Exhibit 10.9
THE PEOPLES NATIONAL BANK
SPLIT DOLLAR AGREEMENT
THIS AGREEMENT is made and entered into this 13th day of February,
2003, by and between THE PEOPLES NATIONAL BANK, a national banking association
having a principal office in Easley, South Carolina (the "Company"), and XXXXXX
X. XXX (the "Executive").
This Agreement shall append the Split Dollar Endorsement entered into
on __________________, 2003, or as subsequently amended, by and between the
aforementioned parties.
INTRODUCTION
To encourage the Executive to remain an employee of the Company, the
Company is willing to divide the death proceeds of a life insurance policy on
the Executive's life. The Company will pay life insurance premiums from its
general assets.
Article 1
General Definitions
The following terms shall have the meanings specified:
1.1 "Change of Control" means (i) the acquisition, directly or
indirectly, by any person within any twelve (12) month period of securities of
the Company representing an aggregate of twenty (20%) percent or more of the
combined voting power of the Company's then outstanding securities; or (ii)
during any period of two (2) consecutive years, individuals who at the beginning
of such period constitute the Board of Directors of the Company, cease for any
reason to constitute at least a majority thereof, unless the election of each
new director was approved in advance by a vote of at least a majority of the
directors then still in office who were directors at the beginning of the
period; or (iii) consummation of (A) a merger, consolidation or other business
combination of the Company with any other person or affiliate thereof, other
than a merger, consolidation or business combination which would result in the
outstanding common stock of the Company immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into common
stock of the surviving entity or a parent or affiliate thereof) at least
sixty-seven (67%) percent of the outstanding common stock (on a fully diluted
basis) of the Company or such surviving entity or parent or affiliate thereof
outstanding immediately after such merger, consolidation or business
combination, or (B) a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets; or (iv) the occurrence of any other event or
circumstance which is not covered by (i) through (iii) above which the Board of
Directors of the Company determines affects control of the Company and, in order
to implement the purposes of this Agreement as set forth above, adopts a
resolution that such event or circumstances constitutes a Change of Control for
the purposes of this Agreement.
1.2 "Disability" means sickness, accident or injury which, in the judgment
of a physician appointed and paid for by the Company, prevents the Executive
from performing all of the Executive's customary duties for the Company. As a
condition to any benefits, the Company may require the Executive to submit to
such physical or mental evaluations and tests as the Board of Directors of the
Company deems appropriate.
1.3 "Insurer" means Southland Life Insurance Company.
1.4 "Policy" means insurance policy no. 0660025344 issued by the Insurer.
1.5 "Insured" means the Executive.
1.6 "Normal Retirement Age" means the earliest of the Executive's 66th
birthday, the date of Termination of Employment on account of Disability or the
date of a Change of Control.
1.7 "Termination of Employment" means that the Executive ceases to be
employed by the Company.
Article 2
Policy Ownership/Interests
2.1 Company Ownership. The Company is the sole owner of the Policy and
shall have the right to exercise all incidents of ownership. The Company shall
be the direct beneficiary of an amount of death proceeds equal to the greater
of: a) the cash surrender value of the policy or b) the aggregate premiums paid
on the Policy by the Company less any outstanding indebtedness to the Insurer.
2.2 Executive's Interest. The Executive shall have the right to designate
the beneficiary of any remaining death proceeds of the Policy. The Executive
shall also have the right to elect and change settlement options that may be
permitted. Provided, however, the Executive, the Executive's transferee or the
Executive's beneficiary shall have no rights or interests in the Policy with
respect to that portion of the death proceeds designated in this section 2.2
upon the Executive's Termination of Employment prior to Normal Retirement Age.
2.3 Option to Purchase. The Company shall not sell, surrender or transfer
ownership of the Policy while this Agreement is in effect without first giving
the Executive or the Executive's transferee the option to purchase the Policy
for a period of sixty (60) days from written notice of such intention. The
purchase price shall be an amount equal to the cash surrender value of the
Policy. This provision shall not impair the right of the Company to terminate
this Agreement.
2.4 Comparable Coverage. Upon Termination of Employment after the
Executive's Normal Retirement Age, the Company shall maintain the Policy in full
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force and effect and in no event shall the Company amend, terminate or otherwise
abrogate the Executive's interest in the Policy, unless the Company replaces the
Policy with a comparable insurance policy to cover the benefit provided under
this Agreement. The Policy or any comparable policy shall be subject to the
claims of the Company's creditors.
Article 3 Premiums
3.1 Premium Payment. The Company shall pay any premiums due on the Policy.
3.2 Imputed Income. The Company shall impute income to the Executive in an
amount equal to the current term rate for the Executive's age multiplied by the
aggregate death benefit payable to the Executive's beneficiary. The "current
term rate" is the minimum amount required to be imputed under Revenue Rulings
64-328 and 66-110, or any subsequent applicable authority.
Article 4
Assignment
The Executive may assign without consideration all interests in the
Policy and in this Agreement to any person, entity or trust. In the event the
Executive transfers all of the Executive's interest in the Policy, then all of
the Executive's interest in the Policy and in the Agreement shall be vested in
the Executive's transferee, who shall be substituted as a party hereunder and
the Executive shall have no further interest in the Policy or in this Agreement.
Article 5
Insurer
The Insurer shall be bound only by the terms of the Policy. Any payments
the Insurer makes or actions it takes in accordance with the Policy shall fully
discharge the Insurer and Company from all claims, suits and demands of all
entities or persons. The Insurer shall not be bound by or be deemed to have
notice of the provisions of this Agreement.
Article 6
Claims Procedure
6.1 For all claims for other than disability benefits:
6.1.1 Claims Procedure. Any individual ("Claimant") who has not
received benefits under the Agreement that he or she believes should be
paid shall make a claim for such benefits as follows:
6.1.1.1 Initiation - Written Claim. The Claimant initiates a
claim by submitting to the Company a written claim for the benefits.
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6.1.1.2 Timing of Company Response. The Company shall respond to
such Claimant within 90 days after receiving the claim. If the Company
determines that special circumstances require additional time for
processing the claim, the Company 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 Company expects to render its
decision.
6.1.1.3 Notice of Decision. If the Company denies part or all of
the claim, the Company shall notify the Claimant in writing of such
denial. The Company 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.
6.1.2 Review Procedure. If the Company denies part or all of the
claim, the Claimant shall have the opportunity for a full and fair review
by the Company of the denial, as follows:
6.1.2.1 Initiation - Written Request. To initiate the
review, the Claimant, within 60 days after receiving the Company's
notice of denial, must file with the Company a written request for
review.
6.1.2.2 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 Company 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.
6.1.2.3 Considerations on Review. In considering the
review, the Company shall take into account all materials and
information the Claimant submits relating to the claim, without
regard to whether such information was submitted or considered in
the initial benefit determination.
6.1.2.4 Timing of Company Response. The Company shall
respond in writing to such Claimant within 60 days after receiving
the request for review. If the Company determines that special
circumstances require additional time for processing the claim,
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the Company 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 Company expects to render its decision.
6.1.2.5 Notice of Decision. The Company shall notify the
Claimant in writing of its decision on review. The Company 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).
6.2 For disability claims:
6.2.1 Claims Procedures. Any individual ("Claimant") who has not
received benefits under the Agreement that he or she believes should
be paid shall make a claim for such benefits as follows:
6.2.1.1 Initiation - Written Claim. The Claimant initiates a
claim by submitting to the Company a written claim for the
benefits.
6.2.1.2 Timing of Company Response. The Company shall notify
the Claimant in writing of any adverse determination as set out
in this Section.
6.2.1.3 Notice of Decision. If the Company denies part or
all of the claim, the Company shall notify the Claimant in writing
of such denial. The Company 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,
(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,
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(f) [See ss. 2560.503-1(g)(v)] Any internal rule,
guideline, protocol, or other similar criterion relied
upon in making the adverse determination, or a
statement that such a rule, guideline, protocol, or
other similar criterion was relied upon in making the
adverse determination and that the Claimant can request
and receive free of charge a copy of such rule,
guideline, protocol or other criterion from the
Company, and
(g) If the adverse benefit determination is based on a
medical necessity or experimental treatment or similar
exclusion or limit, either an explanation of the
scientific or clinical judgment for the determination,
applying the terms of the Agreement to the Claimant's
medical circumstances, or a statement that such
explanation will be provided free of charge upon
request.
6.2.1.4 Timing of Notice of Denial/Extensions. The Company
shall notify the Claimant of denial of benefits in writing not
later than 45 days after receipt of the claim by the Agreement.
The Company may elect to extend notification by two 30-day periods
subject to the following requirements:
(a) For the first 30-day extension, the Company shall
notify the Claimant (1) of the necessity of the
extension and the factors beyond the Agreement's
control requiring an extension; (2) prior to the end of
the initial 45-day period; and (3) of the date by which
the Agreement expects to render a decision.
(b) If the Company determines that a second 30-day
extension is necessary based on factors beyond the
Agreement's control, the Company shall follow the same
procedure in (a) above, with the exception that the
notification must be provided to the Claimant before
the end of the first 30-day extension period.
(c) For any extension provided under this section, the
Notice of Extension shall specifically explain the
standards upon which entitlement to a benefit is based,
the unresolved issues that prevent a decision on the
claim, and the additional information needed to resolve
those issues. The Claimant shall be afforded 45 days
within which to provide the specified information.
6.2.2 Review Procedures - Denial of Benefits. If the Company
denies part or all of the claim, the Claimant shall have the opportunity
for a full and fair review by the Company of the denial, as follows:
6.2.2.1 Initiation of Appeal. Within 180 days following
notice of denial of benefits, the Claimant shall initiate an
appeal by submitting a written notice of appeal to Company.
6.2.2.2 Submissions on Appeal - Information Access. The
Claimant shall be allowed to provide written comments, documents,
records, and other information relating to the claim for benefits.
The Company shall provide to the Claimant, upon request and free
of charge, reasonable access to, and copies of, all documents,
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records, and other information relevant (as defined in applicable
ERISA regulations) to the Claimant's claim for benefits.
6.2.2.3 Additional Company Responsibilities on Appeal. On
appeal, the Company shall:
(a) [See ss. 2560.503-1(h)(3)(i)-(v)] Take into account all
materials and information the Claimant submits relating
to the claim, without regard to whether such
information was submitted or considered in the initial
benefit determination;
(b) Provide for a review that does not afford deference to
the initial adverse benefit determination and that is
conducted by an appropriate named fiduciary of the
Agreement who is neither the individual who made the
adverse benefit determination that is the subject of
the appeal, nor the subordinate of such individual;
(c) In deciding an appeal of any adverse benefit
determination that is based in whole or in part on a
medical judgment, including determinations with regard
to whether a particular treatment, drug, or other item
is experimental, investigational, or not medically
necessary or appropriate, consult with a health care
professional who has appropriate training and
experience in the field of medicine involved in the
medical judgment;
(d) Identify medical or vocational experts whose advise was
obtained on behalf of the Agreement in connection with
a Claimant's adverse benefit determination, without
regard to whether the advice was relied upon in making
the benefit determination; and
(e) Ensure that the health care professional engaged for
purposes of a consultation under subsection (c) above
shall be an individual who was neither an individual
who was consulted in connection with the adverse
benefit determination that is the subject of the
appeal, nor the subordinate of any such individual.
6.2.2.4 Timing of Notification of Benefit Denial - Appeal
Denial. The Company shall notify the Claimant not later than 45
days after receipt of the Claimant's request for review by the
Agreement, unless the Company determines that special
circumstances require an extension of time for processing the
claim. If the Company determines that an extension is required,
written notice of such shall be furnished to the Claimant prior to
the termination of the initial 45-day period, and such extension
shall not exceed 45 days. The Company shall indicate the special
circumstances requiring an extension of time and the date by which
the Agreement expects to render the determination on review.
6.2.2.5 Content of Notification of Benefit Denial. The
Company shall provide the Claimant with a notice calculated to be
understood by the Claimant, which shall contain:
(a) The specific reason or reasons for the adverse
determination;
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(b) Reference to the specific Agreement provisions on which
the benefit determination 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
relevant information (as defined in applicable ERISA
regulations);
(d) A statement of the Claimant's right to bring an action
under ERISA Section 502(a);
(e) [See ss. 2560.503-1(j)(5)] Any internal rule,
guideline, protocol, or other similar criterion relied
upon in making the adverse determination, or a
statement that such a rule, guideline, protocol, or
other similar criterion was relied upon in making the
adverse determination and that the Claimant can request
and receive free of charge a copy of such rule,
guideline, protocol or other criterion from the
Company;
(f) If the adverse benefit determination is based on a
medical necessity or experimental treatment or similar
exclusion or limit, either an explanation of the
scientific or clinical judgment for the determination,
applying the terms of the Agreement to the Claimant's
medical circumstances, or a statement that such
explanation will be provided free of charge upon
request; and
(g) The following statement: "You and your plan may have
other voluntary alternative dispute resolution options
such as mediation. One way to find out what may be
available is to contact your local U.S. Department of
Labor Office and your state insurance regulatory
agency."
Article 7
Amendments and Termination
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Executive. However, unless otherwise agreed to by
the Company and the Executive, this Agreement will automatically terminate upon
the Executive's Termination of Employment prior to Normal Retirement Age.
Article 8
Miscellaneous
8.1 Binding Effect. This Agreement shall bind the Executive and the
Company, their beneficiaries, survivors, executors, administrators and
transferees, and any Policy beneficiary.
8.2 No Guarantee of Employment. This Agreement is not an employment policy
or contract. It does not give the Executive the right to remain a Executive or
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
Executive nor interfere with the Executive's right to terminate service at any
time.
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8.3 Applicable Law. The Agreement and all rights hereunder shall be
governed by and construed according to the laws of the State of South Carolina,
except to the extent preempted by the laws of the United States of America.
8.4 Reorganization. The Company shall not merge or consolidate into or with
another company, or reorganize, or sell substantially all of its assets to
another company, firm or person unless such succeeding or continuing company,
firm or person agrees to assume and discharge the obligations of the Company.
8.5 Notice. Any notice, consent or demand required or permitted to be given
under the provisions of this Split Dollar Agreement by one party to another
shall be in writing, shall be signed by the party giving or making the same, and
may be given either by delivering the same to such other party personally, or by
mailing the same, by United States certified mail, postage prepaid, to such
party, addressed to his or her last known address as shown on the records of the
Company. The date of such mailing shall be deemed the date of such mailed
notice, consent or demand.
8.6 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.
8.7 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
(a) Interpreting the provisions of the Agreement;
(b) Establishing and revising the method of accounting for the Agreement;
(c) Maintaining a record of benefit payments; and
(d) Establishing rules and prescribing any forms necessary or desirable to
administer the Agreement.
8.8 Named Fiduciary. The Company shall be the named fiduciary and plan
administrator under the Agreement. The named fiduciary may delegate to others
certain aspects of the management and operation responsibilities of the plan
including the employment of advisors and the delegation of ministerial duties to
qualified individuals
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
[SIGNATURES OMITTED]
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SPLIT DOLLAR POLICY ENDORSEMENT
THE PEOPLES NATIONAL BANK SPLIT DOLLAR AGREEMENT
Insured: Xxxxxx X. Xxx
Insurer: Southland Life Insurance Company
Policy No. 0660025344
Pursuant to the terms of THE PEOPLES NATIONAL BANK SPLIT DOLLAR AGREEMENT
dated ____________, 2003, the undersigned Owner requests that the
above-referenced policy issued by the Insurer provide for the following
beneficiary designation and limited contract ownership rights to the Insured:
1. Upon the death of the Insured, proceeds shall be paid in one sum to
the Owner, its successors or assigns, to the extent of its interest in the
policy. It is hereby provided that the Insurer may rely solely upon a statement
from the Owner as to the amount of proceeds it is entitled to receive under this
paragraph.
2. Any proceeds at the death of the Insured in excess of the amount paid
under the provisions of the preceding paragraph shall be paid in one sum to:
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PRIMARY BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER
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CONTINGENT BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER
The exclusive right to change the beneficiary for the proceeds payable under
this paragraph, to elect any optional method of settlement for the proceeds paid
under this paragraph which are available under the terms of the policy and to
assign all rights and interests granted under this paragraph are hereby granted
to the Insured. The sole signature of the Insured shall be sufficient to
exercise said rights. The Owner retains all contract rights not granted to the
Insured under this paragraph.
3. It is agreed by the undersigned that this designation and limited
assignment of rights shall be subject in all respects to the contractual terms
of the policy.
4. Any payment directed by the Owner under this endorsement shall be a
full discharge of the Insurer, and such discharge shall be binding on all
parties claiming any interest under the policy.
The undersigned for the Owner is signing in a representative capacity and
warrants that he or she has the authority to bind the entity on whose behalf
this document is being executed.
Signed at Easley, South Carolina this _____ day of ______________, 2003.
[SIGNATURES OMITTED]
