SPLIT DOLLAR INSURANCE AGREEMENT
THIS AGREEMENT is effective this 3rd day of February, 1989, by and
between PEOPLES BANK & TRUST COMPANY (the "Bank") and Xxxxxxx X. XxXxxxxxx (the
"Employee").
WHEREAS, the Bank highly values the efforts, abilities, and
accomplishments of the Employee;
WHEREAS, the Employee is a member of a select group of management and
one of the highly compensated employees of the Bank; and
WHEREAS, the Bank, as an inducement to the Employee's continued
employment, wishes to assist the Employee with his personal life insurance
needs;
NOW, THEREFORE, the parties named above agree as follows:
1. Life Insurance Policy. The Bank shall contemporaneously purchase a
life insurance policy (the "Policy"), which is described in Exhibit A, attached
hereto, and which is a whole life policy on the life of Employee.
2. Payment of Premiums. On or before the due date of the premiums on
the Policy, or within the grace period allowed by the Policy's issuer (the
"Insurer"), the Bank shall pay the full premium amount due on the Policy. In
addition, the Bank shall annually notify the Employee of any amounts that are
required to be included in his income for federal income tax purposes due to the
Bank's payment of the premiums on the Policy.
3. Ownership of Policy. The Bank shall be the sole and absolute owner
of the Policy, and may exercise all ownership rights granted to the owner of the
Policy by the Insurer, except as otherwise provided herein.
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4. Rights of the Employee in Policy. The Employee may select (or change
any prior selection of) the settlement option of the Policy and may designate
(or change any prior designation of) the beneficiaries entitled to receive that
portion of the death benefits described in Paragraph 7(b) of this Agreement by
specifying the same in a written notice to the Bank. Upon receipt of such
notice, the Bank shall execute and deliver to the Insurer the forms necessary to
elect (or change any prior election of) the requested settlement option and to
designate (or change any prior designation of) the requested persons as
beneficiaries to that portion of the death benefits described in Paragraph 7(b)
of this Agreement.
5. Policy Loans. The Bank shall have the limited right to obtain loans
secured by the Policy. The amount of such loans, together with any unpaid
interest thereon, shall at no time exceed the amount the Bank would be entitled
to as determined under the provisions of Section 7(a) of this Agreement. The
interest due on such loans shall be a debt of the Bank owed to the Insurer. The
Employee shall not have any right to obtain loans secured by the Policy.
6. Use of Dividends. Any dividends declared on the Policy shall be
applied to purchase paid up additional insurance on Employee's life and the
dividend provision of the Policy shall be so structured.
7. Interests in Death Benefits. The death benefits payable under the
terms of the Policy shall be payable to each party to this Agreement as follows:
(a) The Bank shall be entitled to the death benefits, if
any, in excess of $600,000.
(b) The Employee shall be entitled to the lesser of:
(i) $600,000, or
(ii) the total death benefits.
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8. Termination of Agreement.
(a) This Agreement shall terminate on the first to occur
of the following: (i) Distribution of death benefits
pursuant to Paragraph 7 of this Agreement.
(ii) Termination of Employee's employment with
the Bank for reasons other than death.
(iii) A change in control of the Bank (as defined
in Paragraph 13 of this Agreement) before
the Employee's attainment of age sixty (60).
(b) In the event of the termination of this Agreement,
the rights of the parties shall be as set forth in
Paragraph 7 in the case of a termination under
Paragraph 8(a)(i); as set forth in Paragraph 9 in the
case of a termination under Paragraph 8(a)(ii); and
as set forth in Paragraph 10 in the case of a
termination under Paragraph 8(a)(iii).
9. Rights of Parties if Employee Ceases Employment. In the case of a
termination under Paragraph 8(a)(ii) of this Agreement, the Bank shall be the
sole owner of the Policy and may dispose of the Policy at its discretion, and
the Employee shall have no further interests in the Policy.
10. Rights of Parties in Case of Change in Control of Bank. In the case
of a termination under Paragraph 8(a)(iii) before the Employee's attainment at
age sixty (60), the Employee shall be entitled during the sixty (60) calendar
day period beginning on the date of the change in control of the Bank (as
defined in Paragraph 13 of this Agreement) to purchase the Bank's interest in
the Policy by paying to the Bank an amount equal to the greater of:
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(a) the amount which would be payable to the Bank under
Paragraph 7(a) of this Agreement if the Employee had
died at the time of termination; or
(b) the surrender value of the Policy at the time of the
change in control. Upon receipt of the required
amount, the Bank shall transfer all of its title and
ownership interests in the Policy to the Employee.
11. Annual Bonus. On or before the January 31 following each calendar
year this Agreement remains in effect, the Bank shall pay to the Employee a
bonus equal to the product of:
(a) the maximum marginal individual composite Federal,
Indiana and Xxxxxx County income tax rate (taking
into account the deductibility for Federal income tax
purposes of state and local income taxes, if then
allowable, and without regard to Section 1(g) of the
Internal Revenue Code of 1986, as amended, in effect
for the calendar year during which the amount
described in Paragraph 11(b) below is required to be
recognized as income by the Employee); and
(b) the amount required to be included in the Employee's
gross income for Federal income tax purposes in such
calendar year because of the Bank's payment of
premiums on the Policy.
12. Right of Employee to Assign Rights. Except for the right to the
annual bonus under Paragraph 11 of this Agreement, which right is not assignable
or otherwise transferable and notwithstanding any provision of this Agreement to
the contrary, the Employee shall have the right to absolutely and irrevocably
assign by gift all of his right, title, and interest in and to this Agreement
and to the Policy to an assignee. This right shall be exercisable by the
execution and delivery to the
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Bank of a written assignment. Upon receipt of such written assignment executed
by the Employee and duly accepted by the assignee, the Bank shall consent
thereto in writing, and shall thereafter treat the Employee's assignee as the
sole owner of all the Employee's right, title and interest in and to this
Agreement and in and to the Policy (other than the bonus provided in Paragraph
11 of this Agreement).
13. Change in Control. If any "person" (as such term is used in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934) subsequent
to the effective date of this Agreement becomes the beneficial owner, directly
or indirectly, of securities of the Bank representing fifty-one percent (51%) or
more of the combined voting power of the outstanding securities of the Bank, a
change of control for purposes of Paragraph 8(a)(iii) shall have occurred.
14. Named Fiduciary. The Bank is hereby designated as the named
fiduciary under this Agreement. The named fiduciary shall have authority to
control and manage the operation and administration of this Agreement, and it
shall be responsible for establishing and carrying out a funding policy and
method consistent with the objectives and provisions of this Agreement.
The named fiduciary shall make all determinations concerning rights to
benefits of the Employee under this Agreement. Any decision by the named
fiduciary denying a claim by the Employee for benefits under this Agreement
shall be stated in writing and delivered or mailed to the Employee. Such
decision shall set forth the specific reasons for the denial. In addition, the
named fiduciary shall afford a reasonable opportunity to the Employee for a full
and fair review of the decision denying such claim.
15. Liability of Insurer. The Insurer shall be fully discharged from
its obligations under the Policy by payment of the Policy's death benefits to
the beneficiary or beneficiaries named in the
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Policy, subject to the terms and conditions of the Policy. In no event shall the
Insurer be considered a party to this Agreement, or to any modification or
amendment hereof. No provision in this Agreement shall be construed as
enlarging, changing, varying, or in any other way affecting the obligations of
the Insurer as expressly provided in the Policy, except insofar as the
provisions hereof are made parts of the Policy by the beneficiary designations
executed by the Bank and filed with the Insurer in connection herewith.
16. Notices. Any and all notices, elections, offers, acceptances and
demands permitted or required to be made under this Agreement shall be in
writing, signed by the party giving such notice, election, offer, acceptance or
demand and shall be delivered personally, or sent by registered or certified
mail, to the other party, at the address set forth under each party's signature
at the end of this Agreement, or at such other address as may be supplied in
writing. The date of personal delivery or the date of mailing, as the case may
be, shall be the date of such notice, election, offer, acceptance or demand.
17. No Waiver. The failure of any party to insist upon strict
performance of any covenant or any obligation hereunder shall not be a waiver of
such party's right to demand strict compliance therewith in the future, nor
shall the same be construed as a novation of this Agreement.
18. Integration. This Agreement constitutes the full and complete
agreement of the parties.
19. Captions. Titles or captions of articles and paragraphs contained
in this Agreement are inserted only as a matter of convenience and for
references, and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof.
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20. Number and Gender. Whenever required by the context, the singular
number shall include the plural, the plural number shall include the singular
and the gender of any pronoun shall include all the genders.
21. Counterparts. This Agreement may be executed in multiple copies,
each of which shall for all purposes constitute an agreement, binding upon the
parties, and each party hereby covenants and agrees to execute all duplicates or
replacement counterparts of this Agreement as may be required.
22. Severability. In the event any provision, clause, sentence, phrase
or word hereof, or the application thereof in any circumstances, is held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
the validity or enforceability of the remainder hereof, or of the application of
any such provision, sentence, clause, phrase or word in any other circumstances.
23. Amendment of Agreement. This Agreement may not be amended, altered,
or modified, except by a written instrument signed by the parties hereto, or
their respective successors or assigns, and may not be otherwise terminated
except as provided herein.
24. Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of the Bank and its successors and assigns, and the Employee and
his successors and assigns.
25. Nonexclusivity of Remedies. No provision of this Agreement shall be
construed as limiting any remedies provided to either party by governing law.
26. Governing Law. This Agreement, and the rights of the parties
hereunder, shall be governed by and construed in accordance with the laws of the
State of Indiana.
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IN WITNESS WHEREOF; The parties hereto have executed this Agreement, as
of the date first written above.
PEOPLES BANK & TRUST COMPANY
By:/s/ Xxxxxx X. Xxxxxxx
--------------------------------------
Its:President
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
/s/ Xxxxxxx X. XxXxxxxxx
------------------------------------
Xxxxxxx X. XxXxxxxxx
0000 X. 00xx Xxxxxx
Xxxxxxxxxxxx, XX 00000
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EXHIBIT A
(Policy Description)
