Document:

Exhibit
10.3

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made as of the 10th
day of July, 2003, by and between NEW  SOUTHERN BANK (the “Bank”); and CAROL SOTO, a resident of the State of
Georgia (the “Executive”).

 

RECITALS:

 

The Bank desires to employ the Executive as
Chief Financial Officer and the Executive desires to accept such employment.

 

In consideration of the above premises and
the mutual agreements hereinafter set forth, the parties hereby agree as
follows:

 

1.             Definitions.
Whenever used in this Agreement, the following terms and their variant
forms shall have the meaning set forth below:

 

1.1          “Agreement”
shall mean this Agreement and any exhibits incorporated herein together
with any amendments hereto made in the manner described in this Agreement.

 

1.2          “Area”
shall mean the geographic area within the boundaries of Bibb, Jones, Monroe,
Crawford, Twiggs, Houston and Peach Counties, Georgia. It is the express intent
of the parties that the Area as defined herein is the area where the Executive
performs services on behalf of the Bank under this Agreement.

 

1.3          “Bank Information” means
Confidential Information and Trade Secrets.

 

1.4          “Business
of the Bank” shall mean the business conducted by the Bank, which is
the business of commercial banking.

 

1.5          “Cause”
shall mean:

 

1.5.1        With
respect to termination by the Bank:

 

(a)           A
material breach of the terms of this Agreement by the Executive, including,
without limitation, failure by the Executive to perform her duties and
responsibilities in the manner and to the extent required under this Agreement;

 

(b)          Conduct
by the Executive that amounts to fraud, dishonesty or willful misconduct in the
performance of her duties and responsibilities hereunder;

 

(c)           Arrest
for, charged in relation to (by criminal information, indictment or otherwise),
or conviction of the Executive during the Term of this Agreement of a crime
involving breach of trust or moral turpitude or any felony;

 

(d)          Conduct
by the Executive that amounts to gross and willful insubordination or inattention
to her duties and responsibilities hereunder; or

 

(e)           Conduct
by the Executive that results in removal from her position as an officer or
executive of the Bank pursuant to a written order by any regulatory agency with
authority or jurisdiction over the Bank.

 

1.5.2        With
respect to termination by the Executive, a material diminution in the powers,
responsibilities or

 

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duties of the Executive hereunder or a material breach of the terms of this
Agreement by the Bank.

 

1.6          “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 Bank, 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 Bank;

 

(b)          within any twelve-month period (beginning on
or after the Effective Date) the persons who were directors of the Bank
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; provided that any director who was not a director as of the
Effective Date shall be deemed to be an Incumbent Director if that director
were elected to the Board of Directors of the Bank by, or on the recommendation
of or with the approval of, at least two-thirds 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 (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Securities Exchange Act of 1934) relating to the election
of directors shall be deemed to be an Incumbent Director;

 

(c)           a reorganization, merger or consolidation,
with respect to which persons who were the stockholders of the Bank immediately
prior to such reorganization, merger 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 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 Bank to any third party.

 

1.7          “Confidential Information”
means data and information
relating to the business of the Bank (which does not rise to the status of a
Trade Secret) which is or has been disclosed to the Executive or of which the Executive
became aware as a consequence of or through the Executive’s relationship to the
Bank and which has value to the Bank and is not generally known to its
competitors. Confidential Information shall not include any data or information
that has been voluntarily disclosed to the public by the Bank (except where
such public disclosure has been made by the Executive without authorization) or
that has been independently developed and disclosed by others, or that
otherwise enters the public domain through lawful means.

 

1.8          “Disability” shall mean the
inability of the Executive to perform each of her material duties under this
Agreement for the duration of the short-term disability period under the Bank’s
policy then in effect (or, if no such policy is in effect, a period of 90
consecutive days) as certified by a physician chosen by the Bank and reasonably
acceptable to the Executive.

 

1.9          “Effective Date” shall mean the
date the of this agreement.

 

1.10        “Initial Term” shall mean that
period of time commencing on the Effective Date and running until the earlier
of the close of business on the last business day immediately preceding the
third anniversary of the Effective Date or any earlier termination of
employment of the Executive under this Agreement as provided for in
Section 3.

 

1.11        “Term” shall mean the Initial Term and all
subsequent renewal periods.

 

1.12        “Trade Secrets” means Bank information including, but not
limited to, technical or nontechnical data, formulas, patterns, compilations, programs, devices,
methods, techniques, drawings, processes, financial data,

 

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financial
plans, product plans or lists of actual or potential customers or suppliers
which:

 

(a)           derives economic value, actual or potential,
from not being generally known to, and not being readily ascertainable by
proper means by, other persons who can obtain economic value from its disclosure
or use; and

 

(b)          is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy.

 

2.             Duties.

 

2.1          Position.  The Executive is employed initially as Chief Financial Officer of the
Bank, subject to the direction of the Board of Directors of the Bank or its
designee(s), shall perform and discharge well and faithfully the duties which
may be assigned to him from time to time by the Bank in connection with the
conduct of its business.

 

2.2          Full-Time Status.  In addition to the duties and responsibilities specifically assigned to
the Executive pursuant to Section 2.1 hereof, the Executive shall:

 

(a)           devote substantially all of her time, energy
and skill during regular business hours to the performance of the duties of her
employment (reasonable vacations and reasonable absences due to illness
excepted) and faithfully and industriously perform such duties;

 

(b)          diligently follow and implement all
reasonable and lawful management policies and decisions communicated to her by
the President and CEO; and

 

(c)           timely prepare and forward to the President
and CEO all reports and accountings as may be requested of the Executive.

 

2.3          Permitted Activities.  The Executive shall devote her entire business time, attention and
energies to the Business of the Bank and shall not during the Term be engaged
(whether or not during normal business hours) in any other business or
professional activity, whether or not such activity is pursued for gain, profit
or other pecuniary advantage; but this shall not be construed as preventing the
Executive from:

 

(a)           investing her personal assets in businesses
which (subject to clause (b) below) are not in competition with the
Business of the Bank and which will not require any services on the part of the
Executive in their operation or affairs and in which her participation is
solely that of an investor;

 

(b)          purchasing securities in any corporation
whose securities are regularly traded provided that such purchase shall not
result in him collectively owning beneficially at any time five percent (5%) or
more of the equity securities of any business in competition with the Business
of the Bank; and

 

(c)           participating in civic and professional
affairs and organizations and conferences, preparing or publishing papers or
books or teaching so long as the Board of Directors of the Bank approves of
such activities prior to the Executive’s engaging in them.

 

3.             Term
and Termination.

 

3.1          Term. This Agreement shall remain in effect for the
Initial Term. At the end of the Initial Term and at the end of each
twelve-month extension thereof, this Agreement shall automatically be extended
for a successive twelve-month period unless either party gives written notice
to the other of its intent not to extend this Agreement with such written
notice to be given not less than sixty (60) days prior to the end of the
Initial Term or such twelve-month period. In the event such notice of
non-extension is properly given, this Agreement shall terminate at the end

 

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of
the remaining Term then in effect.

 

3.2          Termination.  During the Term, the employment of the Executive under this Agreement
may be terminated only as follows:

 

3.2.1        By the Bank:

 

(a)           For Cause pursuant to Section 1.5.1; or

 

(b)           Without Cause at any time, if such, the Bank shall be required to
continue to meet its obligations to the Executive under Section 4.1 for
twelve (12) months; or

 

(c)           Upon the Disability of Executive at any time, provided that the Bank
shall give the Executive thirty (30) days’ prior written notice of its intent
to terminate, in which event, the Bank shall be required to continue to meet
its obligations under Section 4.1 for three (3) months following the
termination or until the Executive begins receiving payments under the Bank’s
long-term disability policy, whichever occurs first.

 

3.2.2        By the Executive:

 

(a)           For Cause, in which event the Bank shall be required to continue to
meet its obligations under Section 4.1 for twelve (12) months; or

 

(b)           Without Cause or upon the Disability of the Executive, provided that
the Executive shall give the Bank sixty (60) days’ prior written notice of her
intent to terminate, in which event the Bank shall have no further obligation
to the Executive except future payment of any amounts due and owing under Section 4
on the effective date of the termination.

 

3.2.3        At any time upon mutual, written agreement of
the parties, in which event the Bank shall have no further obligation to the
Executive except for the payment of any amounts due and owing under
Section 4 of this Agreement on the effective date of termination unless
otherwise set forth in the written agreement.

 

3.2.4        Notwithstanding anything in this Agreement to
the contrary, the Term shall end automatically upon the Executive’s death, in
which event the Bank shall have no further obligation to the Executive except
for the payment of any amounts due and owing under Section 4 on the
effective date of termination.

 

3.3          Change of Control.  If the Executive terminates her employment with the Bank under this
Agreement for Cause or the Bank terminates Executive’s employment without Cause
within six (6) months following a Change in Control, the Executive, or in
the event of her subsequent death, her designated beneficiaries or her estate,
as the case may be, shall receive, as liquidated damages, in lieu of all other
claims, a severance payment equal to one (1) times the Executive’s then
current Base Salary, to be paid in full on the last day of the month following
the date of termination. In no event shall the payment(s) described in this Section 3.3
exceed the amount permitted by Section 280G of the Internal Revenue Code,
as amended (the “Code”). Therefore, if the aggregate present value (determined
as of the date of the Change of Control in accordance with the provisions of Section 280G
of the Code) of both the severance payment and all other payments to the
Executive in the nature of compensation which are contingent on a change in
ownership or effective control of the Bank or in the ownership of a substantial
portion of the assets of the Bank (the “Aggregate Severance”) would result in a
“parachute payment,” as defined under Section 280G of the Code, then the
Aggregate Severance shall not be greater than an amount equal to 2.99
multiplied by Executive’s “base amount” for the “base period, “ as those terms
are defined under Section

 

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280G. In the event the Aggregate Severance is required to be reduced
pursuant to this Section 3.3, the Executive shall be entitled to determine
which portions of the Aggregate Severance are to be reduced so that the
Aggregate Severance satisfies the limit set forth in the preceding sentence.
Notwithstanding any provision in this Agreement, if the Executive may exercise
her right to terminate employment under this Section 3.3 or under Section 3.2.2(a),
the Executive may choose which provision shall be applicable.

 

4.             Compensation.
 The Executive shall receive the
following salary and benefits:

 

4.1          Base
Salary.  During the Initial Term,
the Executive shall be compensated at an annual base rate of $78,000.00 (the “Base
Salary”).  The Executive’s Base Salary
shall be reviewed by the Bank President and the Board of Directors of the Bank
at least annually, and the Executive shall be entitled to receive annually an
increase in such amount, if any, as may be determined by the Bank President and
Board of Directors of the Bank based on its evaluation of Executive’s
performance. Base Salary shall be payable in accordance with the Bank’s normal
payroll practices.

 

4.2          Stock
Options.  The
Bank established a stock incentive plan and will grant to the Executive such stock
incentive plan an incentive stock option to purchase, at a per share purchase
price equal to $10.00 and $12.25. 6,500 options to purchase shares of the Bank’s
common stock were granted on 12/10/01 with a 5 year vesting period at a option
price of $10.00, and an additional 3,250 options to purchase shares were
granted on 12/10/02 with a 9 year vesting period at an option price of $12.25.
The options generally will become vested and exercisable in (1/5 per year for
the 6,500 options and 1/9 per year for the 3,250 options), commencing on the
first anniversary of the option grant date and continuing for the next
successive anniversaries; provided, however, that, subject to such restrictions
as may be imposed by the Bank’s primary regulator, the option shall be fully
vested and exercisable upon a Change in Control of the Bank or a termination of
the Executive’s employment by the Bank without Cause. If the Executive is
dismissed by the Bank for cause of the Executive ends her employment, only the
option fully vested shall survive, all other options shall not vest. The option
shall expire generally upon the earlier of three (3) months following
termination of employment or upon the tenth anniversary of the Bank. The
incentive stock option will be issued by the Bank pursuant to its stock
incentive plan and subject to the terms of a related stock option agreement.

 

4.3          Health Insurance.  The Bank shall pay for the
Executive the cost of premium payments for the Executive’s health insurance
covering the Executive. The Executive shall be responsible for all cost for any
dependent or spouse.

 

4.4          Vacation. On a non-cumulative basis, the Executive
shall be entitled to three (3) weeks of vacation in each successive twelve-month
period during the Term, during which her compensation shall be paid in full.

 

4.5          Benefits.  In addition to the benefits specifically
described in this Agreement, the Executive shall be entitled to such benefits
as may be available from time to time to executives of the Bank similarly
situated to the Executive. All such benefits shall be awarded and administered
in accordance with the Bank’s standard policies and practices. Such benefits
may include, by way of example only, profit-sharing plans, retirement or
investment funds, dental, health, life and disability insurance benefits and
such other benefits as the Bank deems appropriate.

 

4.6          Withholding. The Bank may deduct from each payment of
compensation hereunder all amounts required to be deducted and withheld in
accordance with applicable federal and state income, FICA and other withholding
requirements.

 

5.             Bank
Information.

 

5.1          Ownership
of Bank Information.  All Bank
Information received or developed by the Executive while employed by the Bank
will remain the sole and exclusive property of the Bank.

 

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5.2          Obligations of the Executive.  The Executive agrees:

 

(a)           to hold Bank Information in strictest confidence;

 

(b)           not to use, duplicate, reproduce, distribute,
disclose or otherwise disseminate Bank Information or any physical embodiments
of Bank Information; and

 

(c)           in any event, not to take any action causing
or fail to take any action necessary in order to prevent any Bank Information
from losing its character or ceasing to qualify as Confidential Information or a
Trade Secret.

 

In
the event that the Executive is required by law to disclose any Bank
Information, the Executive will not make such disclosure unless (and then only
to the extent that) the Executive has been advised by independent legal counsel
that such disclosure is required by law and then only after prior written
notice is given to the Bank when the Executive becomes aware that such
disclosure has been requested and is required by law. This Section 5 shall
survive for a period of twelve (12) months following termination of this
Agreement for any reason with respect to Confidential Information, and shall
survive termination of this Agreement for any reason for so long as is permitted
by applicable law, with respect to Trade Secrets.

 

5.3          Delivery upon Request or
Termination.  Upon request by the Bank, and in any event
upon termination of her employment with the Bank, the Executive will promptly
deliver to the Bank all property belonging to the Bank, including, without
limitation, all Bank Information then in her possession or control.

 

6.             Non-Competition.  The Executive agrees that during her employment by the Bank hereunder
and, in the event of her termination:

 

•              by the Bank for Cause pursuant to Section 3.2.1
(a),

•              by the Executive without Cause pursuant to Section 3.2.2(b),
or

•              by the Executive in connection with a Change
of Control pursuant to Section 3.3,

 

for
a period of twelve (12) months thereafter, he will not (except on behalf of or
with the prior written consent of the Bank), within the Area, either directly
or indirectly, on her own behalf or in the service or on behalf of others, as
an executive employee or in any other capacity which involves duties and
responsibilities similar to those undertaken for the Bank (including as an
organizer or proposed executive officer of a new financial institution), engage
in any business which is the same as or essentially the same as the Business of
the Bank.

 

7.             Non-Solicitation
of Customers.  The Executive
agrees that during her employment by the Bank hereunder and, in the event of her termination:

 

•              by the Bank for Cause pursuant to Section 3.2.1(a),

•              by the Executive without Cause pursuant to Section 3.2.2(b),
or

•              by the Executive in connection with a Change
of Control pursuant to Section 3.3,

 

for
a period of twelve (12) months thereafter, he will not (except on behalf of or
with the prior written consent of the Bank), within the Area, on her own behalf
or in the service or on behalf of others, solicit, divert or appropriate or
attempt to solicit, divert or appropriate, any business from any of the Bank’s
customers, including actively sought prospective customers, with whom the
Executive has or had material contact during the last two (2) years of her

 

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employment, for purposes of providing products or services that are
competitive with those provided by the Bank.

 

8.             Non-Solicitation
of Employees.  The Executive
agrees that during her employment by the Bank hereunder and, in the event of
her termination:

 

•              by
the Bank for Cause pursuant to Section 3.2.1(a),

•              by
the Executive without Cause pursuant to Section 3.2.2(b), or

•              by
the Executive in connection with
a Change of Control pursuant to Section 3.3,

 

for a period of twelve (12) months thereafter, he will not, within the
Area, on her own behalf or in the service or on behalf of others, solicit,
recruit or hire away or attempt to solicit, recruit or hire away, any employee
of the Bank, whether or not:

 

•              such
employee is a full-time employee or a temporary employee of the Bank,

•              such
employment is pursuant to written agreement, or

•              such
employment is for a determined period or is at will.

 

9.             Remedies. The Executive agrees that the covenants
contained in Sections 5 through 8 of this Agreement are of the essence of this
Agreement; that each of the covenants is reasonable and necessary to protect
the business, interests and properties of the Bank, and that irreparable loss
and damage will be suffered by the Bank should be breach any of the
covenants.  Therefore, the Executive
agrees and consents that, in addition to all the remedies provided by law or in
equity, the Bank shall be entitled to a temporary restraining order and temporary
and permanent injunctions to prevent a breach or contemplated breach of any of
the covenants.  The Bank and the Executive
agree that all remedies available to the Bank or the Executive, as applicable,
shall be cumulative.

 

10.          Severability. The parties agree that each of the
provisions included in this Agreement is separate, distinct and severable from
the other provisions of this Agreement and that the invalidity or
unenforceability of any Agreement provision shall not affect the validity or
unenforceability of any other provision of this Agreement. Further, if any
provision of this Agreement is ruled invalid or unenforceable by a court of
competent jurisdiction because of a conflict between the provision and any
applicable law or public policy, the provision shall be redrawn to make the
provision consistent with and valid and enforceable under the law or public
policy.

 

11.          No
Set-Off by the Executive.  The
existence of any claim, demand, action or cause of action by the Executive
against the Bank whether predicated upon this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Bank of any of its rights
hereunder.

 

12.          Notice.  All notices and other communications required
or permitted under this Agreement shall be in writing and, if mailed by prepaid
first-class mail or certified mail, return receipt requested, shall be deemed
to have been received on the earlier of the date shown on the receipt or three (3) business
days after the postmarked date thereof. 
In addition, notices hereunder may be delivered by hand or overnight
courier, in which event the notice shall be deemed effective when delivered.
All notices and other communications under this Agreement shall be given to the
parties hereto at the following addresses:

 

(i)            If
to the Bank, to it at:

 

New Southern Bank

40770 Forsyth Street

Macon, Georgia 31210

 

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(ii)           If to the Executive, to him at:

 

602 Glencove Drive

Macon, Georgia 31210

 

13.          Assignment.
 Neither party hereto may assign or delegate
this Agreement or any of its rights and obligations hereunder without the
written consent of the other party to this Agreement.

 

14.          Waiver.  A
waiver by one party to this Agreement of any breach of this Agreement by the
other party to this Agreement shall not be effective unless in writing, and no
waiver shall operate or be construed as a waiver of the same or another breach
on a subsequent occasion.

 

15.          Arbitration.  Any
controversy or claim arising out of or relating to this contract, or the breach
thereof, shall be settled by binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association.
Judgment upon the award rendered by the arbitrator may be entered only in a
state court of Bibb County or the federal court for the Middle District of
Georgia.  The Bank and the Executive
agree to share equally the fees and expenses associated with the arbitration
proceedings.

 

16.          Attorneys’ Fees.  In
the event that the parties have complied with this Agreement with respect to arbitration
of disputes and litigation ensues between the parties concerning the
enforcement of an arbitration award, the party prevailing in such litigation
shall be entitled to receive from the other party all reasonable costs and expenses,
including without limitation attorneys’ fees, incurred by the prevailing party
in connection with such litigation, and the other party shall pay such costs
and expenses to the prevailing party promptly upon demand by the prevailing
party.

 

17.          Applicable Law.  This
Agreement shall be construed and enforced under and in accordance with the laws
of the State of Georgia.

 

18.          Interpretation.  Words
importing any gender include all genders. Words importing the singular form
shall include the plural and vice versa. 
The terms “herein”, “hereunder”, “hereby”, “hereto”, “hereof” and any
similar terms refer to this Agreement. 
Any captions, titles or headings preceding the text of any article, section or
subsection herein are solely for convenience of reference and shall not
constitute part of this Agreement or affect its meaning, construction or
effect.

 

19.          Entire Agreement.  This
Agreement embodies the entire and final agreement of the parties on the subject
matter stated in this Agreement. No amendment or modification of this Agreement
shall be valid or binding upon the Bank or the Executive unless made in writing
and signed by both parties.  All prior
understandings and agreements relating to the subject matter of this Agreement
are hereby expressly terminated.

 

20.          Rights of Third Parties.  Nothing herein expressed is intended to or
shall be construed to confer upon or give to any person, firm or other entity,
other than the parties hereto and their permitted assigns, any rights or remedies
under or by reason of this Agreement.

 

21.          Survival.  The
obligations of the Executive pursuant to Sections 5, 6, 7, 8 and 9 shall
survive the termination of the employment of the Executive hereunder for the
period designated under each of those respective sections.

 

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INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the Bank and the Executive have executed and delivered this Agreement
as of the date first shown above.

 

 

	
   

  	
  THE BANK:

  
	
   

  	
   

  	
   

  
	
   

  	
  NEW SOUTHERN BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark A. Stevens

  	
   

  
	
   

  	
   

  	
  Signature

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mark A. Stevens

  	
   

  
	
   

  	
   

  	
  Print
  Name

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  President & CEO

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THE
  EXECUTIVE:

  
	
   

  	
   

  	
   

  
	
   

  	
  CAROL
  SOTO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/
  Carol W. SotoExhibit
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

 

1

 

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

 

2

 

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

 

3

 

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

 

4

 

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.

 

5

 

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

 

6

 

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.

 

7

 

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

 

8

 

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.

 

9

 

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

  	
   

  
						

 

10

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