SOUTHSIDE BANK SPLIT DOLLAR AGREEMENT
Exhibit 10 (h)
SOUTHSIDE BANK
SPLIT DOLLAR AGREEMENT
THIS AGREEMENT is made and entered into this 13th day of October, 2004, by and between SOUTHSIDE BANK, located in Tyler, Texas (the “Company”), and XXXXX XXXXX STORY (the “Executive”).
WHEREAS, the Executive has contributed substantially to the success of the Company; and
WHEREAS, the Company will pay the life insurance premiums from its general assets; and
Whenever used in this Agreement, the following terms shall have the meanings specified:
1.1 | “Bank’s Interest” means the benefit set forth in Section 3.1. | |||
1.2 | “Base Salary” means the Executive’s total base annual salary as of the date of this Agreement, exclusive of special payments such as bonuses or commissions, but including any salary reductions made in accordance with Section 125 or 401(k) of the Code. |
1.3 | “Beneficiary” means each designated person, or the estate of the Executive, entitled to receive any portion of the Net Death Proceeds upon the death of the Executive. | |||
1.4 | “Board” means the Board of Directors of the Bank as from time to time constituted. | |||
1.5 | “Change in Control” shall mean and shall be deemed to have occurred for purposes of this Agreement if and when: |
(A) any entity, person or group of persons acting in concert (other than the current members of the Board of Directors of Southside Bancshares, Inc. (“BHC”) or any of their descendants) becomes beneficial owner (within the meaning of Section 13(d) of the Securities and Exchange Act of 1934), directly or indirectly, of securities of the BHC representing more than fifty percent (50%) of the combined voting power of the BHC or any successor corporation;
(B) any entity, person or group of persons acting in concert (other than the Company or the current members of the Board of Directors of the Bank or any of their descendants) becomes beneficial owner (within the meaning of Section 13(d) of the Securities and Exchange Act of 1934), directly or indirectly, of securities of the Bank representing more than fifty percent (50%) of the combined voting power of the Bank or any successor;
(C) the effective date of a merger or consolidation of the BHC or the Bank with one or more other corporations or banks as a result of which the holders of the outstanding voting stock of the BHC or the Bank immediately prior to the merger hold less than fifty percent (50%) of the combined voting power of the surviving or resulting corporation or bank; or
(D) the effective date of a transfer of all or substantially all of the property of the BHC or the Bank other than to an entity of which the BHC or the Bank owns at least eighty percent (80%) of the combined voting power.
Notwithstanding the above, no Change in Control shall be deemed to occur for purposes of this Agreement as a result of any transaction or series of transactions involving only the BHC, the Bank, any affiliate (within the meaning of Section 3A of the Federal Reserve Act of 1913, as amended), or any of them, or any of their successors.
1.6 | “Code” means the Internal Revenue Code of 1986, as amended. | |||
1.7 | “Disability” means the Executive’s suffering a sickness, accident or injury which has been determined by the insurance carrier of any individual or group disability insurance policy provided by the Bank or made available by the Bank to its employees and covering the Executive, or by the Social Security Administration, to be a disability rendering the Executive totally and permanently disabled. Upon |
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the request of the Plan Administrator, the Executive must submit proof to the Plan Administrator of the insurance carrier’s or Social Security Administration’s determination. | ||||
1.8 | “Executive’s Interest” means the benefit set forth in Section 3.2. | |||
1.9 | “Final Year of Employment” means the last calendar year in which the Executive was actually employed by the Company on a full-time basis. | |||
1.10 | “Insured” means the Executive. | |||
1.11 | “Insurer” means the insurance company issuing the Policy on the life of the Insured. | |||
1.12 | “Net Death Proceeds” means the total death proceeds of the Policy minus the cash surrender value. | |||
1.13 | “Plan Administrator” means the plan administrator described in Article 13. | |||
1.14 | “Policy” means the insurance policy or policies listed on Schedule A attached hereto or replacement coverage with similar benefits identified in a supplement to this Agreement. | |||
1.15 | “Termination of Employment” means the Executive ceases to be employed by the Bank for any reason whatsoever other than by reason of a leave of absence which is approved by the Bank. For purposes of this Agreement, if there is a dispute over the employment status of the Executive or the date of the Executive’s Termination of Employment, the Bank shall have the sole and absolute right to decide the dispute. | |||
1.16 | “Vested Insurance Benefit” means the Bank will provide the Executive with continued insurance coverage from the date of vesting until death, subject to the forfeiture provisions detailed in Section 4.2 and Article 7. Article 4 explains how the Executive achieves vested status. | |||
1.17 | “Year of Service” means each twelve-month period commencing on the Executive’s initial date of hire by the Bank, during the entirety of which time the Executive remains an employee of the Bank. For purposes of this Agreement, if there is a dispute over the number of years of service of the Executive or the date of the Executive’s initial hire by the Bank, the Bank shall have the sole and absolute right to decide the dispute. |
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ARTICLE 2
Automatic Termination Of Rights
ARTICLE 3
Policy Ownership/Interests
3.1 | Bank’s Interest. The Bank shall own the Policy and shall have the right to exercise all incidents of ownership and, subject to Article 6, the Bank may terminate the Policy without the consent of the Insured. The Bank shall be the beneficiary of an amount equal to the cash surrender value of the Policy and any portion of the Net Death Proceeds of the Policy remaining after the Executive’s Interest is determined according to Section 3.2. | |||
3.2 | Executive’s Interest. The Executive shall have the right to designate the Beneficiary of an amount of Net Death Proceeds as specified in Section 3.2.1 or 3.2.2. The Executive shall also have the right to elect and change settlement options with respect to the Executive’s Interest by providing written notice to the Bank and the Insurer. |
3.2.1 | Death Prior to Termination of Employment. If the Executive dies while employed by the Bank, the Executive’s Beneficiary shall be entitled to a benefit equal to $700,000, which amount shall be increased annually on the anniversary date of this Agreement by an inflation adjustment factor of five percent, provided the total benefit shall be prorated from the first day of the year in which death occurs through the date of the Executive’s death and shall not exceed the Net Death Proceeds. | |||
3.2.2 | Death After Termination of Employment. If after termination of employment the Executive has a Vested Insurance Benefit pursuant to Article 4 at the date of the Executive’s death, the Executive’s Beneficiary shall be entitled to a benefit equal to two times the Executive’s Base Salary for the Executive’s Final Year of Employment, provided the total benefit shall not exceed the Net Death Proceeds. If the Executive has not |
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achieved a Vested Insurance Benefit prior to the Executive’s termination of employment, the Executive’s Beneficiary will not be entitled to a benefit under this Section 3.2.2. |
4.1 | Vested Insurance Benefit. The Executive shall have a Vested Insurance Benefit equal to the amount specified in Section 3.2.2 at the earliest of the following events: |
4.1.1 | Remaining in the continuous employ of the Bank until age sixty-five (65); | |||
4.1.2 | Remaining in the continuous employ of the Bank until the Executive’s age plus Years of Service equals sixty-five (65); | |||
4.1.3 | Termination of Employment due to Disability; | |||
4.1.4 | Being employed by the Bank at the date a Change in Control occurs, followed by a termination of the Executive’s employment, or | |||
4.1.5 | At the discretion of the Board, the Executive may be deemed to have a Vested Insurance Benefit sooner than provided in Sections 4.1.1 through 4.1.4 above if there are other circumstances not addressed in such sections. |
ARTICLE 5
Premiums And Imputed Income
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8.1 | Beneficiary. The Executive shall have the right, at any time, to designate a Beneficiary or Beneficiaries of the Executive’s Interest under Section 3.2 of this Agreement. | |||
8.2 | Beneficiary Designation. The Executive’s designation of a Beneficiary, and the respective interests of the Bank and the Executive in the Policy, shall be reflected on an endorsement signed by the Bank and the Executive and filed with the Insurer. |
The Executive may assign without consideration all or part of the Executive’s Interest under this Agreement to any person, entity or trust. In the event the Executive shall transfer all or part of such Executive’s Interest, then all or part of the Executive’s
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Interest under this Agreement shall be vested in his or her transferee, subject to such transferee executing agreements binding them to the provisions of this Agreement, who shall be substituted as a party hereunder, and the Executive shall have no further interest under this Agreement.
The Insurer shall be bound only by the terms of and all endorsements to the Policy. Any payments the Insurer makes or actions it takes in accordance with the Policy shall fully discharge it from all claims, suits and demands of all entities or persons. The Insurer shall not be bound by or deemed to have notice of the provisions of this Agreement. The Insurer shall have the right to rely on the Plan Administrator’s representations, as approved by the Committee (defined in Section 13.1), with regard to any definitions, interpretations or Policy interests as specified under this Agreement.
ARTICLE 11
Claims And Review Procedure
11.1 | Claims Procedure. The Executive, the Executive’s assignee, or any other party who claims a right to an benefits under this Agreement (“claimant”) shall make a claim for such benefits as follows: |
11.1.1 | Written Claim. The claimant initiates a claim by submitting to the Plan Administrator a written claim for the benefits. | |||
11.1.2 | Timing of Plan Administrator Response. The Plan Administrator shall respond to such claimant within 30 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 30 days by notifying the claimant in writing, prior to the end of the initial 30-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. | |||
11.1.3 | 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; |
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(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 applicable 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. |
11.2 | 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: |
11.2.1 | 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. | |||
11.2.2 | 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. | |||
11.2.3 | Considerations on Review. In considering the review, the Plan Administrator shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. | |||
11.2.4 | Timing of Plan Administrator’s Response. The Plan Administrator shall respond in writing to such claimant within 30 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 30 days by notifying the claimant in writing, prior to the end of the initial 30-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. | |||
11.2.5 | 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: |
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(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 12
Amendments And Termination
12.1 | Non-Vested Insurance Benefit. Unless the Executive has a Vested Insurance Benefit pursuant to Section 4.1, the Bank may amend or terminate this Agreement at any time, or may amend or terminate the Executive’s rights under the Agreement at any time prior to the Executive’s death, by providing written notice of such to the Executive. |
12.2 | Vested Insurance Benefit. If the Executive has a Vested Insurance Benefit, the Bank may amend or terminate this Agreement for the Executive only if (i) the Executive agrees to such action, or (ii) the Bank’s banking regulators issue a written directive to amend or terminate the Agreement. |
13.1 | Plan Administrator Duties. This Agreement shall be administered by the Bank’s Chief Financial Officer as Plan Administrator, who shall consult as necessary with the Compensation Committee (the “Committee”) of the Board. The Committee 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. | |||
13.2 | 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 Bank. | |||
13.3 | Binding Effect of Decisions. The decision or action of the Committee 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 under the Agreement. |
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13.4 | Indemnity of Plan Administrator. The Bank shall indemnify and hold harmless the Committee and 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, the Committee, or any of its members. | |||
13.5 | Information. To enable the Plan Administrator to perform its functions, the Bank shall supply full and timely information to the Plan Administrator on all matters relating to the Base Salary of the Executive, 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. |
Split-Dollar Plan Administrator | ||
Southside Bank | ||
XX Xxx 0000 | ||
Xxxxx, Xxxxx 00000-0000 |
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0000 X. Xxxxxxx Xxxxxx | ||
Xxxxx, XX 00000-0000 |
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 or 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.
SOUTHSIDE BANK | ||||||
By: | /s/ XXX XXXXXX |
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Title: | PRESIDENT |
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/s/ XXXXX STORY |
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XXXXX XXXXX STORY, EXECUTIVE |
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SCHEDULE A
Insurance Company |
Policy Number |
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CNA – Valley Forge |
VIDA005062 | |
CNA – Valley Forge |
22014403 | |
MANULIFE FINANCIAL |
53624003 |
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