Company: FMFG
Filing Date: 2025-03-13
Form Type: PREC14A
Source: 0001437749-25-007538
Chunk: 38

Company: Farmers & Merchants Bancshares, Inc.
Filing Date: 2025-03-13
Form: PREC14A
Chunk 38
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 Insurance Act. Additionally, no benefit will be paid to the extent it constitutes an excess golden parachute payment under Section 280G of the IRC or is determined to be a prohibited golden parachute payment pursuant to 12 C.F.R. § 359.2. Because, both the Harris SERP Agreement and the Harris Severance Agreement (as defined below) were in effect as of December 31, 2024, the total amount due under those agreements upon a Change in Control followed by a Separation from Service would have been reduced, in the aggregate, by approximately $310,977 to prevent the sum of those payments from constituting an excess parachute payment under Section 280G of the IRC.

The timing of the distribution of some or all of the foregoing benefits may be subject to a six-month waiting period under Section 409A of the IRC to the extent the executive is considered to be a “specified employee” of the Company. Section 409A of the IRC places restrictions on the ability of the Bank and/or the executives to change the form or timing of the payment of the benefits, and the Harris SERP Agreement and the Oswald SERP Agreement provide that any such change must be consistent with the requirements and limitations of Section 409A of the IRC. Notwithstanding the foregoing, if an executive becomes subject to tax on the benefits that could be paid under the Harris SERP Agreement or the Oswald SERP Agreement, then the Bank may, subject to the requirements of Section 409A of the IRC, make a limited distribution to the executive to cover such taxes. Any such distribution will reduce the benefits that are otherwise payable under the Harris SERP Agreement and the Oswald SERP Agreement.

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To help fund the foregoing payment obligations, the Bank invested in life insurance policies in 2011 on the life of Mr. Oswald and in 2022 on the life of Mr. Harris.

Performance Driven Retirement Plan Agreement

On November 17, 2015, the Bank and Mr. Krebs entered into a Performance Driven Retirement Plan Agreement (the “Retirement Agreement”) to provide cash benefits to Mr. Krebs following his Separation of Service (as defined in the Retirement Agreement), his Disability (as defined in the Retirement Agreement), his death, or a Change in Control (as defined in the Retirement Agreement). The Retirement Agreement requires the Bank to establish a general ledger “account” for Mr. Krebs’ benefit that will be credited from time to time with cash contributions and interest there