Exhibit
10.4


 


New Southern Bank


Executive Bonus Agreement


 


NEW
SOUTHERN BANK


EXECUTIVE
BONUS AGREEMENT


 


THIS AGREEMENT is adopted this 1st day of
January, 2005, by and between NEW SOUTHERN BANK a state-chartered commercial
bank located in Macon, Georgia (the “Company”), and Brandon L. Mercer (the “Executive”).


 


To encourage the Executive to remain an
employee of the Company, the Company is willing to provide to the Executive a
bonus opportunity. The Company will pay the Executive’s bonus from the Company’s
general assets.


 


The Company and the Executive agree as
provided herein.


 


Article 1


Definitions


 


Whenever used in this Agreement, the
following words and phrases shall have the meanings specified:


 


1.1           “Accrual Balance” means the liability
that should be accrued by the Company, under Generally Accepted Accounting
Principles (“GAAP”), for the Company’s obligation to the Executive under this
Agreement, by applying Accounting Principles Board Opinion Number 12 (“APB 12”)
as amended by Statement of Financial Accounting Standards Number 106 (“FAS 106”)
and the Discount Rate. Any one of a variety of amortization methods may be used
to determine the Accrual Balance. However, once chosen, the method must be
consistently applied. The Accrual Balance shall be reported annually by the
Company to the Executive.


 


1.2           “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.


 


1.3           “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.


 


1.4           “Bonus Award” means only the cash
bonus award paid to the Executive and does not include any salary.


 


1.5           “Change of Control” means any one of
the following events:


 





















 


(a)           the acquisition by any person or persons
acting in concert of the then outstanding voting securities of the Company, if,
after the transaction, the acquiring person (or persons) owns, controls or
holds with power to vote forty percent (40%) or more of any class of voting
securities of the Company;


(b)           within any twelve-month period (beginning on
or after the Effective Date) the persons who were directors of the Company
immediately before the beginning of such twelve-month period (the “Incumbent
Directors”) shall cease to constitute at least a majority of the Board of
Directors of the Company; provided that any director who was not a director as
of the beginning of such twelve-month period shall be deemed to be an Incumbent
Director if that director were elected to the Board of Directors of the Company
by, or on the recommendation of or with the approval of, at least two-thirds
(2/3) of the directors who then qualified as Incumbent Directors; and provided
further that no director whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of
directors shall be deemed to be an Incumbent Director;


(c)           a reorganization, merger, share exchange
combination or consolidation, with respect to which persons who were the
stockholders of the Company immediately prior to such reorganization, merger,
share exchange combination or consolidation do not, immediately thereafter, own
more than fifty percent (50%) of the combined voting power entitled to vote in
the election of directors of the reorganized, merged, combined or consolidated
company’s then outstanding voting securities; or


(d)           the sale, transfer or assignment of all or
substantially all of the assets of the Company to any third party.


 


1.6           “Code” means the Internal Revenue Code
of 1986, as amended.


 


1.7           “Disability” means the Executive (i) is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, or (ii) is, by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected
to last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than 3 months under an accident
and health plan covering employees of the Company.  Medical determination of Disability may be
made by either the Social Security Administration or by the provider of an
accident or health plan covering employees of the Company.  Upon the request of the Plan Administrator,
the Executive must submit proof to the Plan Administrator of the Social
Security Administration’s or the provider’s determination.


 


1.8           “Early Termination” means the
Executive’s Separation from Service before completion of his fifth consecutive
Year of Participation (whether due to a Termination for Cause, an


 


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involuntary termination without cause, or a voluntary resignation) for
reasons other than death, Disability, or following a Change of Control.


 


1.9           “Effective Date” mean January 1,
2005.


 


1.10         “Plan Administrator” means the plan
administrator described in Article 6.


 


1.11         “Plan Year” means the calendar year.


 


1.12         “Separation from Service” means that
the Executive has experienced a separation from service with the Company and
its affiliates within the meaning of Section 409A(a)(2)(i) of the
Code.


 


1.13         “Termination for Cause” means the
Company terminating the Executive’s employment for:


 


(a)           Gross negligence or gross neglect of duties
to the Company;


(b)           Commission of a felony or of a gross
misdemeanor involving moral turpitude in connection with the Executive’s
employment with the Company; or


(c)           Fraud, disloyalty, dishonesty or willful
violation of any law or significant Company policy committed in connection with
the Executive’s employment and resulting in an adverse effect on the Company.


 


1.13         “Years of Participation” means the
consecutive 12-month period beginning on the Effective Date of this Agreement
and any 12-month anniversary thereof, during the entirety of which time the
Executive is a participant in the Agreement.


 


Article 2


Bonus Award


 


2.1           Bonus Award. Upon the Executive completing five consecutive Years of
Participation, the Company 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 amount of the Bonus Award shall be $250,000.


 


2.1.2        Distribution of Benefit.
The Company shall pay the Bonus Award in a lump sum within thirty (30) days
following completion of the five consecutive Years of Participation.


 


2.2           Change in Control Bonus Award.  If a
Separation from Service occurs as a result of a Change in Control at any time
prior to the end of the Executive’s fifth consecutive Year of


 


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Participation, the Company 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 Accrual Balance determined as of the
Executive’s Separation from Service following the Change in Control.


 


2.2.2        Distribution of Benefit.  The
Company shall distribute the Accrual Balance to the Executive in a lump sum
commencing within thirty (30) days following the Executive’s Separation from
Service.


 


2.3           Disability Benefit. If the Executive’s Disability results in
Separation from Service prior to the end of the Executive’s fifth consecutive
Year of Participation, the Company shall distribute to the Executive the
benefit described in this Section 2.3 in lieu of any other benefit under
this Article.


 


2.3.2        Amount of Benefit.  The
benefit under this Section 2.3 is the Accrual Balance determined as of the
date of the Executive’s Separation from Service.


 


2.3.3        Distribution of Benefit. The Company shall pay the Accrual Balance
in a lump sum within thirty (30) days following the Executive’s Separation from
Service.


 


2.4           Restriction on Timing of Distribution. Notwithstanding any provision of this
Agreement to the contrary, if the Executive is considered a “specified employee”
under Section 409A of the Code at the time of any Separation from Service
pursuant to which benefits become payable under Sections 2.1, 2.2 or 2.4, all
benefit payments otherwise due and payable shall be suspended for a period of
six (6) months following the Separation from Service and the amounts so
suspended will be paid in a lump sum as soon as practicable following the
six-month anniversary of the Separation from Service.


 


Article 3


Distribution
at Death


 


3.1           Death During Active Service. If the Executive dies while in the active
service of the Company and prior to the end of the Executive’s fifth
consecutive Year of Participation, the Company 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 Accrual Balance determined as of the
Executive’s death.


 


3.1.2        Distribution of Benefit.  The
Company shall distribute the Accrual Balance to the


 


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Beneficiary in a lump sum commencing within sixty (60) days following
receipt by the Company of the Executive’s death certificate.


 


3.2           Death After Separation from Service But
Before Benefit Distributions Commence. If the Executive is entitled to benefit distributions under this
Agreement, but dies prior to the commencement of said benefit distributions,
the Company shall distribute to the Beneficiary the same benefits that the
Executive was entitled to prior to death except that the benefit distributions
shall commence within sixty (60) days following receipt by the Company of the
Executive’s death certificate.


 


Article 4


Beneficiaries


 


4.1           Beneficiary.  The Executive shall have the
right, at any time, to designate a Beneficiary(ies) to receive any benefit
distributions under this Agreement to a Beneficiary upon the death of the
Executive.  The Beneficiary designated
under this Agreement may be the same as or different from the beneficiary
designation under any other plan of the Company in which the Executive
participates.


 


4.2           Beneficiary Designation:  Change.  The Executive shall designate
a Beneficiary by completing and signing the Beneficiary Designation Form, and
delivering it to the Plan Administrator or its designated agent.  The Executive’s beneficiary designation shall
be deemed automatically revoked if the Beneficiary predeceases the Executive or
if the Executive names a spouse as Beneficiary and the marriage is subsequently
dissolved. The Executive shall have the right to change a Beneficiary by
completing, signing and otherwise complying with the terms of the Beneficiary
Designation Form and the Plan Administrator’s rules and procedures,
as in effect from time to time. Upon the acceptance by the Plan Administrator
of a new Beneficiary Designation Form, all Beneficiary designations previously
filed shall be cancelled. The Plan Administrator shall be entitled to rely on
the last Beneficiary Designation Form filed by the Executive and accepted
by the Plan Administrator prior to the Executive’s death.


 


4.3           Acknowledgment.  No
designation or change in designation of a Beneficiary shall be effective until
received, accepted and acknowledged in writing by the Plan Administrator or its
designated agent.


 


4.4           No Beneficiary Designation. If the Executive dies without a valid
beneficiary designation, or if all designated Beneficiaries predecease the
Executive, then the Executive’s spouse shall be the designated Beneficiary. If
the Executive has no surviving spouse, the benefits shall be made to the
personal representative of the Executive’s estate.


 


4.5           Facility of Distribution. If the Plan Administrator determines in its
discretion that a benefit is to be distributed to a minor, to a person declared
incompetent, or to a person incapable


 


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of handling the disposition of that person’s property, the Plan
Administrator may direct distribution of such benefit to the guardian, legal
representative or person having the care or custody of such minor, incompetent
person or incapable person. The Plan Administrator may require proof of
incompetence, minority or guardianship as it may deem appropriate prior to distribution
of the benefit. Any distribution of a benefit shall be a distribution for the
account of the Executive and the Executive’s Beneficiary, as the case may be,
and shall be a complete discharge of any liability under the Agreement for such
distribution amount.


 


Article 5


General
Limitations


 


The Company shall not pay any Bonus Award
under this Agreement under the following circumstances:


 


(a)           Upon the Executive’s Early Termination; or


(b)           Upon the termination of this Agreement prior
to benefits becoming payable pursuant to Article 2 or Article 3.


 


Article 6


Amendment and Termination


 


This Agreement may be amended or terminated
only by a written agreement signed by the Company and the Executive; provided,
however, that no such amendment or termination shall provide for or otherwise
permit any acceleration of the time or schedule of any payment under this
Agreement in a manner that would be prohibited under Section 409A(a)(3) of
the Code.


 


Notwithstanding the foregoing, the Company
and the Executive agree to take any and all steps reasonably necessary to amend
the Agreement as may be required to comply with the provisions of Section 409A
of the Code, so as not to trigger unintended tax consequences prior to the
distribution of benefits provided herein, as and when additional guidance
promulgated thereunder becomes effective.


 


Article 7


Claims and Review Procedure


 


7.1           Claims Procedure. An Executive (“claimant”) who has not
received benefits under the Agreement that he or she believes should be
distributed shall make a claim for such benefits as follows:


 


7.1.1        Initiation – Written Claim. The claimant initiates a claim by
submitting to the Plan Administrator a written claim for the benefits.


 


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7.1.2        Timing of Plan Administrator Response.  The
Plan Administrator shall respond to such claimant within 90 days after
receiving the claim.  If the Plan
Administrator determines that special circumstances require additional time for
processing the claim, the Plan Administrator can extend the response period by
an additional 90 days by notifying the claimant in writing, prior to the end of
the initial 90-day period, that an additional period is required.  The notice of extension must set forth the
special circumstances and the date by which the Plan Administrator expects to
render its decision.


 


7.1.3        Notice of Decision.  If
the Plan Administrator denies part or all of the claim, the Plan Administrator
shall notify the claimant in writing of such denial.  The Plan Administrator shall write the
notification in a manner calculated to be understood by the claimant. The
notification shall set forth:


 


(a)           The specific reasons for the denial;


(b)           A reference to the specific provisions of the
Agreement on which the denial is based;


(c)           A description of any additional information
or material necessary for the claimant to perfect the claim and an explanation
of why it is needed;


(d)           An explanation of the Agreement’s review
procedures and the time limits applicable to such procedures; and


(e)           A statement of the claimant’s right to bring
a civil action under ERISA Section 502(a) following an adverse
benefit determination on review.


 


7.2           Review Procedure. If the Plan Administrator denies part or
all of the claim, the claimant shall have the opportunity for a full and fair
review by the Plan Administrator of the denial, as follows:


 


7.2.1        Initiation – Written Request.  To
initiate the review, the claimant, within 60 days after receiving the Plan
Administrator’s notice of denial, must file with the Plan Administrator a
written request for review.


 


7.2.2        Additional Submissions – Information Access.  The
claimant shall then have the opportunity to submit written comments, documents,
records and other information relating to the claim.  The Plan Administrator shall also provide the
claimant, upon request and free of charge, reasonable access to, and copies of,
all documents, records and other information relevant (as defined in applicable
ERISA regulations) to the claimant’s claim for benefits.


 


7.2.3        Considerations on Review. In considering the review, the Plan
Administrator shall take into account all materials and information the
claimant submits relating to the


 


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claim, without regard to whether such information was submitted or
considered in the initial benefit determination.


 


7.2.4        Timing of Plan Administrator Response.  The
Plan Administrator shall respond in writing to such claimant within 60 days
after receiving the request for review. 
If the Plan Administrator determines that special circumstances require
additional time for processing the claim, the Plan Administrator can extend the
response period by an additional 60 days by notifying the claimant in writing,
prior to the end of the initial 60-day period, that an additional period is
required. The notice of extension must set forth the special circumstances and
the date by which the Plan Administrator expects to render its decision.


 


7.2.5        Notice of Decision.  The
Plan Administrator shall notify the claimant in writing of its decision on
review.  The Plan Administrator shall
write the notification in a manner calculated to be understood by the
claimant.  The notification shall set forth:


 


(a)           The specific reasons for the denial;


(b)           A reference to the specific provisions of the
Agreement on which the denial is based;


(c)           A statement that the claimant is entitled to
receive, upon request and free of charge, reasonable access to, and copies of,
all documents, records and other information relevant (as defined in applicable
ERISA regulations) to the claimant’s claim for benefits; and


(d)           A statement of the claimant’s right to bring
a civil action under ERISA Section 502(a).


 


Article 8


Administration of Agreement


 


8.1           Plan Administrator Duties. This Agreement shall be administered by a
Plan Administrator which shall consist of the Board, or such committee or
person(s) as the Board shall appoint. 
The Executive may be a member of the Plan Administrator.  The Plan Administrator shall also have the
discretion and authority to (i) make, amend, interpret and enforce all
appropriate rules and regulations for the administration of this Agreement
and (ii) decide or resolve any and all questions including interpretations
of this Agreement, as may arise in connection with the Agreement.


 


8.2           Agents.  In the administration of this
Agreement, 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 Company.


 


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8.3           Binding Effect of Decisions. The decision or action of the Plan
Administrator with respect to any question arising out of or in connection with
the administration, interpretation and application of the Agreement and the rules and
regulations promulgated hereunder shall be final and conclusive and binding
upon all persons having any interest in the Agreement. No Executive shall be
deemed to have any right, vested or nonvested, regarding the continued use of
any previously adopted assumptions.


 


8.4           Indemnity of Plan Administrator.  The
Company 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 Agreement, except in the
case of willful misconduct by the Plan Administrator or any of its members.


 


8.5           Company Information.  To
enable the Plan Administrator to perform its functions, the Company 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
Termination of Employment of the Executive and such other pertinent information
as the Plan Administrator may reasonably require.


 


8.6           Annual Statement. The Plan Administrator shall provide to the
Executive, within 120 days after the end of each Plan Year, a statement setting
forth the benefits payable under this Agreement.


 


Article 9


Miscellaneous


 


9.1           Binding Effect. This Agreement shall bind the Executive and
the Company, and their beneficiaries, survivors, executors, administrators and
transferees.


 


9.2           No Guarantee of Employment. This Agreement is not a contract for
employment. It does not give the Executive the right to remain as an employee
of the Company, nor does it interfere with the Company’s right to discharge the
Executive. It also does not require the Executive to remain an employee nor
interfere with the Executive’s right to terminate employment at any time.


 


9.3           Non-Transferability. Benefits under this Agreement cannot be
sold, transferred, assigned, pledged, attached or encumbered in any manner.


 


9.4           Tax Withholding. The Company shall withhold any taxes that
are required under applicable law to be withheld from the benefits provided
under this Agreement, such withholdings to be funded by reducing the amount of
any such benefit payments or from any other compensation otherwise payable to
the Executive. The Executive acknowledges


 


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that the Company’s sole liability regarding taxes is to forward any
amounts withheld to the appropriate taxing authority(ies).


 


9.5           Applicable Law. The Agreement and all rights hereunder
shall be governed by the laws of the State of Georgia, except to the extent
preempted by the laws of the United States of America.


 


9.6           Unfunded Arrangement.  The
Executive is a general unsecured creditor of the Company for the distribution
of benefits under this Agreement.  The
benefits represent the mere promise by the Company to distribute such benefits.
The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors.  Any insurance
on the Executive’s life or other informal funding asset is a general asset of
the Company to which the Executive has no preferred or secured claim.


 


9.7           Reorganization.  The
Company shall not merge or consolidate into or with another bank, or
reorganize, or sell substantially all of its assets to another bank, firm, or
person unless such succeeding or continuing bank, firm, or person agrees to
assume and discharge the obligations of the Company under this Agreement.  Upon the occurrence of such event, the term “Company”
as used in this Agreement shall be deemed to refer to the successor or survivor
bank.


 


9.8           Entire Agreement. This Agreement constitutes the entire
agreement between the Company and the Executive as to the subject matter
hereof. No rights are granted to the Executive by virtue of this Agreement
other than those specifically set forth herein.


 


9.9           Interpretation. Wherever the fulfillment of the intent and
purpose of this Agreement requires, and the context will permit, the use of the
masculine gender includes the feminine and use of the singular includes the
plural.


 


9.10         Alternative Action. In the event it shall become impossible for
the Company or the Plan Administrator to perform any act required by this
Agreement, the Company or Plan Administrator may in its discretion perform such
alternative act as most nearly carries out the intent and purpose of this
Agreement and is in the best interests of the Company.


 


9.11         Headings.   Article and section headings
are for convenient reference only and shall not control or affect the meaning
or construction of any of its provisions.


 


9.12         Validity. In case any provision of this Agreement shall be illegal or invalid
for any reason, said illegality or invalidity shall not affect the remaining
parts hereof, but this Agreement shall be construed and enforced as if such
illegal and invalid provision has never been inserted herein.


 


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9.13         Notice.  Any notice or filing required
or permitted to be given to the Company or Plan Administrator under this
Agreement shall be sufficient if in writing and hand-delivered, or sent by
registered or certified mail, to the address below:


 


	
   

  	
    4077
  Forsyth Road

  	
   

  
	
   

  	
    Macon,
  GA 31210

  	
   

  



 


Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the receipt
for registration or certification.


 


Any notice or filing required or permitted to be given to the Executive
under this Agreement shall be sufficient if in writing and hand-delivered, or
sent by mail, to the last known address of the Executive.


 


IN WITNESS WHEREOF, the Executive and the
Company consent to this Agreement on the date above written.


 


 


	
  EXECUTIVE:

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  NEW SOUTHERN BANK

  
	
   

  	
   

  
	
  /s/ Brandon L. Mercer

  	
   

  	
  By

  	
  /s/ Mark A. Stevens

  	
   

  
	
  Brandon L. Mercer

  	
   

  
	
   

  	
  Title

  	
  PRES/CEO

  	
   

  
						



 


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