Exhibit 10-6
FIRST AMENDMENT TO
THE PEOPLES NATIONAL BANK
SALARY CONTINUATION AGREEMENT
DATED JULY 7, 1998
FOR XXXXXX X. XXX
THIS AMENDMENT executed on this 13th day of February, 2003, by and between
THE PEOPLES NATIONAL BANK, a national banking association, located in Easley,
South Carolina (the "Company") and XXXXXX X. XXX (the "Executive").
On July 7, 1998, the Company and the Executive executed THE PEOPLES
NATIONAL BANK SALARY CONTINUATION AGREEMENT (the "Agreement").
The undersigned hereby amends, in part, said Agreement for the purpose of:
1) increasing the Normal Retirement Benefit;
2) adding the following definitions:
(i) a second Simulated Coast of Funds Investment,
(ii) a second Simulated Investment;
(iii) a second Retirement Account; and
(iv) a second Simulated Investment Rate;
3) increasing the additional Disability benefit;
4) adding an Effective Date for the First Amendment; and
5) updating the Claims Procedure. Therefore,
Section 2.1.1 of the Agreement shall be deleted in its entirety and
replaced with a new Section 2.1.1 as follows:
2.1.1 "Amount of Benefit" The annual benefit under this Section 2.1 is
$70,094 increased by four percent (4%) each Plan Year between the First
Amendment Effective Date and the Executive's Normal Retirement Date.
A new Section 1.1.19 shall be added to the Agreement as follows:
1.1.19 "Simulated Cost of Funds Investment II" means the value of an
investment comprised of principal and accumulated after-tax interest earnings.
The initial investment of principal is assumed to be $200,000 on December 31,
2002. In determining the value of the Simulated Cost of Funds Investment II, the
following assumptions are to be used:
(1) the interest shall accrue monthly;
(2) the interest shall compound annually on the Anniversary Date;
and
(3) the after-tax interest rate shall equal the Company's
after-tax average cost of funds from the Company's third quarter Call
Report ending within the Plan Year as filed with the Federal Reserve.
A new Section 1.1.20 shall be added to the Agreement as follows:
1.1.20 "Simulated Investment II" means the following life insurance
contract:
Insurance Company: Southland Life Insurance Co.
Policy Type: Flexible Premium Universal Life
Insured's Age and Sex: 61, male
Riders: None
Ratings: Tobacco, Table H
Option: A
Single Premium: $ 500,000
Net Life Insurance: $ 200,000
Total Death Benefits: $ 700,000
Assumed Purchase Date: December 31, 2002
The investment specified above is for use in measuring the Disability Benefit in
Section 2.3.4 of this Agreement. The Company can change the Simulated Investment
II only with the Executive's prior written agreement.
A new Section 1.1.21 shall be added to the Agreement as follows:
1.1.21 "Retirement Account II" means the hypothetical account established
on the Company's books for the Executive. The Retirement Account II as of any
date shall be determined by subtracting the value of the Simulated Cost of Funds
Investment II from the value of the Simulated Investment II and dividing the
difference by the "adjustment rate." For purposes of this paragraph, the
adjustment rate shall mean the figure equal to one minus the Company's highest
marginal federal and state income tax rate for the previous calendar year.
A new Section 1.1.22 shall be added to the Agreement as follows:
1.1.22 "Simulated Investment Rate II" means the after-tax rate of return on
the Simulated Investment II. The Simulated Investment Rate II shall not include
receipt of the policy's death benefits.
A new Section 1.1.23 shall be added to the Agreement as follows:
1.1.23 "First Amendment Effective Date" means February 1, 2003.
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A new Section 2.3.4 shall be added to the Agreement as follows:
2.3.4 Payment of Additional Disability Amount. In addition to the
Disability payments described in Section 2.3.2 and 2.3.3, the Executive shall
receive an annual benefit beginning at Termination of Employment under this
Section 2.3.4 provided that the Executive incurs Disability prior to attaining
his Normal Retirement Age. If the Executive incurs Disability prior to attaining
his Normal Retirement Age (i.e., no benefits under this Section 2.3.4 are paid
if the Executive becomes disabled on or after his Normal Retirement Age), the
Company shall pay the Executive an annual benefit which is calculated at the end
of each Plan Year equal to the increase in the Retirement Account II for the
Plan Year. The benefit payments will be paid annually within sixty (60) days
after the end of the Plan Year for which the payment is calculated. Benefits
under this Section 2.3.4 shall commence at the end of the Plan Year in which
Termination of Employment for Disability occurs and continue until the death of
the Executive. Total annual Disability benefit amounts subsequent to the
commencement of benefit payments under Section 2.3.2 are not to exceed Normal
Retirement Benefit amounts in Section 2.1 and shall be reduced so as not to
exceed the Normal Retirement Benefit amounts in Section 2.1 by reducing the
annual benefit provided for in this Section 2.3.4.
Article 6 of the Agreement shall be deleted in its entirety and replaced
with a new Article 6 as follows:
Article 6
Claims and Review Procedures
6.1 For all claims other than disability benefits:
6.1.1 Claims Procedure. Any individual ("Claimant") who has not
received benefits under this 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.
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 this
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,
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(d) An explanation of this 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, 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 this
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 this 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.
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6.2.1.2 Timing of Company Response. The Company shall notify the
Claimant in writing or electronically 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 this
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,
(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 this 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 or
electronically not later than 45 days after receipt of the claim
by the Company. 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 Company's control
requiring an extension; (2) prior to the end of the
initial 45-day period; and (3) of the date by which the
Company expects to render a decision.
(b) If the Company determines that a second 30-day
extension is necessary based on factors beyond the
Company'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:
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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, 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
Company 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 Company 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
Company, 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 Company 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;
(b) Reference to the specific plan 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);
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(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 this 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 Company 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."
Schedule A of the Agreement shall be deleted in its entirety and replaced
by the attached First Amended Schedule A.
IN WITNESS OF THE ABOVE, the Executive and the Company have agreed to this
First Amendment.
[SIGNATURES OMITTED]
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Xxxxx/Xxxxxx Consulting The Peoples National Bank Plan Year Reporting
Executive Salary Continuation Plan - First Amended - Schedule A
Xxxxxx X. Xxx
DOB: 9/2/41 Early Retirement Disability Pre-retire.
Plan Anniv Date: 10/1/03 Death
Retirement Age: 66 Installment Installment Benefit
Payments: Monthly Installments Payable at 66 Payable at 66 Lump Sum
--------- -------------------- ------------- ------------- --------
Benefit Accrual Based On Based On Based On
Period Level (2) Balance Vesting Benefit Vesting Accrual Accrual
Ending Age (1) (2) (3) (4) (5) (6) (7)
------ --------- ------- ------- ------- ------- ------- -------
Jan 2003(1) 61 144,519 100% 0 100% 21,357 144,519
1/31/03 Accrual Balance Rollover
Sep 2003 62 70,094 210,358 100% 70,094 100% 29,477 210,358
Sep 2004 63 72,898 321,999 100% 72,898 100% 41,663 321,999
Sep 2005 64 75,814 451,698 100% 75,814 100% 53,965 451,698
Sep 2006 65 78,846 606,454 100% 78,846 100% 66,901 606,454
Sep 2007 66 82,000 805,018 100% 82,000 100% 82,000 805,018
September 2, 2007 Retirement; October 1, 2007 First Payment Date
(1) The first line reflects just the initial values as of January 31, 2003.
(2) The benefit amount is based on a $70,094 beginning benefit, inflating at
4.00% each year to $82,000 at retirement. The benefit amount also includes
a 3.00 % nonguaranteed inflator during the payout period.
