Relationship___________________ / _______%
Address:_______________________________________________________________________
(Street) (City) (State) (Zip)
B. ESTATE AS A SECONDARY (CONTINGENT) DESIGNATION:
My Secondary Beneficiary is The Estate of
________________________________________ as set forth in my last will and
testament dated the ____ day of __________, ____ and any codicils thereto.
C. TRUST AS A SECONDARY (CONTINGENT) DESIGNATION:
Name of the Trust:
_______________________________________________________________________________
Execution Date of the Trust: _____ / _____ / _________
Name of the Trustee:
_______________________________________________________________________________
Beneficiary(ies) of the Trust (please indicate the percentage for each
beneficiary):
_______________________________________________________________________________
__________________________
_______________________________________________________________________________
__________________________
All sums payable under the Director Supplemental Retirement Plan Agreement by
reason of my death shall be paid to the Primary Beneficiary(ies), if he or she
survives me, and if no Primary Beneficiary(ies) shall survive me, then to the
Secondary (Contingent) Beneficiary(ies). This beneficiary designation is valid
until the participant notifies the bank in writing.
-------------------------------- -------------------------------------
Date
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