MACON BANK

LONG-TERM CAPITAL APPRECIATION PLAN

 

 

 

 

2004 Amendment and Restatement

 

 

 

 

The Board of Directors of Macon Bank, Inc., by resolution dated December 15,
2004, amends and restates this Long-term Capital Appreciation Plan (“Plan”)
effective as of January 1, 2005 in order to establish that all amounts deferred
or vested after December 31, 2004 shall be governed by the sub-plan (the
“Sub-plan”) attached as Exhibit “C” hereto. The purpose of the Plan is to
provide incentive compensation on a deferred basis for its directors and select
executive officers. The Plan is not tax-qualified under Section 401 of the Code,
and is unfunded and primarily for a select group of management or highly
compensated employees within the meaning of Section 201(2) of the Employee
Retirement Income Security Act of 1974, as amended.

 

ARTICLE I
Definitions

 

The following words and phrases, when used in the Plan with an initial capital
letter, shall have the meanings set forth below unless the context clearly
indicates otherwise.

 

1.1 “Acceptance” shall mean acceptance, by the Committee, of a Deferral Election
Form, a Distribution Election Form, or an Investment Election Form (which
acceptance shall be presumed unless, within ten business days of delivery of a
Participant’s election to a Director, the Committee provides the Participant
with a written notice detailing the reasons for its rejection).

 

1.2 “Account” shall mean a bookkeeping account maintained by the Bank in the
name of each Participant.

 

1.3 “Affiliate” shall mean any “parent corporation” or “subsidiary corporation”
of the Bank, as the terms are defined in Section 424(e) and (f), respectively,
of the Code.

 

1.4 ’‘Appreciation Percentage” shall mean the percentage (if any) by which the
Book Value appreciates between the date on which the Committee credits a Capital
Appreciation Right to a Participant’s Account and the date on which the
Participant terminates Service (subject, however, to Section 3.4 hereof).

 

1.5 “Bank” shall mean Macon Bank, Inc., and any successor to its interest.

 

1.6 “Beneficiary” shall mean the person or persons whom a Participant may
designate as the beneficiary of the Participant’s Benefits under Article II, and
shall mean the Participant’s estate in the absence of a valid designation. A
Participant’s election of a Beneficiary shall be made on the Distribution
Election Form, shall be revocable by the Participant during his or her lifetime,
and shall be effective only upon its Acceptance by the Committee.

 

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1.7 “Benefits” shall mean any and all benefits that accrue under Article II of
the Plan.

 

1.8 “Board” shall mean the Board of Directors of the Bank.

 

1.9 “Book Value” shall mean the book value of the Bank and any Affiliates, as
determined in accordance with Generally Accepted Accounting Principles (GAAP),
provided that the Committee shall have the discretion to take into account or to
disregard any extraordinary financial events affecting the Bank or an Affiliate.

 

1.10 “Capital Appreciation Right” shall mean a credit that the Committee makes
to a Participant’s Account pursuant to Article II.

 

1.11 “Change in Control” shall mean: (i) the execution of an agreement for the
sale of all or a material portion of the assets of the Bank; (ii) the execution
of an agreement for a merger, consolidation, or other transaction of the Bank
whereby the Bank is not the surviving entity; (iii) a change of control of the
Bank, as defined or determined either by the Bank’s primary banking regulator or
under regulations promulgated by it; (iv) the acquisition, directly or
indirectly, of the beneficial ownership within the meaning of that term as it is
used in Section 13(d) of the 1934 Act and the rules and regulations promulgated
thereunder) of twenty-five percent (25%) or more of the outstanding voting
proxies or securities of the Bank by any person, trust, entity, or group; or;
(v) during any period of two consecutive years, individuals (the “Continuing
Directors”) who at the beginning of such period constitute the Board of
Directors of the Bank or its mutual holding company (the “Existing Board”) 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 Existing
Board was approved by a vote of at least two-thirds of the Continuing Directors
then in office shall be considered a Continuing Director. This limitation shall
not apply to a transaction in which either the Bank merely converts stock form
or forms a holding company or up to 30% of any class of securities of the Bank
are purchased by a tax-qualified employee stock benefit plan of the Bank or an
affiliate. The term “person” refers to an individual or a corporation,
partnership, trust, bank, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not specifically listed
herein.

 

1.12 “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

1.13 “Committee” shall mean any committee that the Board may appoint to
administer and effectuate the Plan. The Committee shall act only by a majority
of its members, and may act through meetings or written consents.
Notwithstanding the foregoing, the Board may at any time act in lieu of the
Committee with respect to any action that the Committee may take pursuant to the
Plan.

 

1.14 “Common Stock” shall mean the common stock, if any, of the Bank, but shall
mean common stock of a holding company of the Bank if one is formed for that
purpose independently of a Change in Control.

 

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1.15 “Deferrals” shall mean any Participant-directed deferrals that occur
pursuant to Section 2.1 hereof.

 

1.16 “Deferral Election Form” shall mean the form attached hereto as Exhibit “A”

 

1.17 “Director” shall mean a member of the Board, or the Board of Directors of
an Affiliate.

 

1.18 “Distribution Election Form” shall mean the form attached hereto as Exhibit
“B”.

 

1.19 “Effective Date” shall mean July 1, 1998.

 

1.20 “Employee” shall mean any person to whom the Bank or an Affiliate pays
“wages” that are reportable to the Internal Revenue Service on Form W-2 (or a
successor form thereto).

 

1.21 “Just Cause” shall mean misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, willful
violations of any law, rule or regulation (other than traffic violations or
similar offenses), or final cease-and-desist orders.

 

1.22 “Participant” shall mean (i) executive officers Stiles, Plemens, Jeffress,
Morgan, and Brown, (ii) an individual who serves as a Director of the Bank on
the Effective Date, regardless of whether or not the Director is an Employee,
and (ii) any Director or Employee whom the Board specifically selects for
participation in the Plan after the Effective Date, provided that an Employee
shall be eligible for Plan participation only if the Employee is a member of a
select group of the Bank’s management or highly compensated employees for
purposes of Title I of the Employee Retirement Income Security Act of 1974, as
amended from time to time.

 

1.23 “Plan” shall mean this Macon Bank Long-term Capital Appreciation Plan.

 

1.24 “Plan Year” shall mean the one-year period that begins each July 1, except
the initial Plan Year shall begin on the Effective Date and end on June 30,
1999.

 

1.25 “Service” shall mean an individual’s service as an Employee or Director,
but shall not include service performed as an advisory director or director
emeritus.

 

1.26 “Trust” shall mean the trust created under the Trust Agreement.

 

1.27 “Trust Agreement” shall mean the agreement entered into between the Bank
and the Trustee, pursuant to the terms hereof.

 

1.28 “Trustee” shall mean the person(s) or entity appointed by the Board
pursuant to the Trust Agreement to hold legal title to the Plan Assets for the
purposes set forth herein.

 

1.29 “Vested Percentage” shall be determined for each Participant by dividing
the Participant’s actual Years of Service by 10; provided that a Participant’s
Vested Percentage shall automatically accelerate to 100% in the event the
Participant’s Service terminates due to the Participant’s death or disability
(as determined by the Committee), or a Change in Control.

 

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1.30 “Year of Service” shall mean each full year of a Participant’s Service,
measured from the Effective Date forward; provided that Years of Service in
excess of 10 shall be disregarded for this purpose.

 

ARTICLE II
Credits to Accounts

 

2.1 Deferrals. Each Participant may elect, on the Deferral Election Form, to
make Deferrals by directing that his or her fees, salary, bonuses, or other cash
compensation be reduced on a pre-tax basis. Such elections shall (i) be
irrevocable until the end of the calendar year in which they are made, and (ii)
be effective on the January 1st following their Acceptance, provided that a
Participant may elect to have an election take effect as soon as
administratively practicable with respect to cash compensation that the
Participant may receive in the future and as to which the Participant currently
has no legal right or claim. As soon as practicable after the end of each pay
period, the Bank shall credit each Participant’s Account with any Deferrals that
occurred during the pay period.

 

2.2 Initial Credits. On the Effective Date, the Bank shall credit $4,500 to the
account of each Participant who is a Director on that date.

 

2.3 Investment Return on Deferrals. At the end of each Plan Year during which a
Participant’s Account has a positive value, the Bank shall credit the average
balance of the Participant’s Account that is attributable to Deferrals and
Initial Credits under Section 2.2 with an investment return equal to the average
return-on-equity achieved by the Bank and its Affiliates for the current fiscal
year and the two immediately preceding fiscal years. For this purpose, the
Committee shall determine return-on-equity in accordance with Generally Accepted
Accounting Principles, provided that the Committee may in its discretion take
into account or disregard any extraordinary financial events. In the event of a
stock conversion by the Bank, each Participant may elect to have his or her
Account credited, on a prospective basis, with the total return that
stockholders receive on Common Stock.

 

2.4 Capital Appreciation Rights. As of the Effective Date, the Bank shall credit
Capital Appreciation Rights to the Accounts of Participants according to the
following schedule:

 

  Participant Capital Appreciation Right         Each non-Employee Director    
E. Stiles     R. Plemens
S. Jeffress
M. Morgan
B. Brown  

 

The Committee may, in its discretion, make future credits of Capital
Appreciation Rights to the Accounts of Participants.

 

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2.5 Termination of Service. The Committee shall determine the Account balance,
that is payable to a Participant in accordance with Article III, as of the last
day of the calendar quarter that coincides with or next follows the
Participant’s termination of Service (or a Change in Control, if earlier). The
Participant’s Account balance as of that date shall equal the sum of-

 

(i) all Deferrals made by the Participant, Initial Credits made pursuant to
Section 2.2 hereof, and any earnings credited pursuant to Section 2.3 hereof,
and

 

(ii) the product obtained when each of the Participant’s Capital Appreciation
Rights is multiplied by both the Participant’s Vested Percentage and the
applicable Appreciation Percentage.

 

2.6 Earnings Credits on Final Account Balances. From the date as of which the
Committee determines a Participant’s final Account balance pursuant to Section
2.5 hereof, the Bank shall credit the Participant’s Account with simple interest
that shall accrue monthly on any unpaid balances at a rate of 8% per annum.

 

ARTICLE III
Distributions from Accounts

 

3.1 Normal Form and Timing of Distributions. In the absence of a valid
Distribution Election pursuant to Section 3 .2 hereof or Section 3 .1 of the
Sub-plan, whichever is applicable, (and subject to Section 3.3 hereof), the Bank
shall pay a Participant’s Account balance in cash, in substantially equal
monthly payments over a period of five years; beginning as soon as
administratively practicable following the last day of the month in which the
Committee determines the Participant’s final Account balance pursuant to Section
2.5 hereof.

 

3.2 Distribution Elections. Subject to Section 3.3 hereof, a Participant may
elect on the Distribution Election Form to have his or her final Account balance
paid in annual payments over a period of between 5 and 10 years, in a lump sum
distribution that occurs more than two years after the Participant terminates
service, or a combination of these choices. In order to be effective, Acceptance
of a Participant’s Distribution Election Form must occur either (i) more than
one year before the date on which the Participant’s Service terminates for any
reason or (ii) within 30 days of the Participant’s initial commencement of Plan
participation, or (iii) more than 90 days before the closing of a Change in
Control. In the event a Participant files more than one valid Distribution
Election Form, the most recent valid election shall supersede any and all prior
elections. Nevertheless, Beneficiary designations made pursuant to executed
Election Forms shall be revocable during the Participant’s lifetime and a
Participant may, by submitting an effective superseding Election Form at any
time and from time to time, prospectively change the designated Beneficiary and
the manner of payment to a Beneficiary.

 

3.3 Forfeiture. The portion of a Participant’s final Account balance that is
attributable to Capital Appreciation Rights (as calculated pursuant to Section
2.5 (ii) hereof) shall be forfeited immediately if either of the following
events occur:

 

(i) The Committee determines that the Participant’s Service ended, voluntarily
or involuntarily, due to Just Cause.

 

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(ii) Within 24 months after terminating Service, the Participant becomes an
employee, consultant, director, or 10% or more stockholder of a company that
provides products that compete with those of the Bank or its Affiliates, within
50 miles of any place where the Bank or its Affiliates is doing business on the
date the Participant’s Service terminates.

 

3.4 Change in Control. In the event of a Change in Control, the Bank and the
Participant have the right to mutually agree to limit payments that they might
consider excess “golden parachute payments” as defined under §§280G and 4999 of
the Code. In addition, upon the closing date of a Change in Control: the
forfeiture provision set forth in Section 3.3(ii) hereof shall lapse and become
null and void, each Participant’s Vested Percentage shall become 100%, and the
Appreciation Percentage for each Participant shall be calculated by assuming
that the appreciation percentage that occurred between the initial credit of a
Capital Appreciation Right and the Change in Control continues through date on
which the Participant’s Vested Percentage would have reached 100% pursuant to
Section 1.29 hereof.

 

3.5 Death Benefits. If a Participant dies before receiving all Benefits payable
pursuant to Section 3.1, then the vested but unpaid balance of the Participant’s
Account shall be distributed in a lump sum to the Participant’s Beneficiary as
soon as administratively practicable following the date of the Participant’s
death, provided that a Participant may specify on the Distribution Election Form
the distribution period elected therein by the Participant.

 

ARTICLE IV
Source of Benefits

 

4.1 General Rule. Benefits accumulated under the Plan shall constitute an
unfunded, unsecured promise by the Bank to provide such payments in the future,
as and to the extent such Benefits become payable. Benefits accumulated under
the Plan shall be paid from the general assets of the Bank, and no person shall,
by virtue of this Plan, have any interest in such assets, other than as an
unsecured creditor, of the Bank. For any Plan Year during which a Trust is
maintained, (i) the Trustee shall inform the Committee annually prior to the
commencement of each Plan Year as to the manner in which such Trust assets shall
be invested, and (ii) the Committee shall, as soon as practicable after the end
of each calendar quarter, provide the Trustee with a schedule specifying the
amount of any Trust contribution that is attributable to the Participant’s
Account for purposes only of Section 2.5 of this Plan. The Bank shall also, at
least annually, provide the Trustee with a schedule specifying the amounts
payable to each Participant, and the time for making such payments. All
interest, dividends, and realized gain/losses on Trust assets will be taxed to
the Bank.

 

4.2 Trust Funding on Change in Control. In the event of a Change in Control, the
Bank shall contribute to the Trust an amount sufficient to provide the Trust
with assets having an overall value equivalent to the value of the aggregate
Account balances under the Plan (calculated as though each Participant’s Service
terminates coincident with the Change in Control).

 

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ARTICLE V

Recordkeeping; Plan Expenses

 

The Committee shall be responsible for maintaining all Accounts, with particular
reference to contribution sources and allocating gains and losses (at least
annually), and shall prepare Account reports for the Participants and the Bank.
The Committee may in its discretion appoint or remove a third-party
recordkeeper. The Bank shall pay all expenses associated with the Plan and the
Trust.

 

ARTICLE VI
Assignment

 

Except as otherwise expressly provided by this Plan, it is agreed that neither
the Participant nor his or her Beneficiary, nor the Participant’s executors and
administrators, heirs, legatees, distributees, and any other person or persons
claiming any benefits under him or her under this Plan, shall have any right to
assign, transfer, pledge, hypothecate, sell, transfer, alienate and encumber or
otherwise convey the right to receive any Benefits hereunder, which Benefits and
the rights thereto are expressly declared to be nontransferable. The right to
receive Benefits under this Plan shall likewise not be subject to execution,
attachment, garnishment, sequestration or similar legal, equitable or other
process to the benefit of the Participant’s creditors. Any attempted assignment,
transfer, pledge, hypothecation or other disposition of the Participant’s rights
to receive Benefits under this Plan or the levy of any attachment, garnishment
or similar process thereupon, shall be null and void and without effect.

 

ARTICLE VII

No Retention of Services

 

The Benefits payable under this Plan shall be independent of, and in addition
to, any other compensation payable by the Bank to a Participant, whether in the
form of fees, bonus, retirement income under employee benefit plans sponsored or
maintained by the Bank or otherwise. This Plan shall not be deemed to constitute
a contract of employment between the Bank and any Participant.

 

ARTICLE VIII

Rights of Participants and Beneficiaries

 

The rights (if any) of Participants and their Beneficiaries under this Plan
shall be solely those rights of unsecured creditors of the Bank.

 

ARTICLE IX
Reorganization

 

The Bank agrees that it will not merge or consolidate with any other corporation
or organization, or permit its business activities to be taken over by any other
organization, unless and until the succeeding or continuing corporation or other
organization shall expressly assume the rights and obligations of the Bank
herein set forth. The Bank further agrees that it will not cease its business
activities or terminate its existence, other than as heretofore set forth in
this Article IX, without having made adequate provision for the fulfillment of
its obligation hereunder.

 

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ARTICLE X

Amendment and Termination

 

The Board may amend or terminate the Plan at any time, provided that no such
amendment or termination shall, without the written consent of an affected
Participant, alter or impair any vested rights of the Participant under the
Plan.

 

ARTICLE XI
State Law

 

This Plan shall be construed and governed in all respects under and by the laws
of the State of North Carolina, except to the extent preempted by federal law.
If any provision of this Plan shall be held by a court of competent jurisdiction
to be invalid or unenforceable, the remaining provisions hereof shall continue
to be fully effective.

 

ARTICLE XII
Headings; Gender

 

Headings and subheadings in this Plan are inserted for convenience and reference
only and constitute no part of this Plan. This Plan shall be construed, where
required, so that the masculine gender includes the feminine.

 

ARTICLE XIII
Interpretation of the Plan

 

The Committee shall have sole and absolute discretion to administer, construe,
and interpret the Plan, and the decisions of the Committee shall be conclusive
and binding on all affected parties, unless such decisions are arbitrary and
capricious.

 

ARTICLE XIV
Disputes; Legal Fees

 

14.1 Generally. Any controversy or claim that arises under this Plan and cannot
be settled by the parties shall be addressed solely in the federal or state
courts located in Franklin, North Carolina, or in the closest jurisdiction
thereto if no state or federal court exists in Franklin at the time of such
review.

 

14.2 Reimbursement of Legal Fees. In the event that any dispute arises between a
Participant and the Bank as to the terms or interpretation of this Plan, whether
instituted by formal legal proceedings or otherwise, including any action that
the Participant takes to enforce the terms of this Plan or to defend against any
action taken by the Bank or an Affiliate, the Participant shall be reimbursed
for all costs and expenses, including reasonable attorneys’ fees, arising from
such dispute, proceedings or actions, provided that the Participant shall obtain
a final judgment or settlement substantially in favor of the Participant either
in a court of competent jurisdiction or in binding arbitration under the rules
of the American Arbitration Association or in a written settlement of the
dispute. Such reimbursement shall be paid within ten (10) days of Participant’s
furnishing to the Bank written evidence, which may be in the form, among other
things, of a canceled check or receipt, of any costs or expenses incurred by the
Participant.

 

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14.3 Indemnification. To the maximum extent allowed by law, the Bank shall
indemnify each member of the Committee and each Trustee who is a Director or
Employee for any loss arising from their actions under the Plan and Trust;
provided that such indemnification shall not occur for actions that constitute
Just Cause.

 

ARTICLE XV

Duration of Plan

 

Unless terminated earlier in accordance with Article X, this Plan shall remain
in effect during the term of service of the Participants and until all Benefits
payable hereunder have been made.

 

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Exhibit "A"

 

MACON BANK

LONG-TERM CAPITAL APPRECIATION PLAN

 

 

 

 

 

Pre-2005 Deferral Election Form

 

 

 

 

 

AGREEMENT, made this___ day of________ , 20__ by and between _____________(the
“Participant”) and Macon Bank. Inc. (the Bank”),

 

WHEREAS, the Bank has established the Macon Bank Long-term Capital Appreciation
Plan (the “Plan”), and the Participant is eligible to participate in said Plan.

 

NOW THEREFORE, it is mutually agreed as follows:

 

1. The Participant, by the execution hereof, agrees to participate in the Plan
upon the terms and conditions set forth therein, and, in accordance therewith,
elects to defer the receipt of:

 

____ % of the Participant’s base salary, director’s fees, and/or retainers.

 

____ % of any additional cash compensation that the Participant may receive.

 

Unless the Participant checks this space ___ thereby designating the next
January 1st as this election’s effective date, this election will supersede any
prior election and will take effect as soon as practicable hereafter (but only
with respect to future compensation as to which the Participant has no current
legal right or claim through the rending of services).

 

2. This election will continue in force until either the effective date of a
superseding election by the Participant, or until the Participant terminates
service with the Bank, or until the Plan is terminated by appropriate corporate
action, whichever shall first occur.

 

IN WITNESS WHEREOF, the parties hereto have hereunto set their hands the day and
year first above-written.

 

  Witnessed by:   PARTICIPANT                                          
Witnessed by:   MACON BANK, INC.                           By           A member
of the Board

 

 

 

Exhibit “B”

 

MACON BANK

LONG-TERM CAPITAL APPRECIATION PLAN

 

 

 

 

Pre-2005 Distribution Election Form

 

 

 

 

AGREEMENT, made this _ day of ; 20 by and between the undersigned participant
(the “Participant”) in the Macon Bank Long-term Capital Appreciation Plan (the
“Plan”), and Macon Bank, Inc. (the “Bank”) with respect to distribution of those
Participant’s benefits under the Plan that were deferred and vested before
January 1, 2005.

 

NOW THEREFORE, it is mutually agreed as follows:

 

1. Form of Payment Generally. The Participant, by the execution hereof, agrees
to participate in the Plan upon the terms and conditions set forth therein, and,
in accordance therewith, elects to have his or her Account distributed as
follows:

 

  [  ] in a lump sum that is paid as soon as practicable after the ____ year
following the Participant's termination of Service. [You may choose a number
between 2 and 10.]         [  ] in substantially equal monthly payments over a
period of _  years. [You may choose a number  between  5 and 10.]

 

2. Timing of Payment. Payment of a Participant’s first monthly installment from
his or her Account shall occur as soon as administratively practicable after the
Committee determines the Participant’s Final Account balance, unless the
Participant elects to defer commencing distributions until --

 

  [ ] The date on which the Participant attains age. [You may choose an age
between 60 and 75.]         [ ]  ______________________ ___, ____. [You may
choose any date that occurs before you reach age 75.]      

 

3. Form of Payment to Beneficiary. In the event of the Participant’s death, his
or her Account shall be distributed -

 

  [ ] in one lump sum payment         [ ] in accordance with the payment
schedule selected in paragraphs 1  and 2 hereof (with payments made as though
the Participant survived to collect all benefits, and as though the Participant
terminated service on the date of his or her death, if payments had not already
begun)

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4. Designation of Beneficiary. In the event of the Participant’s death before he
or she has collected all of the benefits payable under the Plan, the Participant
hereby directs that any survivorship benefits payable under Article III of the
Plan be distributed to the beneficiary or beneficiaries designated under
subparagraphs a and b of this paragraph in the manner elected pursuant to
paragraph 3 above:

 

a. Primary Beneficiary. The Participant hereby designates the person(s) named
below to be his or her primary beneficiary and to receive the balance of any
unpaid benefits under the Plan.

 

Name of
Primary Beneficiary Mailing Address Percentage of
Death Benefit     %     %

 

b. Contingent Beneficiary. In the event that the primary beneficiary or
beneficiaries named above are not living at the time of the Participant’s death,
the Participant hereby designates the following person(s) to be his or her
contingent beneficiary for purposes of the Plan:

 

Name  of
Contingent Beneficiary Mailing Address Percentage of Death Benefit     %     %

 

5. Effect of Election. The elections made in paragraphs I and 2 hereof shall
become irrevocable on the earlier of the Participant’s death, (2) the date one
year before the Participant first becomes entitled to receive a distribution
under Article III of the Plan, and (3) the date 90 days before a Change in
Control. The Participant may, by submitting an effective superseding
Distribution Election Form at any time and from time to time, prospectively
change the beneficiary designation and the manner of payment to a Beneficiary.
Such elections shall, however, become irrevocable upon the Participant’s death.

 

6. Mutual Commitments. The Bank agrees to make payment of all amounts due the
Participant in accordance with the terms of the Plan and the elections made by
the Participant herein. The Participant agrees to be bound by the terms of the
Plan, as in effect on the date hereof or properly amended hereafter.

 

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IN WITNESS WHEREOF, the parties hereto have hereunto set their hands the day and
year first above-written.

 

  Witnessed by:   PARTICIPANT                                   Witnessed by:  
MACON BANK, INC.                           By           A duly authorized
Committee Member

 

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MACON BANK
AMENDED AND RESTATED

LONG-TERM CAPITAL APPRECIATION PLAN

 

2005 Sub-Plan

Applicable to Compensation Deferred or

Vested After December 31, 2004

 

 

 

 

PURPOSE AND SCOPE

 

This sub-plan (the “Sub-plan”) hereby incorporates the terms of the Macon Bank
Long• Term Capital Appreciation Plan (the “Plan”) by reference, subject to the
limited modifications set forth below. Terms within the Sub-plan that begin with
initial capital letters shall have the particular defined meaning set forth
herein or in the Plan, unless the context clearly indicates otherwise. This
Sub-plan shall apply to compensation that is deferred pursuant to the terms
below or that vests on or after January 1, 2005. No provision of this Sub-plan
shall apply to Compensation that was deferred and vested on or before December
31, 2004. References within the Plan to Accounts shall not apply to amounts
deferred or vested under this Sub-plan after December 31, 2004, and references
herein to Accounts shall not apply to Accounts under the Plan.

 

ARTICLE I
Definitions

 

The following words and phrases, when used in the Plan with an initial capital
letter, shall have the meanings set forth below unless the context clearly
indicates otherwise.

 

1.1 “Change in Control” shall mean any of the following, subject to the
Committee’s absolute discretion to interpret this definition in a manner that
conforms with the requirements of Section 409A of the Code and associated
regulations: (i) the execution of an agreement for the sale of all or a material
portion of the assets of the Bank; (ii) the execution of an agreement for a
merger, consolidation, or other transaction of the Bank whereby the Bank is not
the surviving entity; (iii) a change of control of the Bank, as defined or
determined either by the Bank’s primary banking regulator or under regulations
promulgated by it; (iv) the acquisition, directly or indirectly, of the
beneficial ownership within the meaning of that term as it is used in Section
13(d) of the 1934 Act and the rules and regulations promulgated thereunder) of
twenty-five percent (25%) or more of the outstanding voting proxies or
securities of the Bank by any person, trust, entity, or group; or; (v) during
any period of two consecutive years, individuals (the “Continuing Directors”)
who at the beginning of such period constitute the Board of Directors of the
Bank or its mutual holding company (the “Existing Board”) 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 Existing Board was
approved by a vote of at least two-thirds of the Continuing Directors then in
office shall be considered a Continuing Director. This limitation shall not
apply to a transaction in which either the Bank merely converts stock form or
forms a holding company or up to 30% of any class of securities of the Bank are
purchased by a tax-qualified employee stock benefit plan of the Bank or an
affiliate. The term “person” refers to an individual or a corporation,
partnership, trust, bank, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not specifically listed
herein.

 

 1 

 

ARTICLE II
Credits to Accounts

 

2.1 Deferrals. Each Participant may elect, on the Deferral Election Form
attached hereto as Exhibit “D”, to make Deferrals by directing that his or her
fees, salary, bonuses, or other cash compensation be reduced on a pre-tax basis.
Such elections shall (i) be irrevocable until the end of the calendar year in
which they are made, and (ii) be effective on the January 1st following their
Acceptance, provided that a Participant who is newly eligible to participate in
the Plan may elect within thirty (30) days of first becoming eligible to
participate to defer cash compensation earned after the Acceptance of the
applicable Deferral Election Form. As soon as practicable after the end of each
pay period, the Bank shall credit each Participant’s Account with any Deferrals
that occurred during the pay period.

 

ARTICLE III

Distributions from Accounts

 

3.1 Distribution Elections. At the time a Participant elects to defer
compensation pursuant to Section 2.1, subject to Section 3.3 of the Plan, the
Participant shall elect on the Distribution Election Form attached hereto as
Exhibit “E” to have his or her final Account balance paid in annual payments
over a period of between 5 and 10 years, in a lump sum distribution that occurs
more than two years after the Participant terminates service, or a combination
of these choices. Such elections shall apply to the portion of the Participant’s
Account that is attributable to compensation deferred under the applicable
Deferral Election Form, but may be changed through Acceptance of one or more
subsequent elections that in each case (i) are delivered to the Committee at
least one year before the date on which distributions are otherwise scheduled to
commence pursuant to the Participant’s current election, and (ii) defer the
commencement of distributions by at least five (5) years from the originally
scheduled commencement date. Nevertheless, Beneficiary designations made
pursuant to executed Election Forms shall be revocable during the Participant’s
lifetime and a Participant may, by submitting an effective superseding Election
Form at any time and from time to time, prospectively change the designated
Beneficiary and the manner of payment to a Beneficiary.

 

3.2 Change in Control. In the event of a Change in Control, the Bank and the
Participant have the right to mutually agree to limit payments that they might
consider excess “golden parachute payments” as defined under §§280G and 4999 of
the Code to the extent not inconsistent with the provisions of Code Section 409A
and associated regulations. In addition, upon the closing date of a Change in
Control: the forfeiture provision set forth in Section 3.3(ii) of the Plan shall
lapse and become null and void, each Participant’s Vested Percentage shall
become 100%, and the Appreciation Percentage for each Participant shall be
calculated by assuming that the appreciation percentage that occurred between
the initial credit of a Capital Appreciation Right and the Change in Control
continues through date on which the Participant’s Vested Percentage would have
reached 100% pursuant to Section 1.29 of the Plan.

 2 

 

Exhibit “D”

 

 

MACON BANK
AMENDED AND RESTATED

LONG-TERM CAPITAL APPRECIATION PLAN

 

 

 

 

Post-2004 Deferral Election Form

 

 

 

 

AGREEMENT, made this __ day of ____________, 2___, by and between
_______________ (the “Participant”) and Macon Bank, Inc. (the “Bank”).

 

WHEREAS, the Bank has established the Macon Bank Long-term Capital Appreciation
Plan (the “Plan”), and the Participant is eligible to participate in said Plan.

 

NOW THEREFORE, it is mutually agreed as follows:

 

1. By the execution hereof, the Participant agrees to participate in the Plan
upon the terms and conditions set forth therein, and, in accordance therewith,
make the elections set forth herein effective -

 

____ on the January 1st that follows Acceptance of this Deferral Election Form
and the corresponding Distribution Election Form.

 

____ on the first day of the next calendar month, but only if this election
occurs within the 30-day period after the Participant first become eligible for
Plan participation (NOTE: only newly elected directors or newly eligible
officers may choose this option).

 

2. For the duration of this election (as determined under paragraph 3 below),
the Participant agrees to participate in the Plan upon the terms and conditions
set forth therein, and, in accordance therewith, elects to defer the receipt of:

 

____ % of the Participant’s base salary, director’s fees, and/or retainers.

 

____ % of any additional cash compensation that the Participant may receive.

 

3. This election will continue in force until either the effective date of a
superseding election by the Participant, or until the Participant terminates
service with the Bank, or until the Plan is terminated by appropriate corporate
action, whichever shall first occur.

 

 

[Signature page follows]

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have hereunto set their hands the day and
year first above-written.

 

  Witnessed by:   PARTICIPANT                                   Witnessed by:  
MACON BANK, INC.                           By           A member of the Board

 

 

 

Exhibit “E”

 

 

MACON BANK AMENDED AND RESTATED

LONG-TERM CAPITAL APPRECIATION PLAN

 

 

 

 

Post-2004 Distribution Election Form

 

 

 

 

AGREEMENT, made this__ day of ____________, 2___, by and between the undersigned
participant (the “Participant”) in the Macon Bank Long-term Capital Appreciation
Plan (the “Plan”), and Macon Bank, Inc. (the “Bank”) with respect to
distribution of the Participant’s benefits under the Plan.

 

NOW THEREFORE, it is mutually agreed as follows:

 

1. Effect of Election. The elections made in paragraphs 2 and 3 hereof shall
apply -

 

o to any compensation that is deferred pursuant to the Participant’s Post-2004
Deferral Election Form executed ____________, 20___.

 

o to the entire value of the Participant’s Account, provided that these
elections may only be changed at least one year in advance of the earliest date
on which payments would otherwise commence pursuant to paragraph 3 hereof, and
may only be changed pursuant to an election that conforms with the requirements
set forth in Section 3.1 of the Sub-plan.

 

With respect to the elections made in paragraphs 3 and 4 hereof, the Participant
may, by submitting an effective superseding Distribution Election Form at any
time and from time to time, prospectively change the beneficiary designation and
the manner of payment to a Beneficiary. Such elections shall, however, become
irrevocable upon the Participant’s death.

 

2. Form of Payment Generally. The Participant, by the execution hereof, agrees
to participate in the Plan upon the terms and conditions set forth therein, and,
in accordance therewith, elects to have his or her Account distributed as
follows:

 

  [ ] in a lump sum that is paid as soon as practicable after the year following
the Participant's termination of Service. [You may choose a number between 2 and
10.]         [ ] in substantially equal monthly payments over a period of ___
years. [You may choose a number  between  5 and 10.]

 

 

 

3. Timing of Payment. Payment of a Participant’s first monthly installment from
his or her Account shall occur as soon as administratively practicable after the
Committee determines the Participant’s Final Account balance, unless the
Participant elects to defer commencing distributions until --

 

  [ ] The date on which the Participant attains age ____. [You may choose an age
between 60 and 75.}         [ ] ____________ __, 2____  [You may choose any date
that occurs before you reach age 75.}

 

4. Form of Payment to Beneficiary. In the event of the Participant’s death, his
or her

Account shall be distributed -

 

  [ ] in one lump sum payment         [ ] in accordance  with the
payment  schedule  selected  in paragraphs   1  and 2 hereof  (with
payments  made as though the Participant  survived to collect all benefits,  and
as though the Participant  terminated  service  on the date of his or her
death,  if payments  had not already begun)

 

5. Designation of Beneficiary. In the event of the Participant’s death before he
or she has collected all of the benefits payable under the Plan, the Participant
hereby directs that any survivorship benefits payable under Article III of the
Plan be distributed to the beneficiary or beneficiaries designated under
subparagraphs a and b of this paragraph in the manner elected pursuant to
paragraph 4 above:

 

a. Primary Beneficiary. The Participant hereby designates the person(s) named
below to be his or her primary beneficiary and to receive the balance of any
unpaid benefits under the Plan.

 

Name of
Primary Beneficiary Mailing Address Percentage of
Death Benefit     %     %

 

b. Contingent Beneficiary. In the event that the primary beneficiary or
beneficiaries named above are not living at the time of the Participant’s death,
the Participant hereby designates the following person(s) to be his or her
contingent beneficiary for purposes of the Plan:

 

Name of
Contingent Beneficiary Mailing Address Percentage of Death Benefit     %     %

 

6. Mutual Commitments. The Bank agrees to make payment of all amounts due the
Participant in accordance with the terms of the Plan and the elections made by
the Participant herin. The Participant agrees to be bound by the terms of the
Plan, as in effect on the date hereof or properly amended hereafter.

 

 

 

IN WITNESS WHEREOF, the parties hereto have hereunto set their hands the day and
year first above-written.

 

  Witnessed by:   PARTICIPANT                                   Witnessed by:  
MACON BANK, INC.                           By           A duly authorized
Committee Member