FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
(X) Quarterly Report Pursuant to Section 13 or 15(d)
of THE SECURITIES EXCHANGE ACT of 1934
For the quarterly period ended September 30, 2002
or
( ) Transition Report Pursuant to Section 13 or 15(d)
of THE SECURITIES EXCHANGE ACT OF 1934
For the transaction period from to
Commission File Number 1-13253
THE PEOPLES HOLDING COMPANY
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(Exact name of the registrant as specified in its charter)
MISSISSIPPI
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(State or other jurisdiction of incorporation or organization)
64-0676974
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(I.R.S. Employer Identification Number)
209 Troy Street, P. O. Box 709, Tupelo, Mississippi 38802-0709
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(Address of principal executive offices) (Zip code)
Registrant's telephone number including area code 662-680-1001
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
YES__X__NO_____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as to the latest practicable date.
Common stock, $5 Par Value, 5,574,733 shares outstanding
as of November 14, 2002
1
THE PEOPLES HOLDING COMPANY
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1.
Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets -
September 30, 2002 and December 31, 2001............. 3
Condensed Consolidated Statements of Income - Three Months
and Nine Months Ended September 30, 2002 and 2001.... 4
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 2002 and 2001........ 5
Notes to Condensed Consolidated Financial Statements...... 6
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 8
Item 3.
Quantitative and Qualitative Disclosures
About Market Risk.................................... 16
Item 4.
Controls and Procedures .................................. 16
PART II. OTHER INFORMATION
Item 1.
Legal Proceedings........................................ 17
Item 6.
Exhibits and Reports on Form 8-K......................... 17
Signatures................................................... 18
Certification of Chief Executive Officer .................... 19
Certification of Chief Financial Officer .................... 20
2
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
SEPTEMBER 30 DECEMBER 31
2002 2001
------------ ------------
(Unaudited) (Note 1)
Assets
Cash and due from banks .................. $ 49,570 $ 41,475
Federal funds sold ....................... 7,000
Interest-bearing balances with banks ..... 392 22,937
---------- ----------
Cash and cash equivalents ... 49,962 71,412
Securities available-for-sale ............ 326,344 277,293
Loans, net of unearned income ............ 855,415 827,696
Allowance for loan losses ............. (12,299) (11,354)
---------- ----------
Net loans ................... 843,116 816,342
Premises and equipment, net .............. 29,124 28,346
Other assets ............................. 58,094 61,334
---------- ----------
Total assets .................... $ 1,306,640 $ 1,254,727
========== ==========
Liabilities
Deposits:
Noninterest-bearing ................... $ 164,848 $ 145,690
Interest-bearing ...................... 925,548 917,365
---------- ----------
Total deposits .............. 1,090,396 1,063,055
Treasury tax and loan note account ....... 9,459 6,181
Advances from the Federal Home Loan Bank . 58,136 41,145
Other liabilities ........................ 18,090 20,764
---------- ----------
Total liabilities ........... 1,176,081 1,131,145
Shareholders' equity
Common Stock, $5 par value - 15,000,000
shares authorized, 6,212,284 shares
issued; 5,575,433 and 5,704,680 shares
outstanding at September 30, 2002 and
December 31, 2001, respectively ........ 31,061 31,061
Treasury stock, at cost .................. (17,529) (12,856)
Additional paid-in capital ............... 39,864 39,850
Retained earnings ........................ 70,869 63,391
Accumulated other comprehensive income ... 6,294 2,136
---------- ----------
Total shareholders' equity .. 130,559 123,582
---------- ----------
Total liabilities and
shareholders' equity ......... $ 1,306,640 $ 1,254,727
========== ==========
See Notes to Condensed Consolidated Financial Statements
3
THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share data)
NINE MONTHS ENDED SEPTEMBER 30 THREE MONTHS ENDED SEPTEMBER 30
2002 2001 2002 2001
(Unaudited) (Unaudited)
Interest income
Loans ................................... $ 46,027 $ 53,919 $ 15,363 $ 17,773
Securities:
Taxable ............................ 9,892 9,380 3,251 3,030
Tax-exempt ......................... 3,011 3,004 1,019 991
Other ................................... 277 669 74 83
--------- --------- --------- ---------
Total interest income .............. 59,207 66,972 19,707 21,877
Interest expense
Deposits ................................ 18,567 31,276 5,940 9,548
Borrowings ............................. 1,797 1,090 614 359
--------- --------- --------- ---------
Total interest expense ............. 20,364 32,366 6,554 9,907
--------- --------- --------- ---------
Net interest income ................ 38,843 34,606 13,153 11,970
Provision for loan losses ..................... 3,325 3,475 1,125 1,225
--------- --------- --------- ---------
Net interest income after
provision for loan losses ...... 35,518 31,131 12,028 10,745
Noninterest income
Service charges on deposit accounts ..... 9,220 8,569 3,220 2,961
Fees and commissions .................... 6,731 5,406 2,456 1,905
Trust revenue ........................... 680 660 218 130
Securities gains ........................ 30 87 22 42
Other ................................... 3,583 3,026 1,069 1,134
--------- --------- --------- ---------
Total noninterest income ........... 20,244 17,748 6,985 6,172
Noninterest expense
Salaries and employee benefits .......... 21,609 19,285 7,290 6,862
Data processing ......................... 2,838 2,629 957 902
Net occupancy ........................... 2,368 2,402 784 797
Equipment ............................... 2,386 2,195 792 733
Other ................................... 8,265 7,792 2,819 2,579
--------- --------- --------- ---------
Total noninterest expense .......... 37,466 34,303 12,642 11,873
--------- --------- --------- ---------
Income before taxes and cumulative effect
of accounting change ...................... 18,296 14,576 6,371 5,044
Income taxes .................................. 5,198 3,845 1,827 1,202
--------- --------- --------- ---------
Income before cumulative
effect of accounting change .... 13,098 10,731 4,544 3,842
Cumulative effect of accounting change ........ (1,300)
--------- --------- --------- ---------
Net income ......................... $ 11,798 $ 10,731 $ 4,544 $ 3,842
========= ========= ========= =========
Basic and diluted earnings per share:
Income before cumulative effect of
accounting change .................... $ 2.33 $ 1.81 $ 0.81 $ 0.66
Cumulative effect of accounting change ... (0.23)
--------- --------- --------- ---------
Net income ............................... $ 2.10 $ 1.81 $ 0.81 $ 0.66
========= ========= ========= =========
Weighted average shares outstanding .......... 5,620,891 5,925,326 5,591,462 5,793,822
Weighted average shares outstanding - diluted . 5,625,348 5,925,326 5,597,362 5,793,822
See Notes to Condensed Consolidated Financial Statements
4
THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except share data)
NINE MONTHS ENDED SEPTEMBER 30
2002 2001
---- ----
(Unaudited)
Operating activities
Net cash provided (used) by
operating activities .......... $ 18,999 $ (1,572)
Investing activities
Purchases of securities
available-for-sale ................. (160,133) (71,398)
Proceeds from sales of securities
available-for-sale ................. 43,770 13,208
Proceeds from calls/maturities of
securities available-for-sale ...... 73,369 58,214
Net increase in loans ................... (33,178) (16,136)
Proceeds from sales of premises
and equipment ...................... 324 33
Purchases of premises and equipment ..... (3,217) (1,023)
---------- ----------
Net cash used in investing
activities .................... (79,065) (17,102)
Financing activities
Net increase in
noninterest-bearing deposits ........ 19,158 28,969
Net increase in
interest-bearing deposits ........... 8,183 12,025
Net increase in
short-term borrowings ............... 3,278 2,128
Proceeds from other borrowings .......... 24,248 6,000
Repayments of other borrowings .......... (7,257) (1,522)
Acquisition of treasury stock ........... (4,673) (7,471)
Cash dividends paid ..................... (4,321) (4,193)
---------- ----------
Net cash provided by financing
activities ................... 38,616 35,936
---------- ----------
(Decrease) increase in cash
and cash equivalents ......... (21,450) 17,262
Cash and cash equivalents at
beginning of period ............... 71,412 56,817
---------- ----------
Cash and cash equivalents at
end of period ..................... $ 49,962 $ 74,079
============ ============
Supplemental disclosures:
Non-cash transactions:
Transfer of loans to other real estate .. $ 3,079 $ 2,104
Transfer of premises and equipment to
other assets ......................... 181
============ ============
See Notes to Condensed Consolidated Financial Statements
5
THE PEOPLES HOLDING COMPANY AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2002
(in thousands, except share data)
Note 1 Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine-month period ended September 30,
2002 are not necessarily indicative of the results that may be expected for the
year ended December 31, 2002.
For further information, refer to the consolidated financial statements and
footnotes thereto included in The Peoples Holding Company and Subsidiary's
annual report on Form 10-K for the year ended December 31, 2001. For purposes of
this quarterly report on Form 10-Q, the term "Company" refers to The Peoples
Holding Company and the term "Bank" refers to The Peoples Bank and Trust
Company.
Note 2 Other Accounting Pronouncements
In October 2002, the Financial Accounting Standards Board (FASB) issued
Statement No. No. 147, "Acquisitions of Certain Financial Institutions." The
statement addresses the financial accounting and reporting for the acquisition
of all or part of a financial institution, and is effective for any such
activities initiated after October 1, 2002. The adoption of this statement is
not anticipated to have a material effect on our financial position or results
of operations.
In the first quarter of 2002, the Company completed the transitional impairment
test required by Financial Accounting Standards Board (FASB) Statement No. 142,
"Goodwill and Intangible Assets." As a result of this test, the Company recorded
a goodwill impairment charge of $1,300 as a cumulative effect of a change in
accounting principle. The Company identified its reporting units as banking
operations and insurance operations for purposes of measuring impairment of
goodwill. The impairment was specific to the insurance subsidiary. The fair
value of the insurance reporting unit was estimated using the expected present
value of future cash flows. The insurance subsidiary acquisition was a tax-free
exchange; therefore, there was no tax offset to the impairment cost booked.
As of September 30, 2002
--------------------------------
Gross Carrying Accumulated
Amount Amortization
-------------- --------------
Amortized intangible assets:
Core deposit intangible assets .. $ 507 $ (365)
Other intangible assets ......... 3,282 (1,986)
---------- ----------
Total ........................... $ 3,789 $ (2,351)
========== ==========
Unamortized goodwill $ 7,190 $ (2,142)
========== ==========
6
Note 2 Other Accounting Pronouncements (continued)
Aggregate amortization expense:
For the period ended September 30, 2002 .. $ 370
Estimated amortization expense in future years:
For the year ended December 31, 2002 ..... $ 493
For the year ended December 31, 2003 ..... 493
For the year ended December 31, 2004 ..... 423
For the year ended December 31, 2005 ..... 399
For the year ended December 31, 2006 ..... 0
The changes in the carrying amount of intangible assets for the nine months
ended September 30, 2002, are as follows:
Other
Goodwill Intangibles
----------- -----------
Balance as of January 1, 2002 .............. $ 6,348 $ 1,808
Impairment losses ........................ (1,300)
Amortization expense ..................... (370)
----------- -----------
Balance as of September 30, 2002 ........... $ 5,048 $ 1,438
=========== ===========
The table below presents net income for the prior periods as reported as well as
adjusted for the exclusion of goodwill amortization and the cumulative effect of
the transitional impairment.
Nine Months Three Months Nine Months Three Months
Ended Ended Year Ended Ended Ended
September 30, September 30, December 31, September 30, September 30,
2002 2002 2001 2001 2001
------------- ------------- ------------ ------------- -------------
Reported net income ................. $ 11,798 $ 4,544 $ 14,587 $ 10,731 $ 3,842
Goodwill amortization, net of tax ... 407 306 102
Transitional impairment ............. 1,300
---------- ---------- ----------- ---------- ----------
Core net income ..................... $ 13,098 $ 4,544 $ 14,994 $ 11,037 $ 3,944
========== ========== =========== ========== ==========
Basic and diluted earnings per share:
Reported net income ................. $ 2.10 $ 0.81 $ 2.48 $ 1.81 $ 0.66
Goodwill amortization, net of tax ... 0.07 0.05 0.02
Transitional impairment ............. 0.23
---------- ---------- ----------- ---------- ----------
Core net income ..................... $ 2.33 $ 0.81 $ 2.55 $ 1.86 $ 0.68
========== ========== =========== ========== ==========
Note 3 Comprehensive Income
For the nine month periods ended September 30, 2002 and 2001, total
comprehensive income was $15,956 and $15,301, respectively. For the quarters
ended September 30, 2002 and 2001, total comprehensive income amounted to $6,543
and $5,613, respectively. Total comprehensive income consists of net income and
the change in the unrealized gain (loss) on securities available for sale.
7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (in thousands, except share data)
This Form 10-Q may contain, or incorporate by reference, statements which may
constitute "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Prospective investors are cautioned that any such
forward-looking statements are not guarantees for future performance and involve
risks and uncertainties, and that actual results may differ materially from
those contemplated by such forward-looking statements. Important factors
currently known to management that could cause actual results to differ
materially from those in forward-looking statements include significant
fluctuations in interest rates, inflation, economic recession, significant
changes in the federal and state legal and regulatory environment, significant
underperformance in our portfolio of outstanding loans, and competition in our
markets. We undertake no obligation to update or revise forward-looking
statements to reflect changed assumptions, the occurrence of unanticipated
events or changes to future operating results over time.
Financial Condition
Total assets of The Peoples Holding Company increased from $1,254,727 on
December 31, 2001, to $1,306,640 on September 30, 2002, or 4.14% for the nine
month period. As a result of weak loan demand and continued payoffs in our sales
finance portfolio, most of the growth in assets occurred in the investment
portfolio, which increased from $277,293 on December 31, 2001, to $326,344 on
September 30, 2002. Federal funds sold and interest bearing bank balances
decreased $29,545 from the beginning of the year as funds were shifted to the
investment portfolio. We invested $35,417 in various securities this quarter.
Purchases included mortgage-backed securities, U.S. government agency
securities, and municipal securities. The majority (57%) of the purchases during
the third quarter continued to be in the mortgage-backed sector because of the
cash flow provided by the principal and interest payback each month. This cash
flow provides a higher reinvestment opportunity that will be advantageous when
rates begin to rise.
Last year, we changed our investment policy, eliminating the minimum requirement
of 18% of the portfolio being invested in Treasury securities. We have steadily
replaced investments in Treasury securities since that time with investments in
other sectors in order to enhance yield. All Treasury securities had matured at
September 30, 2002. This represented a decrease of approximately $15,000 since
December 31, 2001, and approximately $23,000 since September 30, 2001.
Loan balances have increased $27,719, from $827,696 at December 31, 2001, to
$855,415 at September 30, 2002. Loans increased $19,626 during the third
quarter. Most of this growth began in late August and continued during
September. We made a strategic decision to curtail our sales finance division in
July 2000. At the time of the curtailment, this portfolio was approximately $32
million and has since decreased to approximately $8.5 million. The purpose of
the decision was twofold - to reduce risk and to enhance yield. The sales
finance portfolio decreased approximately $6,500 since December 31, 2001.
8
The majority of our loan growth in the third quarter was in real estate loans,
particularly in commercial and residential loans. Approximately 71% of the
portfolio is comprised of loans secured by real estate. We have experienced
declines in retail consumer loans and in commercial, financial and agricultural
loans. With 0% financing being offered by automobile makers, we have experienced
a decline in our new automobile financing. Used automobile financing is also
down primarily because of the implementation of tighter credit standards.
The average loan to deposit ratios were 75.21% and 76.68% at September 30, 2002,
and December 31, 2001, respectively. The actual loan to deposit ratios were
78.45% and 77.86% at September 30, 2002, and December 31, 2001, respectively.
We are committed to increasing loan volume and recognize that doing so is
imperative for maintaining net interest margin. We have also recognized that the
sluggish economy has impacted our ability to expand loan volume; however, we
have taken action to improve loan volume by adding several seasoned commercial
lenders to assist in attracting and pricing commercial business.
Total deposits for the first nine months of 2002 increased from $1,063,055 on
December 31, 2001, to $1,090,396 on September 30, 2002, or an increase of 2.57%.
The majority of our growth has been in noninterest bearing demand accounts and
public fund interest bearing demand deposits. Our average noninterest bearing
demand deposit accounts as a percent of total average deposits have increased
from 13.53% at December 31, 2001 to 13.84% at September 30, 2002. With the
growth in transaction and money market accounts, the Bank is benefitting from a
lower percentage of time deposits to total deposits (on average) this year.
Those ratios were 51.21% and 54.48% for September 30, 2002 and December 31,
2001, respectively.
Other borrowed funds have increased $20,269 from year end. Of the increase,
$16,991 was due to additional funds borrowed from the Federal Home Loan Bank
(FHLB). We minimize rate risk by funding loans with FHLB borrowings having
similar terms, locking in fixed rates based on a spread over the FHLB note
rates.
The equity capital to total assets ratios were 9.99% and 9.85% at September 30,
2002, and December 31, 2001, respectively. Capital increased $6,977, or 5.65%,
from December 31, 2001, to September 30, 2002. There were a number of factors
contributing to the increase in capital. Normal transactions such as net income
and unrealized portfolio gains contributed to the increase in capital, offset by
dividends and the purchase of treasury stock. The increase in the unrealized
gains on the investment portfolio was due primarily to market conditions. Cash
dividends declared were $.25 per share in the first quarter and $.26 per share
in the second and third quarters of 2002. We have continued to purchase treasury
stock, purchasing 129,247 shares at an average cost of $36.07 per share over the
nine month period ending September 30, 2002. We purchased 31,441 shares during
the third quarter of 2002.
9
Results of Operations
Our core net income for the nine month period ended September 30, 2002, was
$13,098. This represented an increase of $2,061, or 18.67% over comparable core
net income for the nine month period ended September 30, 2001. Core net income
for the nine month period ending September 30, 2001 was $11,037. For the three
month periods ended September 30, 2002 and 2001, core net income was $4,544 and
$3,944, respectively. Core earnings per share for the nine month period ended
September 30, 2002 were $2.33, an increase of 25.27% from $1.86 for the
comparable period a year ago. The increase in core net income for the three and
nine month periods ended September 30, 2002, compared to the same periods of
2001 resulted from usual and customary deposit gathering and lending operations
and increases in noninterest income for sales of other products such as
insurance. The annualized core return on average assets on the same basis for
the three month periods ending September 30, 2002 and 2001, was 1.38% and 1.28%,
respectively, and for the nine month periods ending September 30, 2002 and 2001
was 1.33% and 1.18%, respectively. Core net income is defined as income before
the effect of the change in accounting principle and excluding goodwill
amortization for all periods.
Net Interest Income
Net interest income, the difference between interest earned on assets and the
cost of interest-bearing liabilities, is the largest component of our net
income. The primary concerns in managing net interest income are the mix and the
repricing of rate-sensitive assets and liabilities. Net interest income has
improved due to loan growth, risk based pricing of loans, and a shift in the
deposit mix from time deposits to transaction and money market accounts.
Net interest income for the nine month periods ending September 30, 2002 and
2001 was $38,843 and $34,606, respectively, while earning assets for the same
periods averaged $1,176,926 and $1,116,677, respectively.Net interest income for
the three month periods ending September 30, 2002 and 2001 was $13,153 and
$11,970, respectively, while earning assets for the same periods averaged
$1,184,723 and $1,110,881, respectively. The bank's repricing position was
favorable under the falling interest rate environment in which we have been
operating recently. This, combined with our repricing strategy and mix change in
both assets and liabilities, increased net interest margin.
Three Months ending Nine Months ending Three Months ending
September 30, September 30, December 31,
2002 2001 2002 2001 2001
-------- -------- ------- ------- ------------
Net interest margin .. 4.68% 4.58% 4.67% 4,44% 4.54%
10
Provision for Loan Losses
The provision for loan losses charged to operating expense is an amount which,
in the judgment of management, is necessary to maintain the allowance for loan
losses at a level that is adequate to meet the inherent risks of losses on our
current portfolio of loans. The appropriate level of the allowance is based on a
quarterly analysis of the loan portfolio including consideration of such factors
as the risk rating of individual credits, size and diversity of the portfolio,
economic conditions, prior loss experience, and the results of periodic credit
reviews by internal loan review and regulators. The loan loss provision totaled
$3,325 and $3,475, respectively for the nine month periods ending September 30,
2002 and 2001. The tables below present pertinent data and ratios.
Loans and Credit Quality
Nonperforming Net Charge-offs
Loans* Loans Nine Months Ended
September 30 September 30 September 30
------------------ ------------------ ------------------
2002 2001 2002 2001 2002 2001
-------- -------- -------- -------- -------- --------
Commercial, financial, agricultural ... $148,791 $152,621 $ 1,707 $ 535 $ 528 $ 749
Real estate - construction ............ 36,480 33,067 103 96 25
Real estate - mortgage ................ 572,283 528,718 1,990 3,957 1,200 1,086
Consumer .............................. 97,861 112,635 271 522 556 985
-------- -------- -------- -------- -------- --------
$855,415 $827,041 $ 3,968 $ 5,117 $ 2,380 $ 2,845
======== ======== ======== ======== ======== ========
* Net of unearned income.
Allowance for Loan Losses
2002 2001
------------------------------- ------------------------------------------
3rd 2nd 1st 4th 3rd 2nd 1st
Quarter Quarter Quarter Quarter Quarter Quarter Quarter
--------- --------- --------- --------- --------- --------- ---------
Balance at beginning of period ............. $ 11,658 $ 11,811 $ 11,354 $ 11,166 $ 11,403 $ 11,067 $ 10,536
Loans charged off .......................... 573 1,310 985 1,196 1,534 870 702
Recoveries of loans previously charged off . 89 82 317 69 72 81 108
--------- --------- --------- --------- --------- --------- ---------
Net Charge-offs ....................... 484 1,228 668 1,127 1,462 789 594
Provision for loan losses .................. 1,125 1,075 1,125 1,315 1,225 1,125 1,125
--------- --------- --------- --------- --------- --------- ---------
Balance at end of year ..................... $ 12,299 $ 11,658 $ 11,811 $ 11,354 $ 11,166 $ 11,403 $ 11,067
========= ========= ========= ========= ========= ========= =========
Allowance for loan losses to total loans ... 1.44% 1.39% 1.44% 1.37% 1.35% 1.39% 1.36%
Reserve coverage ratio ..................... 309.95 317.57 207.25 178.65 218.20 191.62 143.34
Net charge-offs to total loans ............. 0.06 0.15 0.08 0.14 0.18 0.10 0.07
Nonperforming loans to total loans ......... 0.46 0.44 0.70 0.77 0.62 0.73 0.95
11
Noninterest Income
Noninterest income, excluding gains from the sales of securities, was $20,214
for the nine month period ending September 30, 2002, compared to $17,661 for the
same period in 2001, or an increase of 14.46%. Approximately 63% of the increase
in noninterest income was attributable to usual and customary loan and deposit
services. Income derived from the mortgage loan business continued to be strong
for the first nine months of 2002. Another significant portion of the increase
was due to the income booked as the result of Bank Owned Life Insurance (BOLI)
purchased on key management personnel in May 2001. The additional income derived
from BOLI of approximately $511 has been used to offset rising benefits cost,
primarily health and life insurance.
We continued to place emphasis on sales of insurance and alternative financial
instruments. We implemented an insurance integration plan in 2001 aimed at
improving our cross-selling between the bank and the insurance company. As a
result, our insurance commission income increased $351 over the nine month
period reported in 2001, making up 14% of the total increase in noninterest
income. A secondary, yet significant, benefit resulting from the implementation
of the insurance integration plan was an improvement in contingency income of
$90. Contingency income is a bonus received from the insurance underwriters and
is based both on commission income and claims experience on our customers during
the previous year.
For the three month periods ended September 30, 2002 and 2001, noninterest
income, excluding gains from the sales of securities, was $6,963 and $6,130,
respectively. Approximately 72% of this increase was due to customary loan and
deposit services. The increase in noninterest income derived from insurance
commissions is approximately $158, making up 19% of the increase over the third
quarter of 2001. Income generated from alternative financial products (annuities
and mutual funds) was down this quarter, largely attributable to the economy and
uncertainties in the market. We continue to work our business plan, which is
directed toward increasing the number of services per client for our existing
client base as well as increasing our affluent client base.
Noninterest Expense
Noninterest expense was $37,466 for the nine month period ended September 30,
2002, compared to $34,303 for the same period in 2001, an increase of $3,163, or
9.22%. Core noninterest expense was $37,466 for the nine month period ending
September 30, 2002 compared to $33,879 for the same period in 2001, an increase
of $3,587, or 10.59%. Core noninterest expense excludes amortization expense
associated with all intangible assets that are no longer amortized as the result
of adoption of FASB Statement No 142 "Goodwill and Intangible Assets". The
increase in core noninterest expense, excluding increases in health and life
insurance cost and performance based reward (PBR) plan cost was 6.92%. One
significant factor contributing to the increase was health and life insurance
cost which was approximately 17%, or $598, of the change in core noninterest
expense. This increase was due to the rising cost of health care as well as
higher claims experienced this year.
Our Company has a PBR plan which allows for an incentive payment to employees
based on improvement in net income over an established baseline. This cost is
linked to performance and increases as performance improves. The increase for
incentive cost for the nine month period was $645, or 18% of the total increase
in core noninterest expenses. Since a significant amount of the improvement in
earnings for 2001 occurred in the last half of the year, we recorded 73% of the
total incentive cost during the third and fourth quarters.
12
Other factors contributing to the increase in expense include depreciation,
maintenance contract and computer processing costs associated with technological
enhancements made during the last year. We installed a teller platform system in
2001, and upgraded our deposit platform system and portions of our loan system,
particularly the credit scoring module, this year. In addition, we upgraded data
storage to a robotic DVD device which provides near on-line access to data
(check images) and purchased software to enhance read rates in item processing.
During the fourth quarter of 2002, we will be implementing a new loan platform
system. These upgrades have enhanced productivity, reduced losses for the bank,
and provided better service for our clients. We have noted improvement in both
cash short and fraud/forgery losses as a result of the teller platform and
deposit platform systems. Finally, in recognition of the sophistication of
hackers and the damage that can be done by such individuals, information
security has been enhanced through software, hardware, and retention of services
by experts in that field. It has been, and will continue to be, our practice to
seek technological improvements, evaluate the benefit to us and our clients, and
to progress with implementation of such if a cost/benefit analysis justifies it.
This practice is directly influenced by our vision to be the financial services
advisor and provider of choice in the communities we serve.
For the three month periods ending September 30, 2002 and 2001, noninterest
expense was $12,642 and $11,873, respectively, an increase of $769, or 6.48%.
For the three month periods ending September 30, 2002 and 2001, core noninterest
expense was $12,642 and $11,732, respectively, an increase of $910, or 7.76%.
Health and life insurance expense was $75 less than the third quarter last year
due to the decrease in claims paid during the quarter. Salary cost was $222, or
4.93%, higher than last year. During 2002, employee evaluation reviews were
changed from each employee's anniversary date to March. All employees are now
reviewed in March and merit/cost of living raises are given in April. Insurance
commission expense increased $44 over last year. This cost is directly linked to
the increase in insurance commission income. The cost of the PBR plan increased
$60.
Computer depreciation, maintenance contracts and computer processing cost
increased $84, or approximately 11% of the increase in core noninterest expense,
due to the previously discussed technological enhancements. Offsetting the
higher cost associated with the enhancements are decreases in fraud/forgery
losses of approximately $28. We also incurred additional expense related to
consulting engagements intended to improve efficiency and profitability.
Although expenses increased, we have significantly improved our efficiency
ratio. The growth in noninterest income has been a key factor in the improvement
of our efficiency ratio.
Nine Months Ended Three Months Ended
September 30 September 30
----------------- ------------------
2002 2001 2002 2001
------ ------ ------ ------
Efficiency ratio ..... 60.99% 62.50% 60.44% 62.63%
13
Income tax expense was $5,198 for the nine month period ended September 30,
2002, (with an effective tax rate of 28.41%) compared to $3,845 (with an
effective tax rate of 26.38%) for the same period in 2001. The increase in the
effective tax rate this year was due in part to less tax-free interest income.
Income tax expense was $1,827 and $1,202 for the three month periods ending
September 30, 2002 and 2001 respectively. The effective tax rate for the third
quarters of 2002 and 2001 were 28.68% and 23.83%, respectively.
Liquidity Risk
Liquidity management is the ability to meet the cash flow requirements of
customers who may be either depositors wishing to withdraw funds or borrowers
needing assurance that sufficient funds will be available to meet their credit
needs.
Core deposits are a major source of funds used to meet cash flow needs.
Maintaining the ability to acquire these funds as needed in a variety of money
markets is a key to assuring liquidity. When evaluating the movement of these
funds even during times of large interest rate changes, it is apparent that we
continue to attract deposits that can be used to meet cash flow needs.
Management continues to monitor the liquidity and potentially volatile
liabilities ratios to ensure compliance with Asset-Liability Committee targets.
These targets are set to ensure that we meet the liquidity requirements deemed
necessary by management and regulators.
Another source available for meeting our liquidity needs is available-for-sale
securities. The available-for-sale portfolio is composed of securities with a
readily available market that can be used to convert to cash if the need arises.
Other sources available for meeting liquidity needs include federal funds sold
and interest bearing balances with the FHLB. In addition, we may obtain advances
from the FHLB or the Federal Reserve Bank. Funds obtained from the FHLB are used
primarily to match-fund real estate loans in order to minimize interest rate
risk, and may be used to meet day to day liquidity needs.
Capital Resources
We are subject to various regulatory capital requirements administered by the
federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory, and possibly additional discretionary, actions by
regulators that, if undertaken, could have a direct material effect on our
financial statements. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, we must meet specific capital guidelines
that involve quantitative measures of our assets, liabilities, and certain
off-balance-sheet items as calculated under regulatory accounting practices. Our
capital amounts and classification are also subject to qualitative judgments by
the regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require us to maintain minimum balances and ratios. All banks are required to
have core capital (Tier I) of at least 4% of risk-weighted assets (as defined),
4% of average assets (as defined), and total capital of 8% of risk-weighted
assets (as defined). As of September 30, 2002, we met all capital adequacy
requirements to which we are subject.
14
As of September 30, 2002, the most recent notification from the Federal Deposit
Insurance Corporation (FDIC) categorized us as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, we must maintain minimum total risk-based, Tier I risk-based, and
Tier I leverage ratios of 10%, 6%, and 5%, respectively. In the opinion of
management, there are no conditions or events since the last notification that
have changed the institution's category. The Bank's actual capital amounts and
applicable ratios are as follows and do not differ materially from that of the
Company.
Actual
Amount Ratio
------ -----
As of September 30, 2002
Total Capital .................... $ 127,806 14.6%
(to Risk Weighted Assets)
Tier I Capital ................... $ 116,879 13.4%
(to Risk Weighted Assets)
Tier I Capital ................... $ 116,879 9.0%
(to Adjusted Average Assets)
As of December 31, 2001
Total Capital .................... $ 122,162 14.5%
(to Risk Weighted Assets)
Tier I Capital ................... $ 111,622 13.3%
(to Risk Weighted Assets)
Tier I Capital ................... $ 111,622 9.1%
(to Adjusted Average Assets)
Management recognizes the importance of maintaining a strong capital base. As
the above ratios indicate, we continue to exceed the requirements for a well
capitalized bank. Management also recognizes the importance of managing capital
to maximize performance. Our quarterly dividend to shareholders, which is
currently $0.26 per share of common stock, has increased for sixteen consecutive
years. Our dividend payout ratio was 36.80% at September 30, 2002. We continue
to repurchase shares of our common stock in accordance with our strategic plan.
We Purchased 220,556 of our common stock through a tender offer which was
initiated April 16,2001 and expired May 15, 2001. Since then, we have purchased
an additional 247,135 under our stock repurchase plan. On October 15, 2002 our
Board of Directors authorized the repurchase of up to 278,771 additional shares,
or approximately 5%, of our common stock outstanding September 30, 2002. Along
with earnings, unrealized gains on securities available for sale have
contributed to the increase in capital. Under the current rate environment,
unrealized gains on securities available for sale increased from $2,136 on
December 31, 2001, to $6,294 on September 30, 2002, or 294.66% for the nine
month period.
Book value per share was $23.42 and $21.66 at September 30, 2002 and December
31, 2001, respectively. The annualized core return on average equity for the
three month periods ending September 30, 2002 and 2001, was 14.00% and 12.68%,
respectively, and for the nine month periods ending September 30, 2002 and 2001
was 13.80% and 11.68%, respectively.
Our capital policy is to evaluate future needs based on growth, earnings trends
and anticipated acquisitions.
15
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no significant changes to our disclosure on quantitative and
qualitative disclosures about market risk since December 31, 2001. For
additional information, see our Form 10-K for the year ended December 31, 2001.
Item 4. CONTROLS AND PROCEDURES
Based on their evaluation as of a date within 90 days prior to the filing of
this quarterly report on Form 10-Q, our Chief Executive Officer and Chief
Financial Officer have concluded that our disclosure controls and procedures (as
defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of
1934, as amended) are effective for timely alerting them to material information
required to be included in our periodic SEC reports. Subsequent to the date of
their evaluation, there have been no significant changes in our internal
controls or in other factors that could significantly affect internal controls,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
16
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
There have been no material proceedings against us during the quarter ending
September 30, 2002.
Item 6.(a) EXHIBITS
Exhibit No. and Description
3.1 Articles of Incorporation and Articles of Amendment to Articles
of Incoorporation (filed as Exhibit 3.1 to the Company's
Registration Statement on Form S-4 filed on February 17, 1999, as
amended, and incorporated herin by reference, Commission File No.
333-72507
3.2 By-laws of the Company (as amended March 1, 2001)
10.1 Executive Deferred Compensation Plan A
10.2 Executive Deferred Compensation Plan B
10.3 Directors' Deferred Fee Plan A
10.4 Directors' Deferred Fee Plan B
10.5 Chief Executive Officer Employee Agreement
99.1 Statement of the Chief Executive Officer and the Chief Financial
Officer
(b) REPORTS ON FORM 8-K
On July 18, 2002, we filed on Form 8-K our Second Quarter 2002
Earnings Press Release.
17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE PEOPLES HOLDING COMPANY
---------------------------
Registrant
DATE: November 14, 2002 /s/ E. Robinson McGraw
---------------------------
E. Robinson McGraw
President & Chief Executive Officer
18
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, E. Robinson McGraw, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The Peoples Holding
Company;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
DATE: November 14, 2002 /s/ E. Robinson McGraw
---------------------------
E. Robinson McGraw
President & Chief Executive Officer
19
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Stuart R. Johnson, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The Peoples Holding
Company;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
DATE: November 14, 2002 /s/ Stuart R. Johnson
---------------------------
Stuart R. Johnson
Executive Vice President &
Chief Executive Officer
20
Exhibit 3.2
BYLAWS
OF
THE PEOPLES HOLDING COMPANY
ARTICLE I
OFFICES
Section 1. The principal office of the corporation shall be located at 209 Troy
Street, City of Tupelo, County of Lee, State of Mississippi.
Section 2. The Board of Directors shall have the power and authority to
establish and maintain branch offices at the locations as the business of
the corporation may require.
ARTICLE II
STOCKHOLDERS
Section 1. The annual meeting of the stockholders of the corporation shall be
held on the second Tuesday of April in each year for the purpose of
electing directors and for the transaction of such other business as may
properly come before the meeting.
Section 2. Special meetings of the stockholders, for any purpose, may be called
by written request of persons owning as much as fifty percent of the
outstanding capital stock of the corporation, or by authority of the board
of directors in regular session or by a request in writing of a majority of
the board of directors. All such communications must be addressed to the
president of the corporation.
Section 3. The annual meetings of the stockholders of the corporation shall be
held at the principal office of the corporation in Tupelo, Mississippi, or
at such other place in the area served by the corporation as may be fixed
by the board of directors. All special meetings of the stockholders shall
be held at the principal office of the corporation in Tupelo, Mississippi.
Section 4. At least ten days written notice shall be given of any annual or
special meeting of stockholders, either personally or by mail, to each
stockholder of record entitled to vote at such meeting. Such notice shall
be issued by the president or secretary of the corporation, which notice
shall state the place, day and hour of the meeting and, in case of a
special meeting, the purposes for which the meeting is called.
1
Section 5. A majority of the outstanding shares of the corporation entitled to
vote, represented in person or by proxy, shall constitute a quorum at a
meeting of stockholders. In the event of no quorum at the annual meeting,
the holders of a majority of the stock present and represented at the
meeting shall have power to adjourn the meeting from day to day without
further notice. At such adjourned meeting at which a quorum is present or
represented, any business may be transacted that might have been transacted
at the meeting as originally notified.
In special meetings, if a quorum is not present, there shall be no
adjournment but the call of the meeting will be voided and a new call must
be issued for any special meeting.
Section 6. At all meetings of stockholders, a stockholder may vote by proxy
executed in writing by the stockholder or by his duly authorized attorney
in fact. Such proxy shall be filed with the secretary of the corporation
before or at the time of the meeting and shall not be valid after the date
of the meeting at which it was filed.
Section 7. No stockholder will be allowed to vote at any meeting, either in
person or by proxy, unless he is a stockholder of record. Every share of
stock is entitled to one vote which may be voted as provided by the laws of
the State of Mississippi.
Section 8. The chairman of the board of directors shall act as chairman, and the
secretary of the corporation shall act as secretary of all meetings of the
stockholders of the corporation.
ARTICLE III
BOARD OF DIRECTORS
Section 1. The business and affairs of the corporation shall be managed and
controlled by its board of directors.
Section 2. The board of directors of the corporation shall consist of not less
than seven (7) nor more than twenty (20) stockholders, the number of each
ensuing year to be determined by a majority of the entire board of
directors of the corporation prior to the regular annual meeting. Each
director shall be the owner in his own right of unencumbered stock in the
corporation to the amount of at least Two Hundred Dollars ($200.00) par
value, and shall have such other qualifications as may be prescribed for
directors under the laws of the State of Mississippi. No stockholders shall
be eligible for election as a member of the board of directors after
attaining the age of seventy-two (72) years; provided, however, that any
director who attains the age of seventy-two (72) years during his elected
term can serve only until the next regular meeting of stockholders.
Section 3. The term of the office of the directors elected at the regular annual
meeting of the stockholders shall be until the next annual meeting of the
stockholders, and/or until their successors shall have been elected and
qualified.
2
Section 4. If during the year a vacancy should occur in the offices of the
directors elected for that year, the remaining board of directors shall
have the right, by majority vote, to fill such vacancies as exist by
electing to said vacancies qualified stockholders who shall serve as
directors until the next annual meeting of stockholders, or until a meeting
of the stockholders held for the purpose of electing their successors.
Section 5. The board of directors shall hold regular monthly meetings on the
second Tuesday of each month, except in the month of March. All meetings of
the board of directors, except the meeting immediately following the annual
stockholders' meeting, shall be held in the board of directors room at the
principal office of the bank in Tupelo, Mississippi, unless a different
place be fixed by the board of directors.
Immediately following the annual stockholders' meeting, on the same date
and at the same place, the members of the board of directors, which shall
have been elected at said meeting, shall meet and elect from among
themselves a chairman, a vice chairman and a secretary, who shall serve
until the meeting of the board of directors following the next annual
meeting of stockholders, and until their successors have been elected and
qualified.
Section 6. Special meetings of the board of directors shall be held whenever
called by the chairman or upon written request of a majority of the members
of the board of directors.
Section 7. A majority of the members of the board of directors shall constitute
a quorum of any meeting of said board of directors. Whenever there shall
not be a quorum at a regular or special meeting, the members present may
adjourn the meeting from time to time until a quorum shall be obtained, and
any meeting may be adjourned from time to time by vote of a majority of the
members present.
ARTICLE IV
OFFICERS
Section 1. The officers of the corporation shall be president, vice president or
vice presidents (the number thereof to be determined by the board of
directors), secretary and treasurer, each of whom shall be elected by the
board of directors. The office of secretary and treasurer may be held by
the same person. The board of directors may also elect such assistant
officers as may be deemed necessary.
Section 2. The officers of the corporation to be elected by the board of
directors shall be elected annually at the first meeting of the board of
directors held after each annual meeting of stockholders. Such officers so
elected shall serve until the next meeting of the board of directors
following the next annual meeting of stockholders, and until their
successors have been elected and qualified.
3
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise may be filled by the board of directors for
the unexpired portion of the term.
The powers and duties of the several officers shall be as provided from
time to time by resolution or other directive of the board of directors. In
the absence of such provisions the respective officers shall have the
powers and shall discharge the duties customarily and usually held and
performed by like officers of like or similar corporations.
Section 3. The compensation of such officers shall be fixed from time to time by
the board of directors.
ARTICLE V
COMMITTEES
Section 1. There shall be an executive committee and such other committees as
the board of directors may from time to time constitute. All of said
committees shall be selected by the board of directors from their number,
and their duties shall be as set forth hereinafter and as prescribed by the
board of directors.
Section 2. The executive committee shall consist of the chairman of the board of
directors, the president of the corporation and four other members to be
selected by the board of directors. The executive committee shall have
charge over all matters under the direction and control of the board of
directors which may require attention at any time between regular meetings
of said board of directors.
Section 3. Each committee shall select a chairman and a secretary from among
itself who shall keep a record of the proceedings of each committee and the
action of said committee. In case a secretary be not elected, the chairman
of the committee shall keep such record. Each committee shall meet on the
call of the chairman. The majority of the members of any of said committees
shall constitute a quorum for the transaction of business by such
committee, and in the event of the executive committee at least one of the
members present at such meeting shall be a member of the committee who has
been elected to said committee by the board of directors and is not serving
ex officio.
Section 4. The board of directors may at any meeting adopt such resolutions
restricting the power of committees as the board of directors may deem wise
and prudent.
4
ARTICLE VI
CAPITAL STOCK
Section 1. Certificates representing shares of stock of the corporation shall be
in such form as shall be determined by the board of directors. Such
certificates shall be signed by the president or a vice president and by
the secretary or an assistant secretary. All certificates of shares shall
be consecutively numbered or otherwise identified. The name and address of
the person to whom the shares represented thereby are issued, with the
number of shares and date of issue, shall be entered on the stock transfer
books of the corporation. All certificates surrendered to the corporation
for transfer shall be cancelled, and no new certificates shall be issued
until the former certificate for a like number of shares shall have been
surrendered and cancelled, except that in case of a lost, destroyed or
mutilated certificate a new certificate may be issued therefor on such
terms and indemnity to the corporation as the board of directors may
prescribe.
Section 2. Transfers of shares of stock of the corporation shall be made in the
manner specified in the laws of the State of Mississippi. The corporation
shall maintain stock transfer books, and any transfer shall be registered
thereon only on request and surrender of the stock certificate representing
the transferred shares, properly endorsed. The corporation shall have the
absolute right to recognize as the owner of any shares of stock issued by
it, the person or persons in whose name the certificate representing such
shares stand according to the books of the corporation for all proper
corporate purposes, including the voting of the shares represented by the
certificate at a regular or special meeting of the stockholders, and the
issuance and payment of dividends on such shares.
ARTICLE VII
DIVIDENDS
Section 1. The board of directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and
on the terms and conditions provided by law and by its articles of
incorporation.
ARTICLE VIII
SEAL
The Board of Directors shall provide a corporate seal, which shall be circular
in form and shall have inscribed thereon the name of the corporation and the
state of incorporation and the words "CORPORATE SEAL". The impression of said
seal is made a part of these bylaws.
5
Amendment of the Bylaws of The Peoples Holding Company
Effective March 1, 2001
Article II, Section 1 to read: The annual meeting of the stockholders of the
corporation shall be held on the third Tuesday of April in each year for
the purpose of electing directors and for the transaction of such other
business as may properly come before the meeting.
Article III, Section 5 to read: The board of directors shall hold regular
monthly meetings on the third Tuesday of each month. All meetings of the
board of directors shall be held in the board of directors room at the
principal office of the corporation in Tupelo, Mississippi, unless a
different place be fixed by the board of directors.
Immediately following the annual stockholders meeting, on the same date and
at the same place, the members of the board of directors, who shall have
been elected at said meeting, shall meet and elect from among themselves a
chairman, a vice chairman and a secretary, who shall serve until the
meeting of the board of directors following the next annual meeting of
stockholders, and until their successors have been elected and qualified.
6
Exhibit 10.1
EXECUTIVE
DEFERRED COMPENSATION PLAN
OF
THE PEOPLES BANK & TRUST COMPANY
EXECUTIVE DEFERRED COMPENSATION PLAN
THE PEOPLES BANK & TRUST COMPANY
TABLE OF CONTENTS
Article Subject Page
I Definitions and Construction 1
II Eligibility and Participation 3
III Death Benefit 3
IV Retirement Benefit 4
V Beneficiary 6
VI Source of Benefits 6
VII Termination of Employment 7
VIII Termination of Participation 7
IX Termination, Amendment,
Modification, or Supplement
of Plan 7
X Other Benefits and Agreements 8
XI Restrictions on Alienation
of Benefits 8
XII Administration of the Plan 9
XIII Adoption of Plan by Subsidiary,
Parent, Affiliated or Associated
Companies 10
XIV Reorganization 10
XV Miscellaneous 10
Plan Agreement I-1
EXECUTIVE
DEFERRED COMPENSATION PLAN
OF
THE PEOPLES BANK & TRUST COMPANY
PURPOSE AND EFFECTIVE DATE
The purpose of the Executive Deferred Compensation Plan of The Peoples Bank &
Trust Company is to provide specified benefits to a select group of management
and highly compensated Employees who contribute materially to the continued
growth, development and future business success of The Peoples Bank & Trust
Company. It is the intention of The Peoples Bank & Trust Company that this
program and the individual plans established hereunder be administered as
unfunded welfare benefit plans established and maintained for a select group of
management or highly compensated Employees. The effective date of this Plan is
December 31, 1985.
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 Definitions. For purpose of this Plan, the following phrases or terms shall
have the following indicated meanings unless otherwise clearly apparent
from the context:
(a) "Beneficiary" shall mean the person, persons, or estate of a
Participant, entitled to receive any benefits subsequent to the death
of a Participant under a Plan Agreement entered into in accordance
with the terms of this Plan.
(b) "Beneficiary Designation" shall mean the form of written agreement,
attached hereto as Annex II, by which the Participant names the
Beneficiary(ies) of the Plan.
(c) "Board of Directors" shall mean the Board of Directors of The Peoples
Bank & Trust Company unless otherwise indicated or the context
otherwise requires.
(d) "Committee" shall mean the Administrative Committee appointed to
manage and administer the Plan and individual Plan Agreements in
accordance with the provisions of Article XII hereof.
(e) "Bank" shall mean The Peoples Bank & Trust Company and any Subsidiary
and Parent that duly adopts the Plan as provided in Article XIII
hereof. Where the context dictates, the term "Bank" as used herein
refers to the particular Bank that has entered into a Plan Agreement
with a particular Participant.
(f) "Moody's Average Corporate Bond Rate" shall mean the Monthly Average
of the Composite Yield on Seasoned Corporate Bonds as published by
Moody's Investors Services, Inc. or its successor as stated for the
month of October preceding December 31 of each year. Such rate as it
applies to the provisions of this Plan shall than be used for one
year.
1
If the above mentioned "Monthly Average" is no longer published, a
substantially similar average will be used.
(g) "Early Retirement Date" shall be the date of a Participant's
Retirement prior to his or her Normal Retirement Date which may occur
on the first day of any month following the month in which the
Participant attains his or her fifty-fifth (55th) birthday, has
completed ten (10) years of service, and has been a Participant in the
Plan for four (4) full years.
(h) "Employee" shall mean any person who is associated as an Employee with
the Bank.
(i) "Normal Retirement Date" shall be the first day of the month following
the Participant's attaining his or her sixty-fifth (65th) birthday and
the Participant has completed four (4) continuous full years in the
Plan.
(j) "Participant" shall mean an Employee who is selected and elects to
participate in the Plan through the execution of a Plan Agreement in
accordance with the provisions of Article II.
(k) "Plan" shall mean the Executive Deferred Compensation Plan of The
Peoples Bank & Trust Company as amended from time to time.
(l) "Plan Agreement" shall mean the form of written agreement, attached
hereto as Annex I, which is entered into from time to time by and
between the Bank and an Employee selected to become a Participant as a
condition to participation in the Plan. Each Plan Agreement executed
by a Participant shall provide for the entire estimated benefit to
which such Participant is entitled under the Plan, and the Plan
Agreement bearing the latest date shall govern such entitlement.
(m) "Retirement" and "Retire" shall mean severance of employment with the
Bank at or after the attainment of his or her Normal Retirement Date
or, with the consent of the Bank, on or after the Early Retirement
Date.
(n) "Subsidiary" shall mean any business organization in which The Peoples
Bank & Trust Company, directly or indirectly, owns an interest,
excluding ownership interests The Peoples Bank & Trust Company may
hold in their fiduciary capacities as trustee or otherwise, and any
other business organization that the Board of Directors designates as
a Subsidiary for purposes of this Plan.
(o) "Parent" shall mean The Peoples Holding Company.
1.2 Construction. The masculine gender when used herein shall be deemed to
include the feminine gender, and the singular may include the plural unless
the context clearly indicates to the contrary. The words "hereof",
"herein", "hereunder", and other similar compounds of the word "here" shall
mean and refer to the entire Plan and not to any particular provision or
section. Whenever the words "Article" or "Section" are used in this Plan,
or a cross-reference to an "Article" or "Section" is made, the Article or
Section referred to shall be an Article or Section of this Plan unless
otherwise specified.
2
ARTICLE II
ELIGIBILITY AND PARTICIPATION
2.1 Eligibility. In order to be eligible for participation in the Plan, an
Employee must be selected by the Committee in the year preceding the year
in which the Employee is eligible to participate and in each succeeding
year thereafter as hereinafter provided. The Committee, in its sole and
absolute discretion, shall determine eligibility for participation in
accordance with the purposes of the Plan.
2.2 Participation. After being selected by the Committee to participate in this
Plan, an Employee shall, as a condition precedent to participation herein,
complete and return to the Committee a duly executed Plan Agreement
electing to participate herein and agreeing to the terms and conditions
thereof, and by the execution of such Plan Agreement a Participant shall
agree that all amounts deferred thereby shall be irrevocably deferred and
that in lieu thereof the Participant shall be entitled solely to the
benefits provided under this Plan. Such Plan Agreement shall be completed
and returned to the committee at the time specified thereby, but in no
event subsequent to December 31st of the year preceding the year to which
the Plan Agreement relates.
ARTICLE III
DEATH BENEFIT
3.1. Amount and Payment of Death Benefit. If a Participant dies before
Retirement and the Plan is in effect at that time, the Bank will pay or
cause to be paid a Death Benefit to such Participant's Beneficiary. The
said Death Benefit shall be paid monthly for the next one hundred and
eighty (180) months as set forth in the Plan Agreement. Such payments shall
commence effective the first day of the month following the date of death.
Notwithstanding the immediately preceding paragraph of this Section 3.1,
the Bank will pay or cause to be paid the Death Benefit specified therein
only if:
(a) At the time of the Participant's death prior to attaining his or her
Normal Retirement Date, such Participant was an Employee and had not
Retired, and all required deferrals required to be made by such
Participant under Sections 3.2 et. seq. have been made,
(b) The Participant's Plan Agreement had been kept in force throughout the
period commencing on the date of such Plan Agreement and ending on the
date of his or her death; and
(c) The Participant's death was due to causes other than suicide within
two (2) years of the date of his or her original Plan Agreement or
within two (2) years of the date of any amendment to his or her Plan
Agreement or any subsequent Plan Agreement resulting from additional
Death Benefits granted; but the Participant's suicide shall relieve
the Bank only of its obligation to pay that portion of the Death
Benefit that was granted within two (2) years prior to the date of
such suicide; and
(d) The Participant's death is determined not to be from a bodily or
mental cause or causes, information about which was withheld, or
knowingly concealed, or falsely provided by the Participant when
requested by the Bank to furnish evidence of good health upon the
Participant's enrolling in the Plan or upon an application for an
increase in Death Benefits; and
3
(e) Proof of death in such form as determined acceptable by the Committee
is furnished.
3.2 Amount of Participant Deferral. In consideration for the Death Benefit
selected in Participant's Plan Agreements, each Participant shall defer an
amount of his or her compensation in such amounts and at such times as
shall be determined by the Committee, and the Committee may change the
amount of such deferral in connection with changes in the amount of the
Death Benefit selected by a Participant. A Participant's obligation to
defer an amount of his or her compensation in accordance with this Section
3.2, and shall commence on the date his or her Plan Agreement becomes
effective, and shall continue thereafter during the term of his or her Plan
Agreement or until the earlier of such Participant's death, Retirement, or
attainment of his or her Normal Retirement Date. A Participant shall have
the right to increase or decrease the amount of his or her Death Benefits
initially selected by him or her by amending his or her Plan Agreement in
accordance with the rules adopted by the Committee for this purpose.
3.3 Time and Manner of Deferring or Making Payments. A Participant shall, in
his or her Plan Agreement, authorize the Bank to defer an amount of such
Participant's compensation equal to the amount specified pursuant to
Section 3.2.
3.4 Participant Deferrals - Use and Forfeitability. The amount of each
Participant's compensation deferred pursuant to Sections 3.2 and 3.3 shall
be and remain solely the property of the Bank, and a Participant shall have
no right thereto, nor shall the Bank be obligated to use such amounts in
any specific manner. Except as provided in Article IV, if a Participant's
death occurs under circumstances other than those specified in Section 3.1,
no benefit shall be payable hereunder or under his or her Plan Agreement to
his or her Beneficiary or any other person or entity on his or her behalf,
and any payments made by such Participant under Sections 3.2 and 3.3 shall
be forfeited.
ARTICLE IV
RETIREMENT BENEFIT
4.1 Normal Retirement. If a Participant has remained an Employee until his or
her Normal Retirement Date and shall then retire, and if the Plan and his
or her Plan Agreement have been kept in force, the Bank shall pay or cause
to be paid to such Participant, as a Retirement Benefit (herein so called),
the amount per month specified as a Retirement Benefit. The amount stated
in the Plan Agreement is an estimated amount and the actual amount of such
Retirement Benefit may vary from that shown. Payment of such monthly amount
shall commence on the Participant's Normal Retirement Date and shall
continue for one hundred and eighty (180) months. If such Participant shall
die before receiving one hundred and eighty (180) payments, the Retirement
Benefit will be continued to the Participant's Beneficiary as set forth in
the Beneficiary Designation until the balance of the one hundred and eighty
(180) payments have been made.
The amount of the Retirement Benefit will be determined by multiplying the
total deferrals made by Participant times 130% of the Moody's Average
Corporate Bond Rate until Participant's Normal Retirement. That result will
then be improved by 130% of the Moody's Average Corporate Bond Rate being
used at the time of Normal Retirement until the time the Retirement Benefit
is completed.
4.2 Early Retirement. The Committee, in its sole and absolute discretion, may
permit a Participant to receive an Early Retirement Benefit commencing as
of the first day of any month coincident with or following the
Participant's Early Retirement Date, but before the attainment of his or
4
her Normal Retirement Date. In such event, the Participant's monthly Early
Retirement Benefit shall be the amount accumulated on behalf of the
Participant as set forth in Section 4.1, with such amount being calculated
from the date of entry until Participant's Early Retirement Date. The
amount will be improved by 130% of the Moody's Average Corporate Bond Rate
being used at the time of Early Retirement and will be payable in one
hundred and eighty (180) installments and shall be the only benefit to
which such Participant is entitled. If Participant shall die before
receiving one hundred and eighty (180) installments after commencement of
the Early Retirement Benefit, said amount will be continued to
Participant's Beneficiary as set forth in the Beneficiary Designation until
the balance of one hundred and eighty (180) payments have been made.
4.3 Post Retirement Death Benefit. If a Participant dies after Retirement but
before the applicable Retirement Benefit is paid in full, the unpaid
Retirement Benefit payments to which such Participant is entitled shall
continue and be paid to that Participant's Beneficiary. Such payments shall
be made in accordance with the payment schedule to that Participant
pursuant to Sections 4.1, 4.2 and 4.7 of the Plan.
4.4 Exclusivity of Post Retirement Death Benefit. No Death Benefit as defined
in Article III shall be paid to the Beneficiary of a Participant who dies
after retirement.
4.5 Accrual of Retirement Benefit. A Participant who ceases to be an Employee,
except as a result of death or retirement shall not be entitled to any
benefits hereunder and the Bank shall have no obligation hereunder to such
Participant, except as outlined in Section 4.6.
4.6 Deferred Termination Benefit. A Participant who ceases to be an Employee
shall receive a termination benefit upon the earlier of (i) the
Participant's death or (ii) attainment of his or her Early Retirement Date
or (iii) at the time said Employee ceases his or her employment if such
date is later than his or her Early Retirement Date. Said benefit shall be
determined by improving the Participant's deferrals by the Moody's Average
Corporate Bond Rate if said Participant has been an Employee for less than
ten (10) years or if employment is discontinued for cause and by 130% of
the Moody's Average Corporate Bond Rate if said Participant has been an
Employee for ten (10) or more years with such amounts being computed from
the date of entry to the termination date of Participant.
For those Participants whose employment is terminated other than for cause
the resulting vested amount payable in one hundred and eighty (180)
installments will then be improved by the Moody's Average Corporate Bond
Rate being used at the time Participant ceases to be an Employee until the
completion of payment of the vested amount and will be the only benefit to
which such Participant is entitled.
For those Participants whose employment is terminated for cause, the
resulting vested amount will be divided by one hundred and eighty (180) and
such amount will be paid in one hundred and eighty (180) installments and
will be the only benefit to which such Participant is entitled.
If Participant shall die before receiving one hundred and eighty (180)
installments of said amount, the amount will be continued to Participant's
Beneficiary as set forth in the Beneficiary Designation until the balance
of one hundred and eighty (180) payments have been made.
4.7 Retirement After Normal Retirement Date. A Participant who continues as an
Employee with the Bank after his or her Normal Retirement Date may remain a
Participant in the Plan with the consent of the Bank. Upon Retirement such
5
a Participant shall be entitled to the benefits provided in Section 4.8
hereof. The monthly payments provided for in Section 4.8 hereof shall
commence on the date the Participant retires.
4.8 Benefit at Retirement After Attainment of Normal Retirement Date. If a
Participant elects to continue his or her employment beyond his or her
Normal Retirement Date, the Committee, and only the Committee, will specify
the amount of the Participant's Retirement Benefit, which shall be
evidenced by a new Plan Agreement to be executed by the Participant.
ARTICLE V
BENEFICIARY
A Participant shall designate his or her Beneficiary to receive benefits under
the Plan and his or her Plan Agreement by completing the Beneficiary
Designation. If more than one Beneficiary is named, the shares and/or precedence
of each Beneficiary shall be indicated. A Participant shall have the right to
change the Beneficiary by submitting to the Committee a new Beneficiary
Designation. The Beneficiary Designation must be approved in writing by the
Bank; however, upon the Bank's acknowledgment of approval, the effective date of
the Beneficiary Designation shall be the date it was executed by the
Participant. If the Bank has any doubt as to the proper Beneficiary to receive
payments hereunder, it shall have the right to withhold such payments until the
matter is finally adjudicated. Any payment made by the Bank in good faith and in
accordance with the provisions of this Plan and a Participant's Plan Agreement
and Beneficiary Designation shall fully discharge the Bank from all further
obligations with respect to such payment.
ARTICLE VI
SOURCE OF BENEFITS
6.1 Benefits Payable from General Assets. Amounts payable hereunder shall be
paid exclusively from the general assets of the Bank, and no person
entitled to payment hereunder shall have any claim, right, security
interest, or other interest in any fund, trust, account, or other asset of
the Bank that may be looked to for such payment. The Bank's liability for
the payment of benefits hereunder shall be evidenced only by this Plan and
each Plan Agreement entered into between the Bank and a Participant.
6.2 Investments to Facilitate Payment of Benefits. Although the Bank is not
obligated to invest in any specific asset or fund in order to provide the
means for the payment of any liabilities under this Plan, the Bank may
elect to do so and, in such event, no Participant shall have any interest
whatever in such asset or fund. As a condition precedent to the Bank's
obligation to provide any benefits, including incremental increases in
benefits, under this Plan, the Participant shall, if so requested by the
Bank, provide evidence of insurability at standard and other rates, in such
amounts, and with such insurance carrier or carriers as the Bank may
require, including the results and reports of previous Bank and other
insurance carrier physical examinations, taking such additional physical
examinations as the Bank may request, and taking any other action that the
Bank may request. If a Participant is requested to and does not or cannot
provide evidence of insurability as specified in the immediately preceding
sentence, then the Bank shall have no further obligation to such
Participant under this Plan, and such Participant's Plan Agreement shall
terminate, except as to benefits previously granted. Notwithstanding the
foregoing, if a Participant cannot provide evidence of insurability at
standard rates or for the amounts initially contemplated in connection with
his or her participation in the Plan, the Bank may, at its discretion,
6
permit the Participant to participate herein for such benefits and upon
such deferral of his or her compensation as the Bank may, in its sole
discretion, deem appropriate.
6.3 Bank Obligation. The Bank shall have no obligation of any nature whatsoever
to a Participant under this Plan or a Participant's Plan Agreement, except
otherwise expressly provided herein and in such Plan Agreement.
6.4 Withholding of Information, Etc. If, in connection with a Participant's
enrolling in or applying for incremental benefit increases under the Plan,
the Bank requests the Participant to furnish evidence of insurability, the
Participant dies, and it is determined that the Participant withheld,
knowingly concealed, or knowingly provided false information about the
bodily or mental condition or conditions that caused the Participant's
death, the Bank shall have no obligation to provide the benefits contracted
for on the basis of such withholding, concealment, or false information.
ARTICLE VII
TERMINATION OF EMPLOYMENT
Neither this Plan nor a Participant's Plan Agreement, either singly or
collectively, in any way obligate the Bank to continue the employment of a
Participant with the Bank nor does either limit the right of the Bank at any
time and for any reason to terminate the Participant's employment. Termination
of a Participant's employment with the Bank for any reason, whether by action of
the Bank, shall immediately terminate his or her participation in this Plan and
his or her Plan Agreement, and all further obligations of either party
thereunder, except as may be provided in Section 4.6. In no event shall this
Plan or a Plan Agreement, either singly or collectively, by their terms or
implications constitute an employment contract of any nature whatsoever between
the Bank and a Participant.
ARTICLE VIII
TERMINATION OF PARTICIPATION
8.1 Termination of Participation - General. A Participant reserves the right to
terminate his or her participation in this Plan and his or her Plan
Agreement at his or her election at any time by giving the Committee
written notice of such termination not less than 30 days prior to an
anniversary date of the date of execution of his or her Plan Agreement. A
Participant's termination shall be effective as soon as administratively
convenient after such anniversary date.
8.2 Rights After Termination of Participation. Participants who elect to
terminate participation in the Plan but before eligibility for Retirement
will be entitled to the same benefits as a Participant who ceases to be an
Employee as described in Section 4.6. Such Participants will not be
entitled to a Death Benefit under Article III.
ARTICLE IX
TERMINATIONS, AMENDMENTS, MODIFICATION OR
SUPPLEMENT OF PLAN
9.1 Termination, Amendment, Etc. The Bank reserves the right to terminate,
amend, modify or supplement this Plan, wholly or partially, and from time
to time, at any time. The Bank likewise reserves the right to terminate,
amend, modify, or supplement any Plan Agreement, wholly or partially, from
time to time. Such right to terminate, amend, modify, or supplement this
7
Plan or any Plan Agreement shall be exercised for the Bank by the
Committee; provided, however, that:
(a) No action to terminate this Plan or a Plan Agreement shall be taken
except upon written notice to each Participant to be affected thereby,
which notice shall be given not less than 30 days prior to such
action; and
(b) The Committee shall take no action to terminate this Plan or a Plan
Agreement with respect to a Participant or his or her Beneficiary
after the payment of any benefit has commenced in accordance with
Article III or Article IV but has not been completed.
9.2 Rights and Obligations Upon Termination. Upon the termination of this Plan
or any Plan Agreement, by either the Committee or a Participant in
accordance with the provisions for such termination, neither this Plan nor
the Plan Agreement shall be of any further force and effect, and no party
shall have any further obligation under either this Plan or any Plan
Agreement so terminated except as may be provided for in Section 4.6 or the
preceding provisions of this Article IX.
ARTICLE X
OTHER BENEFITS AND AGREEMENTS
The benefits provided for a Participant and his or her Beneficiary hereunder and
under such Participant's Plan Agreement are in addition to any other benefits
available to such Participant under any other program or plan of the Bank for
its Employees, and, except as may otherwise be expressly provided for, this Plan
and Plan Agreements entered into hereunder shall supplement and shall not
supersede, modify, or amend any other program or plan of the Bank or a
Participant. Moreover, benefits under this Plan and Plan Agreements entered into
hereunder shall not be considered compensation for the purpose of computing
deferrals or benefits under any plan maintained by the Bank that is qualified
under Section 401 (a) of the Internal Revenue Code of 1954, as amended.
ARTICLE XI
RESTRICTIONS ON ALIENATION OF BENEFITS
No right or benefit under this Plan or a Plan Agreement shall be subject to
anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and
any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge
the same shall be void. No right or benefit hereunder or under any Plan
Agreement shall in any manner be liable for or subject to the debts, contract,
liabilities, or torts of the person entitled to such benefit. If any Participant
or Beneficiary under this Plan or a Plan Agreement should become bankrupt or
attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge any
right to a benefit hereunder or under any Plan Agreement, then such right or
benefit shall, in the discretion of the Committee, terminate, and, in such
event, the Committee shall hold or apply the same or any part thereof for the
benefit of such Participant or Beneficiary, his or her spouse, children, or
other dependents, or any of them, in such manner and in such portion as the
Committee, in its sole and absolute discretion, may deem proper.
8
ARTICLE XII
ADMINISTRATION OF THIS PLAN
12.1 Appointment of Committee. The general administration of this Plan, and any
Plan Agreements executed hereunder, as well as construction and
interpretation thereof, shall be vested in the Committee, the number and
members of which shall be designated and appointed from time to time by,
and shall serve at the pleasure of, the Board of Directors. Any such member
of the Committee may resign by notice in writing filed with the secretary
of the Committee. Vacancies shall be filled promptly by the Board of
Directors, but any vacancies remaining unfilled for ninety days may be
filled by a majority vote of the remaining members of the Committee. Each
person appointed a member of the Committee shall signify his or her
acceptance by filing a written acceptance with the Secretary of the
Committee.
12.2 Committee Officials. The board of Directors shall designate one of the
members of the Committee as chairman and shall appoint a secretary who need
not be a member of the Committee. The Secretary shall keep minutes of the
Committee's proceedings and all data, records and documents relating to the
Committee's administration of this Plan and any Plan Agreements executed
hereunder. The Committee may appoint from its number such subcommittees
with such powers as the Committee shall determine and may authorize one or
more of its members or any agent to execute or deliver any instrument or
make any payment on behalf of the Committee.
12.3 Committee Action. All resolutions or other actions taken by the Committee
shall be by the vote of a majority of those present at a meeting at which a
majority of the members are present, or in writing by all the members at
the time in office if they act without a meeting.
12.4 Committee Rules and Powers - General. Subject to the provisions of this
Plan, the Committee shall from time to time establish rules, forms, and
procedures for the administration of this Plan. Such decisions, actions,
and records of the Committee shall be conclusive and binding upon the Bank
and all persons having or claiming to have any right or interest in or
under this Plan.
12.5 Reliance on Certificate, etc. The members of the Committee and the officers
and Employees of the Bank shall be entitled to rely on all certificates and
reports made by any duly appointed accountants, and on all opinions given
by any duly appointed legal counsel. Such legal counsel may be counsel for
the Bank.
12.6 Liability of Committee. No member of the Committee shall be liable for any
act or omission of any other member of the Committee, or for any act or
omission on his or her own part, excepting only his or her own willful
misconduct. The Bank shall indemnify and save harmless each member of the
Committee against any and all expenses and liabilities arising out of his
or her membership on the Committee, excepting only expenses and liabilities
arising out of his or her own willful misconduct. Expenses against which a
member of the Committee shall be indemnified hereunder shall include,
without limitation, the amount of any settlement or judgment, costs,
counsel fees and related charges reasonably incurred in connection with a
claim asserted or a proceeding brought or settlement thereof. The foregoing
right of indemnification shall be in addition to any other rights to which
any such member may be entitled as a matter of law.
12.7 Determination of Benefits. In addition to the powers hereinabove specified,
the Committee shall have the power to compute and certify, under this Plan
9
and any Plan Agreement, the amount and kind of benefits from time to time
payable to Participants and their Beneficiaries, and to authorize all
disbursements for such purposes.
12.8 Information to Committee. To enable the Committee to perform its functions,
the Bank shall supply full and timely information to the Committee on all
matters relating to the compensation of all Participants, their retirement,
death or other cause for termination of employment, and such other
pertinent facts as the Committee may require.
12.9 Manner and time of Payment of Benefits. The Committee shall have the power,
in its sole and absolute discretion, to change the manner and time of
payment of benefits to be made to a Participant or his or her Beneficiary
from that set forth in the Participant's Plan Agreement if requested to do
so by such Participant or Beneficiary.
ARTICLE XIII
ADOPTION OF PLAN BY SUBSIDIARY, PARENT
AFFILIATED OR ASSOCIATED COMPANIES
Any corporation that is a Subsidiary or Parent may, with the approval of the
Board of Directors, adopt this Plan and thereby come within the definition of
Bank in Article I hereof.
ARTICLE XIV
REORGANIZATION
In the event the Bank shall be merged, consolidated, reorganized, or
substantially sells all of its assets to another corporation, firm, or person
and such corporation, firm, or person takes such action to terminate this Plan,
the Participants will be entitled to a minimum of a benefit payable at the
earlier of (i) the Participant's death or (ii) attainment of his or her Early
Retirement Date or (iii) at the time said Employee ceases his or her employment
or the Plan is terminated if such date is later than his or her Early Retirement
Date. Said Benefit shall be determined by improving the Participant's deferrals
by 130% of the Moody's Average Corporate Bond Rate with such amounts being
computed from the date of entry to the termination date of Participant and/or
the termination of the Plan. This resulting amount payable in one hundred and
eighty (180) installments will continue to be improved by 130% of the Moody's
Average Corporate Bond Rate at the time of the termination of Participant and/or
the termination of the Plan until the Benefit is completed and will be the only
benefit to which such Participant is entitled.
ARTICLE XV
MISCELLANEOUS
15.1 Execution of Receipts and Releases. Any payment to any Participant, a
Participant's legal representative, or Beneficiary in accordance with the
provisions of this Plan or Plan Agreement executed hereunder shall, to the
extent thereof, be in full satisfaction of all claims hereunder against the
Bank. The Bank may require such Participant, legal representative, or
Beneficiary, as a condition precedent to such payment, to execute a receipt
and release therefore in such form as it may determine.
15.2 No Guarantee of Interests. Neither the Committee nor any of its members
guarantees the payment of any amounts which may be or become due to any
person or entity under this Plan or any Plan Agreement executed hereunder.
10
The liability of the Bank to make any payment under this Plan or any Plan
Agreement executed hereunder is limited to the then available assets of the
Bank.
15.3 Bank Records. Records of the Bank as to a Participant's employment,
termination of employment and the reason therefore authorized leaves of
absence, and compensation shall be conclusive on all persons and entities,
unless determined to be incorrect.
15.4 Evidence. Evidence required of anyone under this Plan and any Plan
Agreement executed hereunder may be by certificate, affidavit, document, or
other information which the person or entity acting on it considers
pertinent and reliable, and signed, made, or presented by the proper party
or parties.
15.5 Notice. Any notice which shall be or may be given under this Plan or a Plan
Agreement executed hereunder shall be in writing and shall be mailed by
United States mail, postage prepaid. If notice is to be given to the Bank,
such notice shall be addressed to the Bank at:
The Peoples Bank & Trust Company
Box 709
Tupelo, MS 38802-0709
marked to the attention of the Secretary, Administrative Committee,
Deferred Compensation Plan; or, if notice to a Participant, addressed to
the address shown on such Participant's Plan Agreement.
15.6 Change of Address. Any party may, from time to time, change the address to
which notices shall be mailed by giving written notice of such new address.
15.7 Effect of Provisions. The provisions of this Plan and of any Plan Agreement
executed hereunder shall be binding upon the Bank and its successors and
assigns, and upon a Participant, his or her Beneficiary, assigns, heirs,
executors, and administrators.
15.8 Headings. The titles and headings of Articles and Sections are included for
convenience of reference only and are not to be considered in the
construction of the provisions hereof or any Plan Agreement executed
hereunder.
15.9 Governing Law. All questions arising with respect to this Plan and any Plan
Agreement executed hereunder shall be determined by reference to the laws
of the State of Mississippi, as in effect at the time of their adoption and
execution, respectively.
COMPLETE
11
Exhibit 10.2
EXECUTIVE
DEFERRED COMPENSATION PLAN - B
OF
THE PEOPLES BANK & TRUST COMPANY
EXECUTIVE DEFERRED COMPENSATION PLAN - B
THE PEOPLES BANK & TRUST COMPANY
TABLE OF CONTENTS
Article Subject Page
I Definitions and Construction 1
II Eligibility and Participation 3
III Death Benefit 3
IV Retirement Benefit 4
V Beneficiary 6
VI Source of Benefits 6
VII Termination of Employment 7
VIII Termination of Participation 7
IX Termination, Amendment,
Modification, or Supplement
of Plan 8
X Other Benefits and Agreements 8
XI Restrictions on Alienation of Benefits 8
XII Administration of the Plan 9
XIII Adoption of Plan by Subsidiary,
Parent, Affiliated or Associated
Companies 10
XIV Reorganization 10
XV Miscellaneous 10
Plan Agreement I-1
DEFERRED COMPENSATION PLAN - B
OF
THE PEOPLES BANK & TRUST COMPANY
PURPOSE AND EFFECTIVE DATE
The purpose of the Executive Deferred Compensation Plan - B of The Peoples Bank
& Trust Company is to provide specified benefits to a select group of management
and highly compensated Employees who contribute materially to the continued
growth, development and future business success of The Peoples Bank & Trust
Company. It is the intention of The Peoples Bank & Trust Company that this
program and the individual plans established hereunder be administered as
unfunded welfare benefit plans established and maintained for a select group of
management or highly compensated Employees. The effective date of this Plan is
January 1, 1989.
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 Definitions. For purpose of this Plan, the following phrases or terms shall
have the following indicated meanings unless otherwise clearly apparent
from the context:
(a) "Beneficiary" shall mean the person, persons, or estate of a
Participant, entitled to receive any benefits subsequent to the death
of a Participant under a Plan Agreement entered into in accordance
with the terms of this Plan.
(b) "Beneficiary Designation" shall mean the form of written agreement,
attached hereto as Annex II, by which the Participant names the
Beneficiary(ies) of the Plan.
(c) "Board of Directors" shall mean the Board of Directors of The Peoples
Bank & Trust Company unless otherwise indicated or the context
otherwise requires.
(d) "Committee" shall mean the Administrative Committee appointed to
manage and administer the Plan and individual Plan Agreements in
accordance with the provisions of Article XII hereof.
(e) "Bank" shall mean The Peoples Bank & Trust Company and any Subsidiary
and Parent that duly adopts the Plan as provided in Article XIII
hereof. Where the context dictates, the term "Bank" as used herein
refers to the particular Bank that has entered into a Plan Agreement
with a particular Participant.
(f) "Moody's Average Corporate Bond Rate" shall mean the Monthly Average
of the Composite Yield on Seasoned Corporate Bonds as published by
Moody's Investors Services, Inc. or its successor as stated for the
month of October preceding December 31 of each year. Such rate as it
applies to the provisions of this Plan shall than be used for one
year.
1
If the above mentioned "Monthly Average" is no longer published, a
substantially similar average will be used.
(g) "Early Retirement Date" shall be the date of a Participant's
Retirement prior to his or her Normal Retirement Date which may occur
on the first day of any month following the month in which the
Participant attains his or her fifty-fifth (55th) birthday, has
completed ten (10) years of service, and has been a Participant in the
Plan for four (4) full years.
(h) "Employee" shall mean any person who is associated as an Employee with
the Bank.
(i) "Normal Retirement Date" shall be the first day of the month following
the Participant's attaining his or her sixty-fifth (65th) birthday and
the Participant has completed ten (10) continuous full years in the
Plan.
(j) "Participant" shall mean an Employee who is selected and elects to
participate in the Plan through the execution of a Plan Agreement in
accordance with the provisions of Article II.
(k) "Plan" shall mean the Executive Deferred Compensation Plan - B of The
Peoples Bank & Trust Company as amended from time to time.
(l) "Plan Agreement" shall mean the form of written agreement, attached
hereto as Annex I, which is entered into from time to time by and
between the Bank and an Employee selected to become a Participant as a
condition to participation in the Plan. Each Plan Agreement executed
by a Participant shall provide for the entire estimated benefit to
which such Participant is entitled under the Plan, and the Plan
Agreement bearing the latest date shall govern such entitlement.
(m) "Retirement" and "Retire" shall mean severance of employment with the
Bank at or after the attainment of his or her Normal Retirement Date
or, with the consent of the Bank, on or after the Early Retirement
Date.
(n) "Subsidiary" shall mean any business organization in which The Peoples
Bank & Trust Company, directly or indirectly, owns an interest,
excluding ownership interests The Peoples Bank & Trust Company may
hold in their fiduciary capacities as trustee or otherwise, and any
other business organization that the Board of Directors designates as
a Subsidiary for purposes of this Plan.
(o) "Parent" shall mean The Peoples Holding Company.
1.2 Construction. The masculine gender when used herein shall be deemed to
include the feminine gender, and the singular may include the plural unless
the context clearly indicates to the contrary. The words "hereof",
"herein", "hereunder", and other similar compounds of the word "here" shall
mean and refer to the entire Plan and not to any particular provision or
section. Whenever the words "Article" or "Section" are used in this Plan,
or a cross-reference to an "Article" or "Section" is made, the Article or
Section referred to shall be an Article or Section of this Plan unless
otherwise specified.
2
ARTICLE II
ELIGIBILITY AND PARTICIPATION
2.1 Eligibility. In order to be eligible for participation in the Plan, an
Employee must be selected by the Committee in the year preceding the year
in which the Employee is eligible to participate and in each succeeding
year thereafter as hereinafter provided. The Committee, in its sole and
absolute discretion, shall determine eligibility for participation in
accordance with the purposes of the Plan.
2.2 Participation. After being selected by the Committee to participate in this
Plan, an Employee shall, as a condition precedent to participation herein,
complete and return to the Committee a duly executed Plan Agreement
electing to participate herein and agreeing to the terms and conditions
thereof, and by the execution of such Plan Agreement a Participant shall
agree that all amounts deferred thereby shall be irrevocably deferred and
that in lieu thereof the Participant shall be entitled solely to the
benefits provided under this Plan. Such Plan Agreement shall be completed
and returned to the committee at the time specified thereby, but in no
event subsequent to December 31st of the year preceding the year to which
the Plan Agreement relates.
ARTICLE III
DEATH BENEFIT
3.1. Amount and Payment of Death Benefit. If a Participant dies before
Retirement and the Plan is in effect at that time, the Bank will pay or
cause to be paid a Death Benefit to such Participant's Beneficiary. The
said Death Benefit shall be paid monthly for the next one hundred and
eighty (180) months as set forth in the Plan Agreement. Such payments shall
commence effective the first day of the month following the date of death.
Notwithstanding the immediately preceding paragraph of this Section 3.1,
the Bank will pay or cause to be paid the Death Benefit specified therein
only if:
(a) At the time of the Participant's death prior to attaining his or her
Normal Retirement Date, such Participant was an Employee and had not
Retired, and all required deferrals required to be made by such
Participant under Sections 3.2 et. seq. have been made,
(b) The Participant's Plan Agreement had been kept in force throughout the
period commencing on the date of such Plan Agreement and ending on the
date of his or her death; and
(c) The Participant's death was due to causes other than suicide within
two (2) years of the date of his or her original Plan Agreement or
within two (2) years of the date of any amendment to his or her Plan
Agreement or any subsequent Plan Agreement resulting from additional
Death Benefits granted; but the Participant's suicide shall relieve
the Bank only of its obligation to pay that portion of the Death
Benefit that was granted within two (2) years prior to the date of
such suicide; and
(d) The Participant's death is determined not to be from a bodily or
mental cause or causes, information about which was withheld, or
knowingly concealed, or falsely provided by the Participant when
requested by the Bank to furnish evidence of good health upon the
Participant's enrolling in the Plan or upon an application for an
increase in Death Benefits; and
3
(e) Proof of death in such form as determined acceptable by the Committee
is furnished.
3.2 Amount of Participant Deferral. Each Participant shall defer an amount of
his or her compensation in such amounts and at such times as shall be
determined by the Committee, and the Committee may change the amount of
such deferral in connection with changes in the level of participation
selected by a Participant. A Participant's obligation to defer an amount of
his or her compensation in accordance with this Section 3.2, shall commence
on the date his or her Plan Agreement becomes effective, and shall continue
thereafter during the term of his or her Plan Agreement or until the
earlier of such Participant's death, Retirement, or attainment of his or
her Normal Retirement Date. A Participant shall have the right to increase
or decrease the amount of his or her participation initially selected by
him or her by amending his or her Plan Agreement in accordance with the
rules adopted by the Committee for this purpose.
3.3 Time and Manner of Deferring or Making Payments. A Participant shall, in
his or her Plan Agreement, authorize the Bank to defer an amount of such
Participant's compensation equal to the amount specified pursuant to
Section 3.2.
3.4 Participant Deferrals - Use and Forfeitability. The amount of each
Participant's compensation deferred pursuant to Sections 3.2 and 3.3 shall
be and remain solely the property of the Bank, and a Participant shall have
no right thereto, nor shall the Bank be obligated to use such amounts in
any specific manner. Except as provided in Article IV, if a Participant's
death occurs under circumstances other than those specified in Section 3.1,
no benefit shall be payable hereunder or under his or her Plan Agreement to
his or her Beneficiary or any other person or entity on his or her behalf,
and any payments made by such Participant under Sections 3.2 and 3.3 shall
be forfeited.
ARTICLE IV
RETIREMENT BENEFIT
4.1 Normal Retirement. If a Participant has remained an Employee until his or
her Normal Retirement Date and shall then retire, and if the Plan and his
or her Plan Agreement have been kept in force, the Bank shall pay or cause
to be paid to such Participant, as a Retirement Benefit (herein so called),
the amount per month specified as a Retirement Benefit. Payment of such
monthly amount shall commence on the Participant's Normal Retirement Date
and shall continue for one hundred and eighty (180) months. If such
Participant shall die before receiving one hundred and eighty (180)
payments, the Retirement Benefit will be continued to the Participant's
Beneficiary as set forth in the Beneficiary Designation until the balance
of the one hundred and eighty (180) payments have been made.
The amount of the Retirement Benefit will be determined by multiplying the
total deferrals made by Participant times the Moody's Average Corporate
Bond Rate as compounded on an annual basis until Participant's Normal
Retirement. That result will then be improved by the Moody's Average
Corporate Bond Rate being used at the time of Normal Retirement as
compounded on an annual basis until the time the Retirement Benefit is
completed.
4.2 Early Retirement. The Committee, in its sole and absolute discretion, may
permit a Participant to receive an Early Retirement Benefit commencing as
of the first day of any month coincident with or following the
Participant's Early Retirement Date, but before the attainment of his or
her Normal Retirement Date. In such event, the Participant's monthly Early
4
Retirement Benefit shall be the amount accumulated on behalf of the
Participant as set forth in Section 4.1, with such amount being calculated
from the date of entry until Participant's Early Retirement Date. The
amount will be improved by the Moody's Average Corporate Bond Rate as
compounded on an annual basis being used at the time of Early Retirement
and will be payable in one hundred and eighty (180) installments and shall
be the only benefit to which such Participant is entitled. If Participant
shall die before receiving one hundred and eighty (180) installments after
commencement of the Early Retirement Benefit, said amount will be continued
to Participant's Beneficiary as set forth in the Beneficiary Designation
until the balance of one hundred and eighty (180) payments have been made.
4.3 Post Retirement Death Benefit. If a Participant dies after Retirement but
before the applicable Retirement Benefit is paid in full, the unpaid
Retirement Benefit payments to which such Participant is entitled shall
continue and be paid to that Participant's Beneficiary. Such payments shall
be made in accordance with the payment schedule to that Participant
pursuant to Sections 4.1, 4.2 and 4.7 of the Plan.
4.4 Exclusivity of Post Retirement Death Benefit. No Death Benefit as defined
in Article III shall be paid to the Beneficiary of a Participant who dies
after retirement.
4.5 Accrual of Retirement Benefit. A Participant who ceases to be an Employee,
except as a result of death or retirement shall not be entitled to any
benefits hereunder and the Bank shall have no obligation hereunder to such
Participant, except as outlined in Section 4.6.
4.6 Deferred Termination Benefit. A Participant who ceases to be an Employee
shall receive a termination benefit upon the earlier of (i) the
Participant's death or (ii) attainment of his or her Early Retirement Date
or (iii) at the time said Employee ceases his or her employment if such
date is later than his or her Early Retirement Date. Said benefit shall be
determined by improving the Participant's deferrals by seventy five (75%)
of the Moody's Average Corporate Bond Rate as compounded on an annual basis
if said Participant has been an Employee for less than ten (10) years or if
employment is discontinued for cause and by the Moody's Average Corporate
Bond Rate as compounded on an annual basis if said Participant has been an
Employee for ten (10) or more years with such amounts being computed from
the date of entry to the termination date of Participant.
For those Participants whose employment is terminated other than for cause
after ten (10) years of employment, the resulting vested amount payable in
one hundred and eighty (180) installments will then be improved by the
Moody's Average Corporate Bond Rate as compounded on an annual basis being
used at the time Participant ceases to be an Employee until the completion
of payment of the vested amount and will be the only benefit to which such
Participant is entitled.
For those Participants whose employment is terminated other than for cause
with less than ten (10) years of employment, the resulting vested amount
payable in one hundred and eighty (180) installments will then be improved
by seventy five percent (75%) of the Moody's Average Corporate Bond Rate as
compounded on an annual basis being used at the time Participant ceases to
be an Employee until the completion of payment of the vested amount and
will be the only benefit to which such Participant is entitled.
For those Participants whose employment is terminated for cause, the
resulting vested amount will be divided by one hundred and eighty (180) and
such amount will be paid in one hundred and eighty (180) installments and
will be the only benefit to which such Participant is entitled.
5
If Participant shall die before receiving one hundred and eighty (180)
installments of said amount, the amount will be continued to Participant's
Beneficiary as set forth in the Beneficiary Designation until the balance
of one hundred and eighty (180) payments have been made.
For those Participants who have been employees for ten (10) or more years,
who cease his or her relationship other than for cause, and who die before
benefits have been initiated, the Participant's Beneficiary as set forth in
the Beneficiary Designation will receive the greater of the above mentioned
accrued benefits as of the date of death or the Death Benefit as described
in Article III.
4.7 Retirement After Normal Retirement Date. A Participant who continues as an
Employee with the Bank after his or her Normal Retirement Date may remain a
Participant in the Plan with the consent of the Bank. Upon Retirement such
a Participant shall be entitled to the benefits provided in Section 4.8
hereof. The monthly payments provided for in Section 4.8 hereof shall
commence on the date the Participant retires.
4.8 Benefit at Retirement After Attainment of Normal Retirement Date. If a
Participant elects to continue his or her employment beyond his or her
Normal Retirement Date, the Committee, and only the Committee, will specify
the amount of the Participant's Retirement Benefit, which shall be
evidenced by a new Plan Agreement to be executed by the Participant.
ARTICLE V
BENEFICIARY
A Participant shall designate his or her Beneficiary to receive benefits under
the Plan and his or her Plan Agreement by completing the Beneficiary
Designation. If more than one Beneficiary is named, the shares and/or precedence
of each Beneficiary shall be indicated. A Participant shall have the right to
change the Beneficiary by submitting to the Committee a new Beneficiary
Designation. The Beneficiary Designation must be approved in writing by the
Bank; however, upon the Bank's acknowledgment of approval, the effective date of
the Beneficiary Designation shall be the date it was executed by the
Participant. If the Bank has any doubt as to the proper Beneficiary to receive
payments hereunder, it shall have the right to withhold such payments until the
matter is finally adjudicated. Any payment made by the Bank in good faith and in
accordance with the provisions of this Plan and a Participant's Plan Agreement
and Beneficiary Designation shall fully discharge the Bank from all further
obligations with respect to such payment.
ARTICLE VI
SOURCE OF BENEFITS
6.1 Benefits Payable from General Assets. Amounts payable hereunder shall be
paid exclusively from the general assets of the Bank, and no person
entitled to payment hereunder shall have any claim, right, security
interest, or other interest in any fund, trust, account, or other asset of
the Bank that may be looked to for such payment. The Bank's liability for
the payment of benefits hereunder shall be evidenced only by this Plan and
each Plan Agreement entered into between the Bank and a Participant.
6.2 Investments to Facilitate Payment of Benefits. Although the Bank is not
obligated to invest in any specific asset or fund in order to provide the
means for the payment of any liabilities under this Plan, the Bank may
elect to do so and, in such event, no Participant shall have any interest
whatever in such asset or fund. As a condition precedent to the Bank's
6
obligation to provide any benefits, including incremental increases in
benefits, under this Plan, the Participant shall, if so requested by the
Bank, provide evidence of insurability at standard and other rates, in such
amounts, and with such insurance carrier or carriers as the Bank may
require, including the results and reports of previous Bank and other
insurance carrier physical examinations, taking such additional physical
examinations as the Bank may request, and taking any other action that the
Bank may request. If a Participant is requested to and does not or cannot
provide evidence of insurability as specified in the immediately preceding
sentence, then the Bank shall have no further obligation to such
Participant under this Plan, and such Participant's Plan Agreement shall
terminate, except as to benefits previously granted. Notwithstanding the
foregoing, if a Participant cannot provide evidence of insurability at
standard rates or for the amounts initially contemplated in connection with
his or her participation in the Plan, the Bank may, at its discretion,
permit the Participant to participate herein for such benefits and upon
such deferral of his or her compensation as the Bank may, in its sole
discretion, deem appropriate.
6.3 Bank Obligation. The Bank shall have no obligation of any nature whatsoever
to a Participant under this Plan or a Participant's Plan Agreement, except
otherwise expressly provided herein and in such Plan Agreement.
6.4 Withholding of Information, Etc. If, in connection with a Participant's
enrolling in or applying for incremental benefit increases under the Plan,
the Bank requests the Participant to furnish evidence of insurability, the
Participant dies, and it is determined that the Participant withheld,
knowingly concealed, or knowingly provided false information about the
bodily or mental condition or conditions that caused the Participant's
death, the Bank shall have no obligation to provide the benefits contracted
for on the basis of such withholding, concealment, or false information.
ARTICLE VII
TERMINATION OF EMPLOYMENT
Neither this Plan nor a Participant's Plan Agreement, either singly or
collectively, in any way obligate the Bank to continue the employment of a
Participant with the Bank nor does either limit the right of the Bank at any
time and for any reason to terminate the Participant's employment. Termination
of a Participant's employment with the Bank for any reason, whether by action of
the Bank, shall immediately terminate his or her participation in this Plan and
his or her Plan Agreement, and all further obligations of either party
thereunder, except as may be provided in Section 4.6. In no event shall this
Plan or a Plan Agreement, either singly or collectively, by their terms or
implications constitute an employment contract of any nature whatsoever between
the Bank and a Participant.
ARTICLE VIII
TERMINATION OF PARTICIPATION
8.1 Termination of Participation - General. A Participant reserves the right to
terminate his or her participation in this Plan and his or her Plan
Agreement at his or her election at any time by giving the Committee
written notice of such termination not less than 30 days prior to an
anniversary date of the date of execution of his or her Plan Agreement. A
Participant's termination shall be effective as soon as administratively
convenient after such anniversary date.
7
8.2 Rights After Termination of Participation. Participants who elect to
terminate participation in the Plan but before eligibility for Retirement
will be entitled to the same benefits as a Participant who ceases to be an
Employee as described in Section 4.6.
ARTICLE IX
TERMINATIONS, AMENDMENTS, MODIFICATION OR
SUPPLEMENT OF PLAN
9.1 Termination, Amendment, Etc. The Bank reserves the right to terminate,
amend, modify or supplement this Plan, wholly or partially, and from time
to time, at any time. The Bank likewise reserves the right to terminate,
amend, modify, or supplement any Plan Agreement, wholly or partially, from
time to time. Such right to terminate, amen, modify, or supplement this
Plan or any Plan Agreement shall be exercised for the Bank by the
Committee; provided, however, that:
(a) No action to terminate this Plan or a Plan Agreement shall be taken
except upon written notice to each Participant to be affected thereby,
which notice shall be given not less than 30 days prior to such
action; and
(b) The Committee shall take no action to terminate this Plan or a Plan
Agreement with respect to a Participant or his or her Beneficiary
after the payment of any benefit has commenced in accordance with
Article III or Article IV but has not been completed.
9.2 Rights and Obligations Upon Termination. Upon the termination of this Plan
or any Plan Agreement, by either the Committee or a Participant in
accordance with the provisions for such termination, neither this Plan nor
the Plan Agreement shall be of any further force and effect, and no party
shall have any further obligation under either this Plan or any Plan
Agreement so terminated except as may be provided for in Section 4.6 or the
preceding provisions of this Article IX.
ARTICLE X
OTHER BENEFITS AND AGREEMENTS
The benefits provided for a Participant and his or her Beneficiary hereunder and
under such Participant's Plan Agreement are in addition to any other benefits
available to such Participant under any other program or plan of the Bank for
its Employees, and, except as may otherwise be expressly provided for, this Plan
and Plan Agreements entered into hereunder shall supplement and shall not
supersede, modify, or amend any other program or plan of the Bank or a
Participant. Moreover, benefits under this Plan and Plan Agreements entered into
hereunder shall not be considered compensation for the purpose of computing
deferrals or benefits under any plan maintained by the Bank that is qualified
under Section 401 (a) of the Internal Revenue Code of 1954, as amended.
ARTICLE XI
RESTRICTIONS ON ALIENATION OF BENEFITS
No right or benefit under this Plan or a Plan Agreement shall be subject to
anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and
any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge
the same shall be void. No right or benefit hereunder or under any Plan
Agreement shall in any manner be liable for or subject to the debts, contract,
8
liabilities, or torts of the person entitled to such benefit. If any Participant
or Beneficiary under this Plan or a Plan Agreement should become bankrupt or
attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge any
right to a benefit hereunder or under any Plan Agreement, then such right or
benefit shall, in the discretion of the Committee, terminate, and, in such
event, the Committee shall hold or apply the same or any part thereof for the
benefit of such Participant or Beneficiary, his or her spouse, children, or
other dependents, or any of them, in such manner and in such portion as the
Committee, in its sole and absolute discretion, may deem proper.
ARTICLE XII
ADMINISTRATION OF THIS PLAN
12.1 Appointment of Committee. The general administration of this Plan, and any
Plan Agreements executed hereunder, as well as construction and
interpretation thereof, shall be vested in the Committee, the number and
members of which shall be designated and appointed from time to time by,
and shall serve at the pleasure of, the Board of Directors. Any such member
of the Committee may resign by notice in writing filed with the secretary
of the Committee. Vacancies shall be filled promptly by the Board of
Directors, but any vacancies remaining unfilled for ninety days may be
filled by a majority vote of the remaining members of the Committee. Each
person appointed a member of the Committee shall signify his or her
acceptance by filing a written acceptance with the Secretary of the
Committee.
12.2 Committee Officials. The board of Directors shall designate one of the
members of the Committee as chairman and shall appoint a secretary who need
not be a member of the Committee. The Secretary shall keep minutes of the
Committee's proceedings and all data, records and documents relating to the
Committee's administration of this Plan and any Plan Agreements executed
hereunder. The Committee may appoint from its number such subcommittees
with such powers as the Committee shall determine and may authorize one or
more of its members or any agent to execute or deliver any instrument or
make any payment on behalf of the Committee.
12.3 Committee Action. All resolutions or other actions taken by the Committee
shall be by the vote of a majority of those present at a meeting at which a
majority of the members are present, or in writing by all the members at
the time in office if they act without a meeting.
12.4 Committee Rules and Powers - General. Subject to the provisions of this
Plan, the Committee shall from time to time establish rules, forms, and
procedures for the administration of this Plan. Such decisions, actions,
and records of the Committee shall be conclusive and binding upon the Bank
and all persons having or claiming to have any right or interest in or
under this Plan.
12.5 Reliance on Certificate, etc.. The members of the Committee and the
officers and Employees of the Bank shall be entitled to rely on all
certificates and reports made by any duly appointed accountants, and on all
opinions given by any duly appointed legal counsel. Such legal counsel may
be counsel for the Bank.
12.6 Liability of Committee. No member of the Committee shall be liable for any
act or omission of any other member of the Committee, or for any act or
omission on his or her own part, excepting only his or her own willful
misconduct. The Bank shall indemnify and save harmless each member of the
Committee against any and all expenses and liabilities arising out of his
or her membership on the Committee, excepting only expenses and liabilities
arising out of his or her own willful misconduct. Expenses against which a
9
member of the Committee shall be indemnified hereunder shall include,
without limitation, the amount of any settlement or judgment, costs,
counsel fees and related charges reasonably incurred in connection with a
claim asserted or a proceeding brought or settlement thereof. The foregoing
right of indemnification shall be in addition to any other rights to which
any such member may be entitled as a matter of law.
12.7 Determination of Benefits. In addition to the powers hereinabove specified,
the Committee shall have the power to compute and certify, under this Plan
and any Plan Agreement, the amount and kind of benefits from time to time
payable to Participants and their Beneficiaries, and to authorize all
disbursements for such purposes.
12.8 Information to Committee. To enable the Committee to perform its functions,
the Bank shall supply full and timely information to the Committee on all
matters relating to the compensation of all Participants, their retirement,
death or other cause for termination of employment, and such other
pertinent facts as the Committee may require.
12.9 Manner and time of Payment of Benefits. The Committee shall have the power,
in its sole and absolute discretion, to change the manner and time of
payment of benefits to be made to a Participant or his or her Beneficiary
from that set forth in the Participant's Plan Agreement if requested to do
so by such Participant or Beneficiary.
ARTICLE XIII
ADOPTION OF PLAN BY SUBSIDIARY, PARENT
AFFILIATED OR ASSOCIATED COMPANIES
Any corporation that is a Subsidiary or Parent may, with the approval of the
Board of Directors, adopt this Plan and thereby come within the definition of
Bank in Article I hereof.
ARTICLE XIV
REORGANIZATION
In the event the Bank shall be merged, consolidated, reorganized, or
substantially sells all of its assets to another corporation, firm, or person
and such corporation, firm, or person takes such action to terminate this Plan,
the Participants will be entitled to a minimum of a benefit payable at the
earlier of (i) the Participant's death or (ii) attainment of his or her Early
Retirement Date or (iii) at the time said Employee ceases his or her
relationship or the Plan is terminated if such date is later than his or her
Early Retirement Date. Said Benefit shall be determined by improving the
Participant's deferrals by the Moody's Average Corporate Bond Rate as compounded
on an annual basis with such amounts being computed from the date of entry to
the termination date of Participant and/or the termination of the Plan. This
resulting amount payable in one hundred and eighty (180) installments will
continue to be improved by the Moody's Average Corporate Bond Rate as compounded
on an annual basis at the time of the termination of Participant and/or the
termination of the Plan until the Benefit is completed and will be the only
benefit to which such Participant is entitled.
ARTICLE XV
MISCELLANEOUS
15.1 Execution of Receipts and Releases. Any payment to any Participant, a
Participant's legal representative, or Beneficiary in accordance with the
10
provisions of this Plan or Plan Agreement executed hereunder shall, to the
extent thereof, be in full satisfaction of all claims hereunder against the
Bank. The Bank may require such Participant, legal representative, or
Beneficiary, as a condition precedent to such payment, to execute a receipt
and release therefore in such form as it may determine.
15.2 No Guarantee of Interests. Neither the Committee nor any of its members
guarantees the payment of any amounts which may be or become due to any
person or entity under this Plan or any Plan Agreement executed hereunder.
The liability of the Bank to make any payment under this Plan or any Plan
Agreement executed hereunder is limited to the then available assets of the
Bank.
15.3 Bank Records. Records of the Bank as to a Participant's employment,
termination of employment and the reason therefore authorized leaves of
absence, and compensation shall be conclusive on all persons and entities,
unless determined to be incorrect.
15.4 Evidence. Evidence required of anyone under this Plan and any Plan
Agreement executed hereunder may be by certificate, affidavit, document, or
other information which the person or entity acting on it considers
pertinent and reliable, and signed, made, or presented by the proper party
or parties.
15.5 Notice. Any notice which shall be or may be given under this Plan or a Plan
Agreement executed hereunder shall be in writing and shall be mailed by
United States mail, postage prepaid. If notice is to be given to the Bank,
such notice shall be addressed to the Bank at:
The Peoples Bank & Trust Company
Box 709
Tupelo, MS 38802-0709
marked to the attention of the Secretary, Administrative Committee,
Deferred Compensation Plan; or, if notice to a Participant, addressed to
the address shown on such Participant's Plan Agreement.
15.6 Change of Address. Any party may, from time to time, change the address to
which notices shall be mailed by giving written notice of such new address.
15.7 Effect of Provisions. The provisions of this Plan and of any Plan Agreement
executed hereunder shall be binding upon the Bank and its successors and
assigns, and upon a Participant, his or her Beneficiary, assigns, heirs,
executors, and administrators.
15.8 Headings. The titles and headings of Articles and Sections are included for
convenience of reference only and are not to be considered in the
construction of the provisions hereof or any Plan Agreement executed
hereunder.
15.9 Governing Law. All questions arising with respect to this Plan and any Plan
Agreement executed hereunder shall be determined by reference to the laws
of the State of Mississippi, as in effect at the time of their adoption and
execution, respectively.
COMPLETE
11
Ehhibit 10.3
DIRECTORS'
DEFERRED FEE PLAN
OF
THE PEOPLES BANK & TRUST COMPANY
DIRECTORS' DEFERRED FEE PLAN
THE PEOPLES BANK & TRUST COMPANY
TABLE OF CONTENTS
Article Subject Page
I Definitions and Construction 1
II Eligibility and Participation 3
III Death Benefit 3
IV Retirement Benefit 4
V Beneficiary 6
VI Source of Benefits 6
VII Termination of Relationship 7
VIII Termination of Participation 7
IX Termination, Amendment,
Modification, or Supplement
of Plan 7
X Other Benefits and Agreements 8
XI Restrictions on Alienation
of Benefits 8
XII Administration of the Plan 8
XIII Adoption of Plan by Subsidiary,
Parent, Affiliated or Associated
Companies 10
XIV Reorganization 10
XV Miscellaneous 10
Plan Agreement I-1
DIRECTORS'
DEFERRED FEE PLAN
OF
THE PEOPLES BANK & TRUST COMPANY
PURPOSE AND EFFECTIVE DATE
The purpose of the Directors' Deferred Fee Plan of The Peoples Bank & Trust
Company is to provide specified benefits to Directors who contribute materially
to the continued growth, development and future business success of The Peoples
Bank & Trust Company. It is the intention of The Peoples Bank & Trust Company
that this program and the individual plans established hereunder be administered
as unfunded welfare benefit plans established for Directors of the Bank. The
effective date of this Plan is December 31, 1985.
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 Definitions. For purpose of this Plan, the following phrases or terms shall
have the following indicated meanings unless otherwise clearly apparent
from the context:
(a) "Beneficiary" shall mean the person, persons, or estate of a
Participant, entitled to receive any benefits subsequent to the death
of a Participant under a Plan Agreement entered into in accordance
with the terms of this Plan.
(b) "Beneficiary Designation" shall mean the form of written agreement,
attached hereto as Annex II, by which the Participant names the
Beneficiary(ies) of the Plan.
(c) "Board of Directors" shall mean the Board of Directors of The Peoples
Bank & Trust Company unless otherwise indicated or the context
otherwise requires.
(d) "Committee" shall mean the Administrative Committee appointed to
manage and administer the Plan and individual Plan Agreements in
accordance with the provisions of Article XII hereof.
(e) "Bank" shall mean The Peoples Bank & Trust Company and any Subsidiary
and Parent that duly adopts the Plan as provided in Article XIII
hereof. Where the context dictates, the term "Bank" as used herein
refers to the particular Bank that has entered into a Plan Agreement
with a particular Participant.
(f) "Moody's Average Corporate Bond Rate" shall mean the Monthly Average
of the Composite Yield on Seasoned Corporate Bonds as published by
Moody's Investors Services, Inc. or its successor as stated for the
month of October preceding December 31 of each year. Such rate as it
applies to the provisions of this Plan shall than be used for one
year.
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If the above mentioned "Monthly Average" is no longer published, a
substantially similar average will be used.
(g) "Early Retirement Date" shall be the date of a Participant's
Retirement prior to his or her Normal Retirement Date which may occur
on the first day of any month following the month in which the
Participant attains his or her fifty-fifth (55th) birthday, has
completed ten (10) years of service on the Board, and has been a
Participant in the Plan for four (4) full years.
(h) "Director" shall mean any person who is associated as a Director with
the Bank.
(i) "Normal Retirement Date" shall be March 31 following the Participant's
attaining his or her seventy second (72nd) birthday and the
Participant has completed four (4) continuous full years in the Plan.
(j) "Participant" shall mean a Director who is selected and elects to
participate in the Plan through the execution of a Plan Agreement in
accordance with the provisions of Article II.
(k) "Plan" shall mean the Directors' Deferred Fee Plan of The Peoples Bank
& Trust Company as amended from time to time.
(l) "Plan Agreement" shall mean the form of written agreement, attached
hereto as Annex I, which is entered into from time to time by and
between the Bank and a Director selected to become a Participant as a
condition to participation in the Plan. Each Plan Agreement executed
by a Participant shall provide for the entire estimated benefit to
which such Participant is entitled under the Plan, and the Plan
Agreement bearing the latest date shall govern such entitlement.
(m) "Retirement" and "Retire" shall mean severance of relationship with
the Bank at or after the attainment of his or her Normal Retirement
Date or, with the consent of the Bank, on or after the Early
Retirement Date.
(n) "Subsidiary" shall mean any business organization in which The Peoples
Bank & Trust Company, directly or indirectly, owns an interest,
excluding ownership interests The Peoples Bank & Trust Company may
hold in their fiduciary capacities as trustee or otherwise, and any
other business organization that the Board of Directors designates as
a Subsidiary for purposes of this Plan.
(o) "Parent" shall mean The Peoples Holding Company.
1.2 Construction. The masculine gender when used herein shall be deemed to
include the feminine gender, and the singular may include the plural unless
the context clearly indicates to the contrary. The words "hereof",
"herein", "hereunder", and other similar compounds of the word "here" shall
mean and refer to the entire Plan and not to any particular provision or
section. Whenever the words "Article" or "Section" are used in this Plan,
or a cross-reference to an "Article" or "Section" is made, the Article or
Section referred to shall be an Article or Section of this Plan unless
otherwise specified.
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ARTICLE II
ELIGIBILITY AND PARTICIPATION
2.1 Eligibility. In order to be eligible for participation in the Plan, a
Director must be selected by the Committee in the year preceding the year
in which the Director is eligible to participate and in each succeeding
year thereafter as hereinafter provided. The Committee, in its sole and
absolute discretion, shall determine eligibility for participation in
accordance with the purposes of the Plan.
2.2 Participation. After being selected by the Committee to participate in this
Plan, a Director shall, as a condition precedent to participation herein,
complete and return to the Committee a duly executed Plan Agreement
electing to participate herein and agreeing to the terms and conditions
thereof, and by the execution of such Plan Agreement a Participant shall
agree that all amounts deferred thereby shall be irrevocably deferred and
that in lieu thereof the Participant shall be entitled solely to the
benefits provided under this Plan. Such Plan Agreement shall be completed
and returned to the committee at the time specified thereby, but in no
event subsequent to December 31st of the year preceding the year to which
the Plan Agreement relates.
ARTICLE III
DEATH BENEFIT
3.1. Amount and Payment of Death Benefit. If a Participant dies before
Retirement and the Plan is in effect at that time, the Bank will pay or
cause to be paid a Death Benefit to such Participant's Beneficiary. The
said Death Benefit shall be paid monthly for the next one hundred and
eighty (180) months as set forth in the Plan Agreement. Such payments shall
commence effective the first day of the month following the date of death.
Notwithstanding the immediately preceding paragraph of this Section 3.1,
the Bank will pay or cause to be paid the Death Benefit specified therein
only if:
(a) At the time of the Participant's death prior to attaining his or her
Normal Retirement Date, such Participant was a Director and had not
Retired, and all required deferrals required to be made by such
Participant under Sections 3.2 et. seq. have been made,
(b) The Participant's Plan Agreement had been kept in force throughout the
period commencing on the date of such Plan Agreement and ending on the
date of his or her death; and
(c) The Participant's death was due to causes other than suicide within
two (2) years of the date of his or her original Plan Agreement or
within two (2) years of the date of any amendment to his or her Plan
Agreement or any subsequent Plan Agreement resulting from additional
Death Benefits granted; but the Participant's suicide shall relieve
the Bank only of its obligation to pay that portion of the Death
Benefit that was granted within two (2) years prior to the date of
such suicide; and
(d) The Participant's death is determined not to be from a bodily or
mental cause or causes, information about which was withheld, or
knowingly concealed, or falsely provided by the Participant when
requested by the Bank to furnish evidence of good health upon the
Participant's enrolling in the Plan or upon an application for an
increase in Death Benefits; and
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(e) Proof of death in such form as determined acceptable by the Committee
is furnished.
3.2 Amount of Participant Deferral. Each Participant shall defer an amount of
his or her compensation in such amounts and at such times as shall be
determined by the Committee, and the Committee may change the amount of
such deferral in connection with changes in the level of participation
selected by a Participant. A Participant's obligation to defer an amount of
his or her compensation in accordance with this Section 3.2, shall commence
on the date his or her Plan Agreement becomes effective, and shall continue
thereafter during the term of his or her Plan Agreement or until the
earlier of such Participant's death, Retirement, or attainment of his or
her Normal Retirement Date. A Participant shall have the right to increase
or decrease the amount of his or her participation initially selected by
him or her by amending his or her Plan Agreement in accordance with the
rules adopted by the Committee for this purpose.
3.3 Time and Manner of Deferring or Making Payments. A Participant shall, in
his or her Plan Agreement, authorize the Bank to defer an amount of such
Participant's compensation equal to the amount specified pursuant to
Section 3.2.
3.4 Participant Deferrals - Use and Forfeitability. The amount of each
Participant's compensation deferred pursuant to Sections 3.2 and 3.3 shall
be and remain solely the property of the Bank, and a Participant shall have
no right thereto, nor shall the Bank be obligated to use such amounts in
any specific manner. Except as provided in Article IV, if a Participant's
death occurs under circumstances other than those specified in Section 3.1,
no benefit shall be payable hereunder or under his or her Plan Agreement to
his or her Beneficiary or any other person or entity on his or her behalf,
and any payments made by such Participant under Sections 3.2 and 3.3 shall
be forfeited.
ARTICLE IV
RETIREMENT BENEFIT
4.1 Normal Retirement. If a Participant has remained a Director until his or
her Normal Retirement Date and shall then retire, and if the Plan and his
or her Plan Agreement have been kept in force, the Bank shall pay or cause
to be paid to such Participant, as a Retirement Benefit (herein so called),
the amount per month specified as a Retirement Benefit. Payment of such
monthly amount shall commence on the Participant's Normal Retirement Date
and shall continue for one hundred and eighty (180) months. If such
Participant shall die before receiving one hundred and eighty (180)
payments, the Retirement Benefit will be continued to the Participant's
Beneficiary as set forth in the Beneficiary Designation until the balance
of the one hundred and eighty (180) payments have been made.
The amount of the Retirement Benefit will be determined by multiplying the
total deferrals made by Participant times 130% of the Moody's Average
Corporate Bond Rate as compounded on an annual basis until Participant's
Normal Retirement. That result will then be improved by 130% of the Moody's
Average Corporate Bond Rate being used at the time of Normal Retirement as
compounded on an annual basis until the time the Retirement Benefit is
completed.
4.2 Early Retirement. The Committee, in its sole and absolute discretion, may
permit a Participant to receive an Early Retirement Benefit commencing as
of the first day of any month coincident with or following the
Participant's Early Retirement Date, but before the attainment of his or
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her Normal Retirement Date. In such event, the Participant's monthly Early
Retirement Benefit shall be the amount accumulated on behalf of the
Participant as set forth in Section 4.1, with such amount being calculated
from the date of entry until Participant's Early Retirement Date. The
amount will be improved by 130% of the Moody's Average Corporate Bond Rate
as compounded on an annual basis being used at the time of Early Retirement
and will be payable in one hundred and eighty (180) installments and shall
be the only benefit to which such Participant is entitled. If Participant
shall die before receiving one hundred and eighty (180) installments after
commencement of the Early Retirement Benefit, said amount will be continued
to Participant's Beneficiary as set forth in the Beneficiary Designation
until the balance of one hundred and eighty (180) payments have been made.
4.3 Post Retirement Death Benefit. If a Participant dies after Retirement but
before the applicable Retirement Benefit is paid in full, the unpaid
Retirement Benefit payments to which such Participant is entitled shall
continue and be paid to that Participant's Beneficiary. Such payments shall
be made in accordance with the payment schedule to that Participant
pursuant to Sections 4.1 and 4.2 of the Plan.
4.4 Exclusivity of Post Retirement Death Benefit. No Death Benefit as defined
in Article III shall be paid to the Beneficiary of a Participant who dies
after retirement.
4.5 Accrual of Retirement Benefit. A Participant who ceases to be a Director,
except as a result of death or retirement shall not be entitled to any
benefits hereunder and the Bank shall have no obligation hereunder to such
Participant, except as outlined in Section 4.6.
4.6 Deferred Termination Benefit. A Participant who ceases to be a Director
shall receive a termination benefit upon the earlier of (i) the
Participant's death or (ii) attainment of his or her Early Retirement Date
or (iii) at the time said Director ceases his or her relationship if such
date is later than his or her Early Retirement Date. Said benefit shall be
determined by improving the Participant's deferrals by the Moody's Average
Corporate Bond Rate as compounded on an annual basis if said Participant
has been a Director for less than ten (10) years or if the relationship is
discontinued for cause and by 130% of the Moody's Average Corporate Bond
Rate as compounded on an annual basis if said Participant has been a
Director for ten (10) or more years with such amounts being computed from
the date of entry to the termination date of Participant.
For those Participants whose relationship is terminated other than for
cause the resulting vested amount payable in one hundred and eighty (180)
installments will then be improved by the Moody's Average Corporate Bond
Rate as compounded on an annual basis being used at the time Participant
ceases to be a Director until the completion of payment of the vested
amount and will be the only benefit to which such Participant is entitled.
For those Participants whose relationship is terminated for cause, the
resulting vested amount will be divided by one hundred and eighty (180) and
such amount will be paid in one hundred and eighty (180) installments and
will be the only benefit to which such Participant is entitled.
If Participant shall die before receiving one hundred and eighty (180)
installments of said amount, the amount will be continued to Participant's
Beneficiary as set forth in the Beneficiary Designation until the balance
of one hundred and eighty (180) payments have been made.
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For those Participants who have been Directors for ten (10) or more years,
who cease his or her relationship other than for cause, and who die before
benefits have been initiated, the Participant's Beneficiary as set forth in
the Beneficiary Designation will receive the greater of the above mentioned
accrued benefits as of the date of death or the Death Benefit as described
in Article III.
ARTICLE V
BENEFICIARY
A Participant shall designate his or her Beneficiary to receive benefits under
the Plan and his or her Plan Agreement by completing the Beneficiary
Designation. If more than one Beneficiary is named, the shares and/or precedence
of each Beneficiary shall be indicated. A Participant shall have the right to
change the Beneficiary by submitting to the Committee a new Beneficiary
Designation. The Beneficiary Designation must be approved in writing by the
Bank; however, upon the Bank's acknowledgment of approval, the effective date of
the Beneficiary Designation shall be the date it was executed by the
Participant. If the Bank has any doubt as to the proper Beneficiary to receive
payments hereunder, it shall have the right to withhold such payments until the
matter is finally adjudicated. Any payment made by the Bank in good faith and in
accordance with the provisions of this Plan and a Participant's Plan Agreement
and Beneficiary Designation shall fully discharge the Bank from all further
obligations with respect to such payment.
ARTICLE VI
SOURCE OF BENEFITS
6.1 Benefits Payable from General Assets. Amounts payable hereunder shall be
paid exclusively from the general assets of the Bank, and no person
entitled to payment hereunder shall have any claim, right, security
interest, or other interest in any fund, trust, account, or other asset of
the Bank that may be looked to for such payment. The Bank's liability for
the payment of benefits hereunder shall be evidenced only by this Plan and
each Plan Agreement entered into between the Bank and a Participant.
6.2 Investments to Facilitate Payment of Benefits. Although the Bank is not
obligated to invest in any specific asset or fund in order to provide the
means for the payment of any liabilities under this Plan, the Bank may
elect to do so and, in such event, no Participant shall have any interest
whatever in such asset or fund. As a condition precedent to the Bank's
obligation to provide any benefits, including incremental increases in
benefits, under this Plan, the Participant shall, if so requested by the
Bank, provide evidence of insurability at standard and other rates, in such
amounts, and with such insurance carrier or carriers as the Bank may
require, including the results and reports of previous Bank and other
insurance carrier physical examinations, taking such additional physical
examinations as the Bank may request, and taking any other action that the
Bank may request. If a Participant is requested to and does not or cannot
provide evidence of insurability as specified in the immediately preceding
sentence, then the Bank shall have no further obligation to such
Participant under this Plan, and such Participant's Plan Agreement shall
terminate, except as to benefits previously granted. Notwithstanding the
foregoing, if a Participant cannot provide evidence of insurability at
standard rates or for the amounts initially contemplated in connection with
his or her participation in the Plan, the Bank may, at its discretion,
permit the Participant to participate herein for such benefits and upon
such deferral of his or her compensation as the Bank may, in its sole
discretion, deem appropriate.
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6.3 Bank Obligation. The Bank shall have no obligation of any nature whatsoever
to a Participant under this Plan or a Participant's Plan Agreement, except
otherwise expressly provided herein and in such Plan Agreement.
6.4 Withholding of Information, Etc. If, in connection with a Participant's
enrolling in or applying for incremental benefit increases under the Plan,
the Bank requests the Participant to furnish evidence of insurability, the
Participant dies, and it is determined that the Participant withheld,
knowingly concealed, or knowingly provided false information about the
bodily or mental condition or conditions that caused the Participant's
death, the Bank shall have no obligation to provide the benefits contracted
for on the basis of such withholding, concealment, or false information.
ARTICLE VII
TERMINATION OF RELATIONSHIP
Neither this Plan nor a Participant's Plan Agreement, either singly or
collectively, in any way obligate the Bank to continue the relationship of a
Participant with the Bank nor does either limit the right of the Bank at any
time and for any reason to terminate the Participant's relationship. Termination
of a Participant's relationship with the Bank for any reason, whether by action
of the Bank, shall immediately terminate his or her participation in this Plan
and his or her Plan Agreement, and all further obligations of either party
thereunder, except as may be provided in Section 4.6. In no event shall this
Plan or a Plan Agreement, either singly or collectively, by their terms or
implications constitute an employment contract of any nature whatsoever between
the Bank and a Participant.
ARTICLE VIII
TERMINATION OF PARTICIPATION
8.1 Termination of Participation - General. A Participant reserves the right to
terminate his or her participation in this Plan and his or her Plan
Agreement at his or her election at any time by giving the Committee
written notice of such termination not less than 30 days prior to an
anniversary date of the date of execution of his or her Plan Agreement. A
Participant's termination shall be effective as soon as administratively
convenient after such anniversary date.
8.2 Rights After Termination of Participation. Participants who elect to
terminate participation in the Plan but before eligibility for Retirement
will be entitled to the same benefits as a Participant who ceases to be a
Director as described in Section 4.6.
ARTICLE IX
TERMINATIONS, AMENDMENTS, MODIFICATION OR
SUPPLEMENT OF PLAN
9.1 Termination, Amendment, Etc. The Bank reserves the right to terminate,
amend, modify or supplement this Plan, wholly or partially, and from time
to time, at any time. The Bank likewise reserves the right to terminate,
amend, modify, or supplement any Plan Agreement, wholly or partially, from
time to time. Such right to terminate, amen, modify, or supplement this
Plan or any Plan Agreement shall be exercised for the Bank by the
Committee; provided, however, that:
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(a) No action to terminate this Plan or a Plan Agreement shall be taken
except upon written notice to each Participant to be affected thereby,
which notice shall be given not less than 30 days prior to such
action; and
(b) The Committee shall take no action to terminate this Plan or a Plan
Agreement with respect to a Participant or his or her Beneficiary
after the payment of any benefit has commenced in accordance with
Article III or Article IV but has not been completed.
9.2 Rights and Obligations Upon Termination. Upon the termination of this Plan
or any Plan Agreement, by either the Committee or a Participant in
accordance with the provisions for such termination, neither this Plan nor
the Plan Agreement shall be of any further force and effect, and no party
shall have any further obligation under either this Plan or any Plan
Agreement so terminated except as may be provided for in Section 4.6 or the
preceding provisions of this Article IX.
ARTICLE X
OTHER BENEFITS AND AGREEMENTS
The benefits provided for a Participant and his or her Beneficiary hereunder and
under such Participant's Plan Agreement are in addition to any other benefits
available to such Participant under any other program or plan of the Bank for
its Directors, and, except as may otherwise be expressly provided for, this Plan
and Plan Agreements entered into hereunder shall supplement and shall not
supersede, modify, or amend any other program or plan of the Bank or a
Participant. Moreover, benefits under this Plan and Plan Agreements entered into
hereunder shall not be considered compensation for the purpose of computing
deferrals or benefits under any plan maintained by the Bank that is qualified
under Section 401 (a) of the Internal Revenue Code of 1954, as amended.
ARTICLE XI
RESTRICTIONS ON ALIENATION OF BENEFITS
No right or benefit under this Plan or a Plan Agreement shall be subject to
anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and
any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge
the same shall be void. No right or benefit hereunder or under any Plan
Agreement shall in any manner be liable for or subject to the debts, contract,
liabilities, or torts of the person entitled to such benefit. If any Participant
or Beneficiary under this Plan or a Plan Agreement should become bankrupt or
attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge any
right to a benefit hereunder or under any Plan Agreement, then such right or
benefit shall, in the discretion of the Committee, terminate, and, in such
event, the Committee shall hold or apply the same or any part thereof for the
benefit of such Participant or Beneficiary, his or her spouse, children, or
other dependents, or any of them, in such manner and in such portion as the
Committee, in its sole and absolute discretion, may deem proper.
ARTICLE XII
ADMINISTRATION OF THIS PLAN
12.1 Appointment of Committee. The general administration of this Plan, and any
Plan Agreements executed hereunder, as well as construction and
interpretation thereof, shall be vested in the Committee, the number and
members of which shall be designated and appointed from time to time by,
and shall serve at the pleasure of, the Board of Directors. Any such member
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of the Committee may resign by notice in writing filed with the secretary
of the Committee. Vacancies shall be filled promptly by the Board of
Directors, but any vacancies remaining unfilled for ninety days may be
filled by a majority vote of the remaining members of the Committee. Each
person appointed a member of the Committee shall signify his or her
acceptance by filing a written acceptance with the Secretary of the
Committee.
12.2 Committee Officials. The board of Directors shall designate one of the
members of the Committee as chairman and shall appoint a secretary who need
not be a member of the Committee. The Secretary shall keep minutes of the
Committee's proceedings and all data, records and documents relating to the
Committee's administration of this Plan and any Plan Agreements executed
hereunder. The Committee may appoint from its number such subcommittees
with such powers as the Committee shall determine and may authorize one or
more of its members or any agent to execute or deliver any instrument or
make any payment on behalf of the Committee.
12.3 Committee Action. All resolutions or other actions taken by the Committee
shall be by the vote of a majority of those present at a meeting at which a
majority of the members are present, or in writing by all the members at
the time in office if they act without a meeting.
12.4 Committee Rules and Powers - General. Subject to the provisions of this
Plan, the Committee shall from time to time establish rules, forms, and
procedures for the administration of this Plan. Such decisions, actions,
and records of the Committee shall be conclusive and binding upon the Bank
and all persons having or claiming to have any right or interest in or
under this Plan.
12.5 Reliance on Certificate, etc.. The members of the Committee and the
officers and directors of the Bank shall be entitled to rely on all
certificates and reports made by any duly appointed accountants, and on all
opinions given by any duly appointed legal counsel. Such legal counsel may
be counsel for the Bank.
12.6 Liability of Committee. No member of the Committee shall be liable for any
act or omission of any other member of the Committee, or for any act or
omission on his or her own part, excepting only his or her own willful
misconduct. The Bank shall indemnify and save harmless each member of the
Committee against any and all expenses and liabilities arising out of his
or her membership on the Committee, excepting only expenses and liabilities
arising out of his or her own willful misconduct. Expenses against which a
member of the Committee shall be indemnified hereunder shall include,
without limitation, the amount of any settlement or judgment, costs,
counsel fees and related charges reasonably incurred in connection with a
claim asserted or a proceeding brought or settlement thereof. The foregoing
right of indemnification shall be in addition to any other rights to which
any such member may be entitled as a matter of law.
12.7 Determination of Benefits. In addition to the powers hereinabove specified,
the Committee shall have the power to compute and certify, under this Plan
and any Plan Agreement, the amount and kind of benefits from time to time
payable to Participants and their Beneficiaries, and to authorize all
disbursements for such purposes.
12.8 Information to Committee. To enable the Committee to perform its functions,
the Bank shall supply full and timely information to the Committee on all
matters relating to the compensation of all Participants, their retirement,
death or other cause for termination of relationship, and such other
pertinent facts as the Committee may require.
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12.9 Manner and time of Payment of Benefits. The Committee shall have the power,
in its sole and absolute discretion, to change the manner and time of
payment of benefits to be made to a Participant or his or her Beneficiary
from that set forth in the Participant's Plan Agreement if requested to do
so by such Participant or Beneficiary.
ARTICLE XIII
ADOPTION OF PLAN BY SUBSIDIARY, PARENT
AFFILIATED OR ASSOCIATED COMPANIES
Any corporation that is a Subsidiary or Parent may, with the approval of the
Board of Directors, adopt this Plan and thereby come within the definition of
Bank in Article I hereof.
ARTICLE XIV
REORGANIZATION
In the event the Bank shall be merged, consolidated, reorganized, or
substantially sells all of its assets to another corporation, firm, or person
and such corporation, firm, or person takes such action to terminate this Plan,
the Participants will be entitled to a minimum of a benefit payable at the
earlier of (i) the Participant's death or (ii) attainment of his or her Early
Retirement Date or (iii) at the time said Director ceases his or her
relationship or the Plan is terminated if such date is later than his or her
Early Retirement Date. Said Benefit shall be determined by improving the
Participant's deferrals by 130% of the Moody's Average Corporate Bond Rate as
compounded on an annual basis with such amounts being computed from the date of
entry to the termination date of Participant and/or the termination of the Plan.
This resulting amount payable in one hundred and eighty (180) installments will
continue to be improved by 130% of the Moody's Average Corporate Bond Rate as
compounded on an annual basis at the time of the termination of Participant
and/or the termination of the Plan until the Benefit is completed and will be
the only benefit to which such Participant is entitled.
ARTICLE XV
MISCELLANEOUS
15.1 Execution of Receipts and Releases. Any payment to any Participant, a
Participant's legal representative, or Beneficiary in accordance with the
provisions of this Plan or Plan Agreement executed hereunder shall, to the
extent thereof, be in full satisfaction of all claims hereunder against the
Bank. The Bank may require such Participant, legal representative, or
Beneficiary, as a condition precedent to such payment, to execute a receipt
and release therefore in such form as it may determine.
15.2 No Guarantee of Interests. Neither the Committee nor any of its members
guarantees the payment of any amounts which may be or become due to any
person or entity under this Plan or any Plan Agreement executed hereunder.
The liability of the Bank to make any payment under this Plan or any Plan
Agreement executed hereunder is limited to the then available assets of the
Bank.
15.3 Bank Records. Records of the Bank as to a Participant's relationship,
termination of relationship and the reason therefore authorized leaves of
absence, and compensation shall be conclusive on all persons and entities,
unless determined to be incorrect.
15.4 Evidence. Evidence required of anyone under this Plan and any Plan
Agreement executed hereunder may be by certificate, affidavit, document, or
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other information which the person or entity acting on it considers
pertinent and reliable, and signed, made, or presented by the proper party
or parties.
15.5 Notice. Any notice which shall be or may be given under this Plan or a Plan
Agreement executed hereunder shall be in writing and shall be mailed by
United States mail, postage prepaid. If notice is to be given to the Bank,
such notice shall be addressed to the Bank at:
The Peoples Bank & Trust Company
Box 709
Tupelo, MS 38802-0709
marked to the attention of the Secretary, Administrative Committee,
Deferred Fee Plan; or, if notice to a Participant, addressed to the address
shown on such Participant's Plan Agreement.
15.6 Change of Address. Any party may, from time to time, change the address to
which notices shall be mailed by giving written notice of such new address.
15.7 Effect of Provisions. The provisions of this Plan and of any Plan Agreement
executed hereunder shall be binding upon the Bank and its successors and
assigns, and upon a Participant, his or her Beneficiary, assigns, heirs,
executors, and administrators.
15.8 Headings. The titles and headings of Articles and Sections are included for
convenience of reference only and are not to be considered in the
construction of the provisions hereof or any Plan Agreement executed
hereunder.
15.9 Governing Law. All questions arising with respect to this Plan and any Plan
Agreement executed hereunder shall be determined by reference to the laws
of the State of Mississippi, as in effect at the time of their adoption and
execution, respectively.
COMPLETE
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Exhibit 10.4
DIRECTORS'
DEFERRED FEE PLAN - B
OF
THE PEOPLES BANK & TRUST COMPANY
DIRECTORS' DEFERRED FEE PLAN - B
THE PEOPLES BANK & TRUST COMPANY
TABLE OF CONTENTS
Article Subject Page
I Definitions and Constructi 1
II Eligibility and Participation 2
III Death Benefit 3
IV Retirement Benefit 4
V Beneficiary 6
VI Source of Benefit 6
VII Termination of Relationship 7
VIII Termination of Participation 7
IX Termination, Amendment,
Modification, or Supplement
of Plan 7
X Other Benefits and Agreements 8
XI Restrictions on Alienation
of Benefits 8
XII Administration of the Plan 8
XIII Adoption of Plan by Subsidiary,
Parent, Affiliated or Associated
Companies 9
XIV Reorganization 10
XV Miscellaneous 10
Plan Agreement I-1
DEFERRED FEE PLAN - B
OF
THE PEOPLES BANK & TRUST COMPANY
PURPOSE AND EFFECTIVE DATE
The purpose of the Directors' Deferred Fee Plan - B of The Peoples Bank & Trust
Company is to provide specified benefits to Directors who contribute materially
to the continued growth, development and future business success of The Peoples
Bank & Trust Company. It is the intention of The Peoples Bank & Trust Company
that this program and the individual plans established hereunder be administered
as unfunded welfare benefit plans established for Directors of the Bank. The
effective date of this Plan is January 1, 1989.
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 Definitions. For purpose of this Plan, the following phrases or terms shall
have the following indicated meanings unless otherwise clearly apparent
from the context:
(a) "Beneficiary" shall mean the person, persons, or estate of a
Participant, entitled to receive any benefits subsequent to the death
of a Participant under a Plan Agreement entered into in accordance
with the terms of this Plan.
(b) "Beneficiary Designation" shall mean the form of written agreement,
attached hereto as Annex II, by which the Participant names the
Beneficiary(ies) of the Plan.
(c) "Board of Directors" shall mean the Board of Directors of The Peoples
Bank & Trust Company unless otherwise indicated or the context
otherwise requires.
(d) "Committee" shall mean the Administrative Committee appointed to
manage and administer the Plan and individual Plan Agreements in
accordance with the provisions of Article XII hereof.
(e) "Bank" shall mean The Peoples Bank & Trust Company and any Subsidiary
and Parent that duly adopts the Plan as provided in Article XIII
hereof. Where the context dictates, the term "Bank" as used herein
refers to the particular Bank that has entered into a Plan Agreement
with a particular Participant.
(f) "Moody's Average Corporate Bond Rate" shall mean the Monthly Average
of the Composite Yield on Seasoned Corporate Bonds as published by
Moody's Investors Services, Inc. or its successor as stated for the
month of October preceding December 31 of each year. Such rate as it
applies to the provisions of this Plan shall than be used for one
year.
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If the above mentioned "Monthly Average" is no longer published, a
substantially similar average will be used.
(g) "Early Retirement Date" shall be the date of a Participant's
Retirement prior to his or her Normal Retirement Date which may occur
on the first day of any month following the month in which the
Participant attains his or her fifty-fifth (55th) birthday, has
completed ten (10) years of service on the Board, and has been a
Participant in the Plan for four (4) full years.
(h) "Director" shall mean any person who is associated as a Director with
the Bank.
(i) "Normal Retirement Date" shall be March 31 following the Participant's
attaining his or her seventy second (72nd) birthday and the
Participant has completed ten (10) continuous full years in the Plan.
(j) "Participant" shall mean a Director who is selected and elects to
participate in the Plan through the execution of a Plan Agreement in
accordance with the provisions of Article II.
(k) "Plan" shall mean the Directors' Deferred Fee Plan - B of The Peoples
Bank & Trust Company as amended from time to time.
(l) "Plan Agreement" shall mean the form of written agreement, attached
hereto as Annex I, which is entered into from time to time by and
between the Bank and a Director selected to become a Participant as a
condition to participation in the Plan. Each Plan Agreement executed
by a Participant shall provide for the entire estimated benefit to
which such Participant is entitled under the Plan, and the Plan
Agreement bearing the latest date shall govern such entitlement.
(m) "Retirement" and "Retire" shall mean severance of relationship with
the Bank at or after the attainment of his or her Normal Retirement
Date or, with the consent of the Bank, on or after the Early
Retirement Date.
(n) "Subsidiary" shall mean any business organization in which The Peoples
Bank & Trust Company, directly or indirectly, owns an interest,
excluding ownership interests The Peoples Bank & Trust Company may
hold in their fiduciary capacities as trustee or otherwise, and any
other business organization that the Board of Directors designates as
a Subsidiary for purposes of this Plan.
(o) "Parent" shall mean The Peoples Holding Company.
1.2 Construction. The masculine gender when used herein shall be deemed to
include the feminine gender, and the singular may include the plural unless
the context clearly indicates to the contrary. The words "hereof",
"herein", "hereunder", and other similar compounds of the word "here" shall
mean and refer to the entire Plan and not to any particular provision or
section. Whenever the words "Article" or "Section" are used in this Plan,
or a cross-reference to an "Article" or "Section" is made, the Article or
Section referred to shall be an Article or Section of this Plan unless
otherwise specified.
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ARTICLE II
ELIGIBILITY AND PARTICIPATION
2.1 Eligibility. In order to be eligible for participation in the Plan, a
Director must be selected by the Committee in the year preceding the year
in which the Director is eligible to participate and in each succeeding
year thereafter as hereinafter provided. The Committee, in its sole and
absolute discretion, shall determine eligibility for participation in
accordance with the purposes of the Plan.
2.2 Participation. After being selected by the Committee to participate in this
Plan, a Director shall, as a condition precedent to participation herein,
complete and return to the Committee a duly executed Plan Agreement
electing to participate herein and agreeing to the terms and conditions
thereof, and by the execution of such Plan Agreement a Participant shall
agree that all amounts deferred thereby shall be irrevocably deferred and
that in lieu thereof the Participant shall be entitled solely to the
benefits provided under this Plan. Such Plan Agreement shall be completed
and returned to the committee at the time specified thereby, but in no
event subsequent to December 31st of the year preceding the year to which
the Plan Agreement relates.
ARTICLE III
DEATH BENEFIT
3.1. Amount and Payment of Death Benefit. If a Participant dies before
Retirement and the Plan is in effect at that time, the Bank will pay or
cause to be paid a Death Benefit to such Participant's Beneficiary. The
said Death Benefit shall be paid monthly for the next one hundred and
eighty (180) months as set forth in the Plan Agreement. Such payments shall
commence effective the first day of the month following the date of death.
Notwithstanding the immediately preceding paragraph of this Section 3.1,
the Bank will pay or cause to be paid the Death Benefit specified therein
only if:
(a) At the time of the Participant's death prior to attaining his or her
Normal Retirement Date, such Participant was a Director and had not
Retired, and all required deferrals required to be made by such
Participant under Sections 3.2 et. seq. have been made,
(b) The Participant's Plan Agreement had been kept in force throughout the
period commencing on the date of such Plan Agreement and ending on the
date of his or her death; and
(c) The Participant's death was due to causes other than suicide within
two (2) years of the date of his or her original Plan Agreement or
within two (2) years of the date of any amendment to his or her Plan
Agreement or any subsequent Plan Agreement resulting from additional
Death Benefits granted; but the Participant's suicide shall relieve
the Bank only of its obligation to pay that portion of the Death
Benefit that was granted within two (2) years prior to the date of
such suicide; and
(d) The Participant's death is determined not to be from a bodily or
mental cause or causes, information about which was withheld, or
knowingly concealed, or falsely provided by the Participant when
requested by the Bank to furnish evidence of good health upon the
Participant's enrolling in the Plan or upon an application for an
increase in Death Benefits; and
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(e) Proof of death in such form as determined acceptable by the Committee
is furnished.
3.2 Amount of Participant Deferral. Each Participant shall defer an amount of
his or her compensation in such amounts and at such times as shall be
determined by the Committee, and the Committee may change the amount of
such deferral in connection with changes in the level of participation
selected by a Participant. A Participant's obligation to defer an amount of
his or her compensation in accordance with this Section 3.2, shall commence
on the date his or her Plan Agreement becomes effective, and shall continue
thereafter during the term of his or her Plan Agreement or until the
earlier of such Participant's death, Retirement, or attainment of his or
her Normal Retirement Date. A Participant shall have the right to increase
or decrease the amount of his or her participation initially selected by
him or her by amending his or her Plan Agreement in accordance with the
rules adopted by the Committee for this purpose.
3.3 Time and Manner of Deferring or Making Payments. A Participant shall, in
his or her Plan Agreement, authorize the Bank to defer an amount of such
Participant's compensation equal to the amount specified pursuant to
Section 3.2.
3.4 Participant Deferrals - Use and Forfeitability. The amount of each
Participant's compensation deferred pursuant to Sections 3.2 and 3.3 shall
be and remain solely the property of the Bank, and a Participant shall have
no right thereto, nor shall the Bank be obligated to use such amounts in
any specific manner. Except as provided in Article IV, if a Participant's
death occurs under circumstances other than those specified in Section 3.1,
no benefit shall be payable hereunder or under his or her Plan Agreement to
his or her Beneficiary or any other person or entity on his or her behalf,
and any payments made by such Participant under Sections 3.2 and 3.3 shall
be forfeited.
ARTICLE IV
RETIREMENT BENEFIT
4.1 Normal Retirement. If a Participant has remained a Director until his or
her Normal Retirement Date and shall then retire, and if the Plan and his
or her Plan Agreement have been kept in force, the Bank shall pay or cause
to be paid to such Participant, as a Retirement Benefit (herein so called),
the amount per month specified as a Retirement Benefit. Payment of such
monthly amount shall commence on the Participant's Normal Retirement Date
and shall continue for one hundred and eighty (180) months. If such
Participant shall die before receiving one hundred and eighty (180)
payments, the Retirement Benefit will be continued to the Participant's
Beneficiary as set forth in the Beneficiary Designation until the balance
of the one hundred and eighty (180) payments have been made.
The amount of the Retirement Benefit will be determined by multiplying the
total deferrals made by Participant times the Moody's Average Corporate
Bond Rate as compounded on an annual basis until Participant's Normal
Retirement. That result will then be improved by the Moody's Average
Corporate Bond Rate being used at the time of Normal Retirement as
compounded on an annual basis until the time the Retirement Benefit is
completed.
4.2 Early Retirement. The Committee, in its sole and absolute discretion, may
permit a Participant to receive an Early Retirement Benefit commencing as
of the first day of any month coincident with or following the
Participant's Early Retirement Date, but before the attainment of his or
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her Normal Retirement Date. In such event, the Participant's monthly Early
Retirement Benefit shall be the amount accumulated on behalf of the
Participant as set forth in Section 4.1, with such amount being calculated
from the date of entry until Participant's Early Retirement Date. The
amount will be improved by the Moody's Average Corporate Bond Rate as
compounded on an annual basis being used at the time of Early Retirement
and will be payable in one hundred and eighty (180) installments and shall
be the only benefit to which such Participant is entitled. If Participant
shall die before receiving one hundred and eighty (180) installments after
commencement of the Early Retirement Benefit, said amount will be continued
to Participant's Beneficiary as set forth in the Beneficiary Designation
until the balance of one hundred and eighty (180) payments have been made.
4.3 Post Retirement Death Benefit. If a Participant dies after Retirement but
before the applicable Retirement Benefit is paid in full, the unpaid
Retirement Benefit payments to which such Participant is entitled shall
continue and be paid to that Participant's Beneficiary. Such payments shall
be made in accordance with the payment schedule to that Participant
pursuant to Sections 4.1 and 4.2 of the Plan.
4.4 Exclusivity of Post Retirement Death Benefit. No Death Benefit as defined
in Article III shall be paid to the Beneficiary of a Participant who dies
after retirement.
4.5 Accrual of Retirement Benefit. A Participant who ceases to be a Director,
except as a result of death or retirement shall not be entitled to any
benefits hereunder and the Bank shall have no obligation hereunder to such
Participant, except as outlined in Section 4.6.
4.6 Deferred Termination Benefit. A Participant who ceases to be a Director
shall receive a termination benefit upon the earlier of (i) the
Participant's death or (ii) attainment of his or her Early Retirement Date
or (iii) at the time said Director ceases his or her relationship if such
date is later than his or her Early Retirement Date. Said benefit shall be
determined by improving the Participant's deferrals by seventy five percent
(75%) of the Moody's Average Corporate Bond Rate as compounded on an annual
basis if said Participant has been a Director for less than ten (10) years
or if the relationship is discontinued for cause and by the Moody's Average
Corporate Bond Rate as compounded on an annual basis if said Participant
has been a Director for ten (10) or more years with such amounts being
computed from the date of entry to the termination date of Participant.
For those Participants whose relationship is terminated other than for
cause after ten (10) years of service, the resulting vested amount payable
in one hundred and eighty (180) installments will then be improved by the
Moody's Average Corporate Bond Rate as compounded on an annual basis being
used at the time Participant ceases to be a Director until the completion
of payment of the vested amount and will be the only benefit to which such
Participant is entitled.
For those Participants whose relationship is terminated other than for
cause with less than ten (10) years of service, the resulting vested amount
payable in one hundred and eighty (180) installments will then be improved
by seventy five percent (75%) of the Moody's Average Corporate Bond Rate as
compounded on an annual basis being used at the time Participant ceases to
be a Director until the completion of payment of the vested amount and will
be the only benefit to which such Participant is entitled.
For those Participants whose relationship is terminated for cause, the
resulting vested amount will be divided by one hundred and eighty (180) and
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such amount will be paid in one hundred and eighty (180) installments and
will be the only benefit to which such Participant is entitled.
If Participant shall die before receiving one hundred and eighty (180)
installments of said amount, the amount will be continued to Participant's
Beneficiary as set forth in the Beneficiary Designation until the balance
of one hundred and eighty (180) payments have been made.
For those Participants who have been Directors for ten (10) or more years,
who cease his or her relationship other than for cause, and who die before
benefits have been initiated, the Participant's Beneficiary as set forth in
the Beneficiary Designation will receive the greater of the above mentioned
accrued benefits as of the date of death or the Death Benefit as described
in Article III.
ARTICLE V
BENEFICIARY
A Participant shall designate his or her Beneficiary to receive benefits under
the Plan and his or her Plan Agreement by completing the Beneficiary
Designation. If more than one Beneficiary is named, the shares and/or precedence
of each Beneficiary shall be indicated. A Participant shall have the right to
change the Beneficiary by submitting to the Committee a new Beneficiary
Designation. The Beneficiary Designation must be approved in writing by the
Bank; however, upon the Bank's acknowledgment of approval, the effective date of
the Beneficiary Designation shall be the date it was executed by the
Participant. If the Bank has any doubt as to the proper Beneficiary to receive
payments hereunder, it shall have the right to withhold such payments until the
matter is finally adjudicated. Any payment made by the Bank in good faith and in
accordance with the provisions of this Plan and a Participant's Plan Agreement
and Beneficiary Designation shall fully discharge the Bank from all further
obligations with respect to such payment.
ARTICLE VI
SOURCE OF BENEFITS
6.1 Benefits Payable from General Assets. Amounts payable hereunder shall be
paid exclusively from the general assets of the Bank, and no person
entitled to payment hereunder shall have any claim, right, security
interest, or other interest in any fund, trust, account, or other asset of
the Bank that may be looked to for such payment. The Bank's liability for
the payment of benefits hereunder shall be evidenced only by this Plan and
each Plan Agreement entered into between the Bank and a Participant.
6.2 Investments to Facilitate Payment of Benefits. Although the Bank is not
obligated to invest in any specific asset or fund in order to provide the
means for the payment of any liabilities under this Plan, the Bank may
elect to do so and, in such event, no Participant shall have any interest
whatever in such asset or fund. As a condition precedent to the Bank's
obligation to provide any benefits, including incremental increases in
benefits, under this Plan, the Participant shall, if so requested by the
Bank, provide evidence of insurability at standard and other rates, in such
amounts, and with such insurance carrier or carriers as the Bank may
require, including the results and reports of previous Bank and other
insurance carrier physical examinations, taking such additional physical
examinations as the Bank may request, and taking any other action that the
Bank may request. If a Participant is requested to and does not or cannot
provide evidence of insurability as specified in the immediately preceding
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sentence, then the Bank shall have no further obligation to such
Participant under this Plan, and such Participant's Plan Agreement shall
terminate, except as to benefits previously granted. Notwithstanding the
foregoing, if a Participant cannot provide evidence of insurability at
standard rates or for the amounts initially contemplated in connection with
his or her participation in the Plan, the Bank may, at its discretion,
permit the Participant to participate herein for such benefits and upon
such deferral of his or her compensation as the Bank may, in its sole
discretion, deem appropriate.
6.3 Bank Obligation. The Bank shall have no obligation of any nature whatsoever
to a Participant under this Plan or a Participant's Plan Agreement, except
otherwise expressly provided herein and in such Plan Agreement.
6.4 Withholding of Information, Etc. If, in connection with a Participant's
enrolling in or applying for incremental benefit increases under the Plan,
the Bank requests the Participant to furnish evidence of insurability, the
Participant dies, and it is determined that the Participant withheld,
knowingly concealed, or knowingly provided false information about the
bodily or mental condition or conditions that caused the Participant's
death, the Bank shall have no obligation to provide the benefits contracted
for on the basis of such withholding, concealment, or false information.
ARTICLE VII
TERMINATION OF RELATIONSHIP
Neither this Plan nor a Participant's Plan Agreement, either singly or
collectively, in any way obligate the Bank to continue the relationship of a
Participant with the Bank nor does either limit the right of the Bank at any
time and for any reason to terminate the Participant's relationship. Termination
of a Participant's relationship with the Bank for any reason, whether by action
of the Bank, shall immediately terminate his or her participation in this Plan
and his or her Plan Agreement, and all further obligations of either party
thereunder, except as may be provided in Section 4.6. In no event shall this
Plan or a Plan Agreement, either singly or collectively, by their terms or
implications constitute an employment contract of any nature whatsoever between
the Bank and a Participant.
ARTICLE VIII
TERMINATION OF PARTICIPATION
8.1 Termination of Participation - General. A Participant reserves the right to
terminate his or her participation in this Plan and his or her Plan
Agreement at his or her election at any time by giving the Committee
written notice of such termination not less than 30 days prior to an
anniversary date of the date of execution of his or her Plan Agreement. A
Participant's termination shall be effective as soon as administratively
convenient after such anniversary date.
8.2 Rights After Termination of Participation. Participants who elect to
terminate participation in the Plan but before eligibility for Retirement
will be entitled to the same benefits as a Participant who ceases to be a
Director as described in Section 4.6.
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ARTICLE IX
TERMINATIONS, AMENDMENTS, MODIFICATION OR
SUPPLEMENT OF PLAN
9.1 Termination, Amendment, Etc. The Bank reserves the right to terminate,
amend, modify or supplement this Plan, wholly or partially, and from time
to time, at any time. The Bank likewise reserves the right to terminate,
amend, modify, or supplement any Plan Agreement, wholly or partially, from
time to time. Such right to terminate, amen, modify, or supplement this
Plan or any Plan Agreement shall be exercised for the Bank by the
Committee; provided, however, that:
(a) No action to terminate this Plan or a Plan Agreement shall be taken
except upon written notice to each Participant to be affected thereby,
which notice shall be given not less than 30 days prior to such
action; and
(b) The Committee shall take no action to terminate this Plan or a Plan
Agreement with respect to a Participant or his or her Beneficiary
after the payment of any benefit has commenced in accordance with
Article III or Article IV but has not been completed.
9.2 Rights and Obligations Upon Termination. Upon the termination of this Plan
or any Plan Agreement, by either the Committee or a Participant in
accordance with the provisions for such termination, neither this Plan nor
the Plan Agreement shall be of any further force and effect, and no party
shall have any further obligation under either this Plan or any Plan
Agreement so terminated except as may be provided for in Section 4.6 or the
preceding provisions of this Article IX.
ARTICLE X
OTHER BENEFITS AND AGREEMENTS
The benefits provided for a Participant and his or her Beneficiary hereunder and
under such Participant's Plan Agreement are in addition to any other benefits
available to such Participant under any other program or plan of the Bank for
its Directors, and, except as may otherwise be expressly provided for, this Plan
and Plan Agreements entered into hereunder shall supplement and shall not
supersede, modify, or amend any other program or plan of the Bank or a
Participant. Moreover, benefits under this Plan and Plan Agreements entered into
hereunder shall not be considered compensation for the purpose of computing
deferrals or benefits under any plan maintained by the Bank that is qualified
under Section 401 (a) of the Internal Revenue Code of 1954, as amended.
ARTICLE XI
RESTRICTIONS ON ALIENATION OF BENEFITS
No right or benefit under this Plan or a Plan Agreement shall be subject to
anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and
any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge
the same shall be void. No right or benefit hereunder or under any Plan
Agreement shall in any manner be liable for or subject to the debts, contract,
liabilities, or torts of the person entitled to such benefit. If any Participant
or Beneficiary under this Plan or a Plan Agreement should become bankrupt or
attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge any
right to a benefit hereunder or under any Plan Agreement, then such right or
benefit shall, in the discretion of the Committee, terminate, and, in such
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event, the Committee shall hold or apply the same or any part thereof for the
benefit of such Participant or Beneficiary, his or her spouse, children, or
other dependents, or any of them, in such manner and in such portion as the
Committee, in its sole and absolute discretion, may deem proper.
ARTICLE XII
ADMINISTRATION OF THIS PLAN
12.1 Appointment of Committee. The general administration of this Plan, and any
Plan Agreements executed hereunder, as well as construction and
interpretation thereof, shall be vested in the Committee, the number and
members of which shall be designated and appointed from time to time by,
and shall serve at the pleasure of, the Board of Directors. Any such member
of the Committee may resign by notice in writing filed with the secretary
of the Committee. Vacancies shall be filled promptly by the Board of
Directors, but any vacancies remaining unfilled for ninety days may be
filled by a majority vote of the remaining members of the Committee. Each
person appointed a member of the Committee shall signify his or her
acceptance by filing a written acceptance with the Secretary of the
Committee.
12.2 Committee Officials. The board of Directors shall designate one of the
members of the Committee as chairman and shall appoint a secretary who need
not be a member of the Committee. The Secretary shall keep minutes of the
Committee's proceedings and all data, records and documents relating to the
Committee's administration of this Plan and any Plan Agreements executed
hereunder. The Committee may appoint from its number such subcommittees
with such powers as the Committee shall determine and may authorize one or
more of its members or any agent to execute or deliver any instrument or
make any payment on behalf of the Committee.
12.3 Committee Action. All resolutions or other actions taken by the Committee
shall be by the vote of a majority of those present at a meeting at which a
majority of the members are present, or in writing by all the members at
the time in office if they act without a meeting.
12.4 Committee Rules and Powers - General. Subject to the provisions of this
Plan, the Committee shall from time to time establish rules, forms, and
procedures for the administration of this Plan. Such decisions, actions,
and records of the Committee shall be conclusive and binding upon the Bank
and all persons having or claiming to have any right or interest in or
under this Plan.
12.5 Reliance on Certificate, etc.. The members of the Committee and the
officers and directors of the Bank shall be entitled to rely on all
certificates and reports made by any duly appointed accountants, and on all
opinions given by any duly appointed legal counsel. Such legal counsel may
be counsel for the Bank.
12.6 Liability of Committee. No member of the Committee shall be liable for any
act or omission of any other member of the Committee, or for any act or
omission on his or her own part, excepting only his or her own willful
misconduct. The Bank shall indemnify and save harmless each member of the
Committee against any and all expenses and liabilities arising out of his
or her membership on the Committee, excepting only expenses and liabilities
arising out of his or her own willful misconduct. Expenses against which a
member of the Committee shall be indemnified hereunder shall include,
without limitation, the amount of any settlement or judgment, costs,
counsel fees and related charges reasonably incurred in connection with a
claim asserted or a proceeding brought or settlement thereof. The foregoing
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right of indemnification shall be in addition to any other rights to which
any such member may be entitled as a matter of law.
12.7 Determination of Benefits. In addition to the powers hereinabove specified,
the Committee shall have the power to compute and certify, under this Plan
and any Plan Agreement, the amount and kind of benefits from time to time
payable to Participants and their Beneficiaries, and to authorize all
disbursements for such purposes.
12.8 Information to Committee. To enable the Committee to perform its functions,
the Bank shall supply full and timely information to the Committee on all
matters relating to the compensation of all Participants, their retirement,
death or other cause for termination of relationship, and such other
pertinent facts as the Committee may require.
12.9 Manner and time of Payment of Benefits. The Committee shall have the power,
in its sole and absolute discretion, to change the manner and time of
payment of benefits to be made to a Participant or his or her Beneficiary
from that set forth in the Participant's Plan Agreement if requested to do
so by such Participant or Beneficiary.
ARTICLE XIII
ADOPTION OF PLAN BY SUBSIDIARY, PARENT
AFFILIATED OR ASSOCIATED COMPANIES
Any corporation that is a Subsidiary or Parent may, with the approval of the
Board of Directors, adopt this Plan and thereby come within the definition of
Bank in Article I hereof.
ARTICLE XIV
REORGANIZATION
In the event the Bank shall be merged, consolidated, reorganized, or
substantially sells all of its assets to another corporation, firm, or person
and such corporation, firm, or person takes such action to terminate this Plan,
the Participants will be entitled to a minimum of a benefit payable at the
earlier of (i) the Participant's death or (ii) attainment of his or her Early
Retirement Date or (iii) at the time said Director ceases his or her
relationship or the Plan is terminated if such date is later than his or her
Early Retirement Date. Said Benefit shall be determined by improving the
Participant's deferrals by the Moody's Average Corporate Bond Rate as compounded
on an annual basis with such amounts being computed from the date of entry to
the termination date of Participant and/or the termination of the Plan. This
resulting amount payable in one hundred and eighty (180) installments will
continue to be improved by the Moody's Average Corporate Bond Rate as compounded
on an annual basis at the time of the termination of Participant and/or the
termination of the Plan until the Benefit is completed and will be the only
benefit to which such Participant is entitled.
ARTICLE XV
MISCELLANEOUS
15.1 Execution of Receipts and Releases. Any payment to any Participant, a
Participant's legal representative, or Beneficiary in accordance with the
provisions of this Plan or Plan Agreement executed hereunder shall, to the
extent thereof, be in full satisfaction of all claims hereunder against the
Bank. The Bank may require such Participant, legal representative, or
Beneficiary, as a condition precedent to such payment, to execute a receipt
and release therefore in such form as it may determine.
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15.2 No Guarantee of Interests. Neither the Committee nor any of its members
guarantees the payment of any amounts which may be or become due to any
person or entity under this Plan or any Plan Agreement executed hereunder.
The liability of the Bank to make any payment under this Plan or any Plan
Agreement executed hereunder is limited to the then available assets of the
Bank.
15.3 Bank Records. Records of the Bank as to a Participant's relationship,
termination of relationship and the reason therefore authorized leaves of
absence, and compensation shall be conclusive on all persons and entities,
unless determined to be incorrect.
15.4 Evidence. Evidence required of anyone under this Plan and any Plan
Agreement executed hereunder may be by certificate, affidavit, document, or
other information which the person or entity acting on it considers
pertinent and reliable, and signed, made, or presented by the proper party
or parties.
15.5 Notice. Any notice which shall be or may be given under this Plan or a Plan
Agreement executed hereunder shall be in writing and shall be mailed by
United States mail, postage prepaid. If notice is to be given to the Bank,
such notice shall be addressed to the Bank at:
The Peoples Bank & Trust Company
Box 709
Tupelo, MS 38802-0709
marked to the attention of the Secretary, Administrative Committee,
Deferred Fee Plan; or, if notice to a Participant, addressed to the address
shown on such Participant's Plan Agreement.
15.6 Change of Address. Any party may, from time to time, change the address to
which notices shall be mailed by giving written notice of such new address.
15.7 Effect of Provisions. The provisions of this Plan and of any Plan Agreement
executed hereunder shall be binding upon the Bank and its successors and
assigns, and upon a Participant, his or her Beneficiary, assigns, heirs,
executors, and administrators.
15.8 Headings. The titles and headings of Articles and Sections are included for
convenience of reference only and are not to be considered in the
construction of the provisions hereof or any Plan Agreement executed
hereunder.
15.9 Governing Law. All questions arising with respect to this Plan and any Plan
Agreement executed hereunder shall be determined by reference to the laws
of the State of Mississippi, as in effect at the time of their adoption and
execution, respectively.
COMPLETE
11
Exhibit 10.5
THE PEOPLES HOLDING COMPANY
EMPLOYMENT AGREEMENT
This Agreement ("Agreement") has been entered into this lst day of January,
2001, by and between The Peoples Holding Company ("Company"), and Edward R.
McGraw, an individual ("Executive").
RECITALS
The Board of Directors of the Company ("Board") has determined that it is in the
best interest of the Company and its stockholders to reinforce and encourage the
continued attention and dedication of the Executive to the Company as a member
of management of the Company or as a member of management of a subsidiary of the
Company, and to assure that the Company will have the continued dedication of
the Executive, notwithstanding the possibility, threat, or occurrence of a
Change in Control (as defined below) of the Company. The Board believes that it
is imperative to diminish the inevitable distraction of the Executive by virtue
of the personal uncertainties and risks created by a pending or threatened
Change in Control and to encourage the Executive's full attention and dedication
to the Company or a subsidiary currently and in the event of any threatened or
pending Change in Control which ensures that the compensation and benefit
expectations of the Executive will be satisfied and which are competitive with
those of other corporations. Therefore, in order to accomplish these objectives,
the Board has caused the Company to enter into this Agreement.
IT IS AGREED AS FOLLOWS:
Section 1: Definitions and Construction.
1.1 Definitions. For purposes of this Agreement, the following words and
phrases, whether or not capitalized, shall have the meaning specified below
unless the context plainly requires a different meaning.
(a) "Board" means the Board of Directors of the Company.
(b) "Change in Control" means any liquidation, dissolution, consolidation
or merger of the Company in which the Company is not a continuing or
surviving corporation.
(c) "Change in Control Date" shall mean the date of the change in control.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Company" means The Peoples Holding Company, a Mississippi
Corporation, for the purpose of determining if a change in control has
occurred. For the purpose of an employment relationship, it includes
any subsidiary or successor of The Peoples Holding Company.
(f) "Effective Date" shall mean January 1, 2001. .
(g) "Exchange Act" means the Securities and Exchange Act of 1934, as
amended.
(h) "Person" means any "person" within the meaning of Sec.13(d) and 14(d)
of the Exchange Act.
(i) "Term" means the period that begins on the effective date and ends on
the anniversary of the effective date, unless prior thereto a Change
in Control shall have occurred. This contract shall automatically
renew for additional one- (1) year terms unless either party shall
give the other party at least ninety (90) days' advance written notice
of said party's intention not to renew said contract; provided,
however, the Company shall not be able to give notice of its intention
not to renew the contract following a Change in Control or if it is
involved in any negotiations, whether formal or informal, that may
result in a Change in Control.
1.2 Headings. All headings herein are included solely for ease of reference and
do not bear on the interpretation of the text. Accordingly, as used herein,
the terms "Article" and "Section" mean the text that accompanies the
specified Article or Section hereof.
1.3 Applicable Law. This agreement shall be governed by and construed in
accordance with the laws of the State of Mississippi without reference to
its conflicts of law principles.
Section 2: Terms and Conditions of Employment.
2.1 Severance Benefits. In order to induce the Executive to remain in the
employ of the Company and in consideration of the Executive's agreeing to
remain in the employ of the Company, subject to the terms and conditions
set forth herein, this Agreement sets forth the severance benefits which
the Company agrees will be provided to the Executive in the event the
Executive's employment with the Company is terminated subsequent to a
Change in Control under the circumstances described herein.
2.2 Positions and Duties. Prior to the receipt of benefits under this
Agreement, the Executive shall serve as an officer of the Company or of a
subsidiary thereof, subject to the reasonable directions of the Board.
During the term of this Agreement, Executive agrees that Executive will not
voluntarily leave the employ of the Company except as may be provided
hereunder. Any violation of this Section 2.2 by the Executive prior to a
Change in Control shall result in a termination hereof, and the Executive
shall have no other liability hereunder for such action. In consideration
of this, the Company agrees that following a Change in Control, the
Executive's authority, duties and responsibilities shall be at least
commensurate in all material respects with those assigned to, or held and
exercised by, the Executive immediately preceding the date on which a
Change in Control occurs. Notwithstanding the foregoing, the Company may
terminate the Executive's employment at any time, subject to providing the
benefits hereinafter specified and in accordance with the terms hereof.
Nothing contained herein shall require the surviving corporation to use the
designation of Chief Executive Officer and/or President.
2.3 Situs of Employment. Following a Change in Control, the new entity shall
make a good faith effort to provide the Executive with the type and kind of
employment described herein at the location where the Executive was
providing his services prior to the Change of Control. Nothing contained
herein shall require the Executive to move and will give the Executive the
authority to receive the benefits provided to him under this contract if he
does not elect to move. 2.4 Compensation.
(a) Annual Base Salary. The Annual Base Salary ("Annual Base Salary")shall
be an amount equal to the salary the Executive was receiving during
the month immediately preceding a Change in Control computed on an
annualized basis.
(b) Incentive Bonuses. Incentive Bonuses ("Incentive Bonus") shall mean
any bonuses provided through any incentive compensation plan, subject
to the provisions of such plan.
(c) Welfare Benefit Plans. Welfare benefit plans shall mean practices,
policies and programs provided by the Company (including, without
limitation, medical, prescription, dental, disability, salary
continuance, employee life, group life, accidental death and travel
accident insurance plans and programs), subject to the provision of
such welfare benefit plans.
Section 3: Termination of Employment.
3.1 Death. The Executive's employment shall terminate automatically upon the
Executive's death during the Term of this Agreement and prior to a
termination of employment by the Executive.
3.2 Disability. Following a Change in Control, if the Company determines in
good faith that a Disability of the Executive has occurred (pursuant to the
definition of Disability set forth below), the Company may give to the
Executive written notice in accordance with Section 7.1 of the intention of
the Company to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the
thirtieth (30th) day after receipt of such notice by the Executive (the
"Disability Effective Date"), provided that, within the thirty (30) days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean that the Executive has been unable to perform the
services required of the Executive hereunder on a full-time basis for a
period of one hundred-eighty (180) consecutive business days by reason of a
physical and/or mental condition. "Disability" shall be deemed to exist
when certified by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably). The
Executive will submit to such medical or psychiatric examinations and tests
as such physician deems necessary to make any such Disability
determination.
3.3 Termination for Cause. Following a Change in Control, the Company may
terminate the Executive's employment for "Cause," which shall mean
termination based upon: (a) the Executive's willful and continued failure
to perform the Executive's duties with the Company (other than as a result
of incapacity due to physical or mental condition), after a demand for
substantial performance is delivered to the Executive by the Chief
Executive Officer of the Company or the Chairman of the Board, which
specifically identifies the manner in which the Executive has not
substantially performed the Executive's duties, (b) the Executive's willful
commission of misconduct which is materially injurious to the Company,
monetarily or otherwise, or (c) the Executive's material breach of any
provision of this Agreement. For purposes of this paragraph, no act or
failure to act on the Executive's part shall be considered "willful" unless
done, or omitted to be done, without good faith and without reasonable
belief that the act or omission was in the best interests of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have
been terminated for Cause unless and until (a) the Executive receives a
notice of Termination (as defined in Section 3.5) from the Chief Executive
Officer of the Company or the Chairman of the Board, (b) the Executive is
given the opportunity, with counsel, to be heard before the Board, and (c)
the Board finds, in its good faith opinion, that the Executive was guilty
of the conduct set forth in the Notice of Termination.
3.4 Good Reason. Following a Change in Control, the Executive may terminate
employment with the Company for "Good Reason," which shall mean termination
based upon:
(a) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position, authority, duties or
responsibilities as contemplated by Section 2.2 or any other action by
the Company which results in a material diminution in such position,
authority, duties or responsibilities, excluding for this purpose any
action not taken in bad faith and which is remedied by the Company
promptly after notice thereof given by the Executive;
(b) (i) the failure by the Company to continue in effect any benefit or
compensation plan, stock ownership plan, life insurance plan, health
and accident plan or disability plan in which the Executive is
participating as specified in Section 2.4(b) or 2.4(c) or (ii) the
taking of any action by the Company which would adversely affect the
Executive's participation in,or materially reduce the Executive's
benefits under, any plans described in Section 2.4(b) or 2.4(c),or
deprive the Executive of any material fringe benefit enjoyed by the
Executive as described in Section 2.4(b) or 2.4(c);
(c) a material breach by the Company of any provision hereof;
(d) any termination by the Company of the Executive's employment otherwise
than as expressly permitted by this Agreement;
(e) within a period ending at the close of business on the date three (3)
years after the Change in Control Date, any failure by the Company to
comply with and satisfy Section 6.2 on or after the Change in Control
Date.
3.5 Notice of Termination. Any termination by the Company for Cause or
Disability, or by the Executive for Good Reason, shall be communicated by
Notice of Termination to the other party, given in accordance with Section
7.1. For purposes of this Agreement, a "notice of Termination" means a
written notice which (a) indicates the specific termination provision
herein relied upon, (b) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated,
and (c) if the Date of Termination (as defined below) is other than the
date of receipt of such notice, specifies the termination date (which date
shall be not more than thirty [30] days after the giving of such notice).
The failure by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company
hereunder or preclude the Executive or the Company from asserting such fact
or circumstance in enforcing the Executive's or the Company's rights
hereunder.
3.6 Date of Termination. "Date of Termination" means (a) if the Executive's
employment is terminated by the Company with or without Cause, or by the
Executive for Good Reason, the date of Termination shall be the date of
receipt of the Notice of Termination or any later date specified therein,
as the case may be, or (b) if the Executive's employment is terminated by
reason of death or Disability, the Date of Termination shall be the date of
death of the Executive or the Disability Effective Date, as the case may
be.
Section 4: Certain Benefits Upon Termination of Employment.
4.1 Termination after a Change in Control. If a Change in Control occurs during
the Term of this Agreement and within three (3) years after such Change in
Control, either the Company shall terminate the Executive's employment
without Cause, or the Executive shall terminate employment with the Company
for Good Reason, then the Executive shall be entitled to the benefits
provided below for the three year period after Change in Control or the
remaining portion of said three year period following the date of
termination.
(a) "Accrued Obligations": On the tenth (10th) business day following the
Date of Termination, the Company shall pay to the Executive the sum of
(i) the Executive's Annual Base Salary prorated through the Date of
Termination to the extent not previously paid, and (ii) any accrued
vacation pay to the extent not previously paid.
(b) "Severance Amount": The "Severance Amount" shall be an amount equal to
2.99 times the Executive's Annual Base Salary in effect on the
business day prior to the Date of Termination plus 2.99 times the
average annual incentive bonus for the two years prior to the Change
in Control. The Company shall set aside this amount in escrow for a
period of three years and the Escrow Agent shall pay to the Executive,
beginning on the tenth (10th) business day following the Date of
Termination, a monthly amount of one-thirty-sixth (1/36) of the
severance amount less any monthly W-2, Schedule C or Schedule F
earnings reportable on Internal Revenue Service Form 1040 which are
received by the Executive from his present employer or any future
employer or employers for a period of 36 months or until the earlier
exhaustion of the entire severance amount plus interest thereon. In
the event of the Executive's death after a termination for which a
"Severance Amount" is payable, the Escrow Agent shall continue to pay
to the Executive's spouse or other named beneficiary the remaining
obligation owed the Executive under the terms of this contract and the
Escrow Agreement. The Company may, however, at its option, elect to
pay the Severance Amount to the Executive, or in the event of his
death, his spouse or other named beneficiary, in the form of a
lump-sum cash payment on or before the date the first monthly payment
is due; or the Company, at its option, at anytime during the term of
the Escrow Agreement, can direct the Escrow Agent to pay the
Executive, the Executive's spouse, or named beneficiary, as the case
may be, the then remaining balance of the severance amount, plus any
accrued and accumulated interest thereon, in the form of a lump-sum
cash payment, and the rights and obligations of all parties under both
the Employment Agreement and Escrow Agreement shall be terminated.
In the event, subsequent to the Change in Control, the Executive
becomes an employee of any competing commercial bank, savings bank,
savings and loan association, or credit union ("financial
institution") in the defined market area of the Employer prior to the
Change in Control, then any obligation of the Employer under this
Section is terminated, and the Executive shall not be entitled to any
further benefits under this Agreement.
The severance amount set aside in escrow shall be invested according
to the provisions of the escrow agreement attached hereto as "Exhibit
A" and the interest earned included in the amount payable to the
Executive. Any severance amounts not paid to the Executive shall be
returned to the Company at the end of the 36-month escrow period, or
sooner should the Executive accept employment with a competing
"financial institution" as defined above. All interest earned on the
account shall be paid to the Executive following the final severance
payment.
(c) "Other Benefits": To the extent not previously provided, the Company
shall timely pay or provide to the Executive and/or the Executive's
family any other amounts or benefits including benefits from welfare
benefit plans required to be paid or provided for which the Executive
and/or the Executive's family is eligible to receive pursuant hereto
and under any plan, program, policy or practice or contract or
agreement of the Company as those provided generally to other peer
executives and their families during the ninety (90) day period
immediately preceding the Effective Date or, if more favorable to the
Executive, as those provided generally after the Effective Date to
other peer executives of the Company and their families.
(d) If termination of the Executive occurs less than three years after
such Change in Control, then the benefits provided by this Agreement
shall be pro rated on the ratio of the remaining portion of said three
year period to the full three year period following Change in Control.
(e) "Excess Parachute Payment": Anything herein to the contrary
notwithstanding, in the event that an independent accountant shall
determine that any payment or distribution by the Company to or for
the benefit of Executive (whether paid or payable or distributed or
distributable pursuant to the terms hereof or otherwise) (a "Payment")
would be nondeductible by the Company for Federal income tax purposes
because of Code Sec.280G or would constitute an "excess parachute
payment" (as defined in Code Sec.280G), then the aggregate present
value of amounts payable or distributable to or for the benefit of the
Executive pursuant hereto or pursuant to any other agreement with the
company because of the occurrence of a Change in Control (such
payments or distributions are hereinafter referred to as "Agreement
Payments") shall be reduced (but not below zero) to the Reduced
Amount. For purposes of this paragraph, the "Reduced Amount" shall be
an amount expressed in present value which maximizes the aggregate
present value of Agreement Payments without causing any payment to be
nondeductible by the Company because of Code Sec.280G or without
causing any portion of the Payment to be subject to the excise tax
imposed by Code Sec.4999.
If the independent accountant determines that any Payment would be
nondeductible by the Company because of Code Sec.280G or that any
portion of the Payment would be subject to the excise tax imposed by
Code Sec.4999, the Company shall promptly give Executive notice to
that effect. The Executive may then elect,in the Executive's sole
discretion, which and how much of the Agreement Payments shall be
eliminated or reduced (as long as after such election the aggregate
present value of the Agreement Payments equals the Reduced Amount, and
shall advise the Company in writing of the Executive's election within
ten (10) days after the Executive's receipt of such notice. If no such
election is made by the Executive within such ten-day period, the
Company may elect which and how much of the Agreement Payments shall
be eliminated or reduced (as long as after such election the aggregate
present value of the Agreement Payments equals the Reduced Amount) and
shall notify the Executive promptly of such election. For purposes of
this paragraph, present value shall be determined in accordance with
Code Sec. 280G(d)(4). All determinations made by the independent
accountant under this paragraph shall be binding upon the Company and
the Executive and shall be made within sixty (60) days of a
termination of employment of the Executive. As promptly as practicable
following such determination and the elections hereunder, the Company
shall pay to or distribute to or for the benefit of the Executive such
amounts as are then due to the Executive hereunder and shall promptly
pay to or distribute for the benefit of the Executive in the future
such amounts as become due to the Executive hereunder.
As a result of the uncertainty in the application of Code Sec.280G and
4999 at the time of the initial determination by the independent
accountant hereunder, it is possible that Agreement Payments will be
made by the Company which should not have been made ("Overpayment") or
that additional Agreement Payments which have not been made by the
Company should have been made ("Underpayment"), in each case,
consistent with the calculation of the Reduced Amount hereunder. In
the event that the independent accountant, based upon the assertion of
a deficiency by the Internal Revenue Service against the Company or
the Executive which the independent accountant believes has a high
probability of success, determines that an Overpayment has been made,
any such Overpayment shall be treated for all purposes as a loan to
the Executive which the Executive shall repay to the Company, together
with interest at the applicable Federal rate provided for in Code
Sec.7872(f)(2); provided, however, that no amount shall be payable by
the Executive to the Company if and to the extent such payment would
not reduce the amount which is subject to taxation under Code Sec.
4999 or if the period of limitations for assessment of tax under Code
Sec. 4999 against the Executive shall have expired. If the Executive
is required to repay an amount under this Section, the Executive shall
repay such amount over a period of time not to exceed one (1) year for
each twenty-five thousand dollars ($25,000) which the Executive must
repay to the Company. In the event that the independent accountant,
based upon controlling precedent, determines that an Underpayment has
occurred, any such Underpayment shall be promptly paid by the Company
to or for the benefit of the Executive together with interest at the
applicable Federal rate provided for in Code Sec 7872(f)(2)(A).
4.2 Death. If the Executive's employment is terminated by reason of the
Executive's death during the Term hereof (either prior or subsequent
to a Change in Control but prior to a termination of employment by the
Executive), this Agreement shall terminate without further obligation
to the Executive's legal representatives hereunder.
4.3 Disability. If the Executive's employment is terminated by reason of
the Executive's Disability during the Term hereof subsequent to a
Change in Control, this Agreement shall terminate without further
obligations to the Executive.
4.4 Termination for Cause; Executive's Termination Other Than for Good
Reason After a Change in Control. If the Executive's employment shall
be terminated for Cause during the Term hereof (either prior to or
subsequent to a Change in Control), this Agreement shall terminate
without further obligations to the Executive. If the Executive
terminates employment with the Company during the Term hereof (other
than for Good Reason after a Change in Control), this Agreement shall
terminate without further obligations to the Executive.
4.5 Non-Exclusivity of Rights. Nothing herein shall prevent or limit the
Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company and for which the Executive
may qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with
the Company. Amounts which are vested benefits of which the Executive
is otherwise entitled to receive under any plan, policy, practice or
program of , or any contract or agreement with, the Company at or
subsequent to the Date of Termination, shall be payable in accordance
with such plan, policy, practice or program or contract or agreement
except as explicitly modified by this Agreement.
4.6 Full Settlement. The Company's obligation to make the payments
provided for herein and otherwise to perform its obligations hereunder
shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have
against the Executive or others, other than for the repayment of any
debt owed the Company which is in default or to receive reimbursement
of funds determined to have been taken through malfeasance. In no
event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amount payable to
the Executive under any of the provisions hereof. The Company agrees,
only on and after a Change in Control Date, to pay promptly as
incurred all reasonable legal fees and expenses which the Executive
may reasonably incur as a result of any unsuccessful contest by the
Company or successful contest by the Executive, his heirs, agents or
attorneys-in-fact, of the validity or enforceability of, or liability
under, any provision hereof or any guarantee of performance thereof,
plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Code Sec.7872(f)(2)(A). If Executive
commits acts of malfeasance during his employment which result in the
conviction of said Executive of a crime, Executive shall be entitled
to no benefits under this agreement from and after the date of such
conviction.
4.7 Resolution of Disputes. If there shall be any dispute between the
Company and the Executive (a) in the event of any termination of the
Executive's employment by the Company, whether or not such termination
was for Cause, or (b) in the event of any termination of employment by
the Executive, whether Good Reason existed, then, the entire amount
payable under Section 4.1 of this agreement shall be held in escrow
until there is a final nonappealable judgment by a court of competent
jurisdiction. If said judgment declares that such termination was
without Cause or that the determination by the Executive of the
existence of Good Reason was made in good faith, the Escrow Agent
shall, only on and after a Change in Control Date, pay all amounts,
including any interest earned on any funds held in escrow, and provide
all benefits, to the Executive and/or the Executive's family or other
beneficiaries, as the case may be, that the Company would be required
to pay or provide pursuant to Section 4.1 as though such termination
were by the Company without Cause or by the Executive with Good
Reason. In the event, however, that the Company shall not be required
to pay any disputed amounts pursuant to this paragraph, such funds
shall be payable to the Company.
During the period of time the funds are held in escrow, the Escrow
Agent shall pay to the Executive, the Executive's spouse, or named
beneficiary, as the case may be, a monthly amount of 1/36 of the
severance amount less any monthly W-2, Schedule C or Schedule F
earnings reportable on Internal Revenue Service Form 1040 which are
received by the Executive from his present employer, or any future
employer or employers, until the earlier of 36 months or the
exhaustion of the entire severance amount plus interest thereon.
The severance amount set aside in escrow shall be invested according
to the provisions of the escrow agreement attached hereto as "Exhibit
A" and the interest earned included in the Amount payable to the
Executive.
As a condition of placing the severance amount in escrow, the
Executive shall execute an agreement which shall be binding on
Executive's spouse or other beneficiaries to repay all such amounts to
which the Executive is ultimately adjudged by such court not to be
entitled.
Section 5: Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company
and its or their respective businesses, which shall have been obtained
by the Executive during the Executive's employment by the Company and
which shall not be or become public knowledge (other than by acts of
the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of
the Company, or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. In no event
shall an asserted violation of the provisions of this Section
constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement.
Section 6: Successors.
6.1 Successors of Executive. This Agreement is personal to the Executive
and, without the prior written consent of the Company, shall not be
assignable by the Executive otherwise than by will or the laws of
descent and distribution. This Agreement shall inure to the benefit of
and be enforceable by the Executive's legal representatives.
6.2 Successors of Company. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required
to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement upon the effectiveness of any such
succession shall be a breach hereof and shall entitle the Executive to
terminate under the terms of the Agreement at the Executive's option
on or after the Change in Control for Good Reason. As used herein,
"Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
Section 7: Miscellaneous.
7.1 Notice. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified
or registered mail, return receipt requested,postage prepaid,
addressed to the respective addresses as set forth below; provided
that all notices to the Company shall be directed to the attention of
the Chairman of the Board of the Company with copies to the Chief
Executive Officer and the Secretary of the Company, or to such other
address as one party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be
effective only upon receipt.
Notice to Executive
Edward R. McGraw
2120 Applewood Street
Tupelo, MS 38804
Notice to Company:
The Peoples Holding Company
209 Troy Street
P. O. Box 709
Tupelo, MS 38802-0709
7.2 Validity. The invalidity or unenforceability of any provision hereof
shall not affect the validity or enforceability of any other portion
of this Agreement.
7.3 Withholding. The Company may withhold from any amounts payable
hereunder such federal, state, or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
7.4 Waiver. The Executive's or the Company's failure to insist upon a
strict compliance with any provision hereof or any other provision
hereof or the failure to assert any right the Executive or the Company
may have hereunder, including, without limitation,the right of the
Executive to terminate employment for Good Reason pursuant to Section
3.4 shall not be deemed to be a waiver of such provision or right or
any other provision or right hereof.
7.5 Effect on Other Employment Agreements. The terms hereof shall
supersede all other employment or other agreements with respect to
severance entered into by and between the Executive and the Company,
or the Executive and any other employer, and this Agreement shall
constitute the governing agreement pursuant to which the Company shall
have obligations to the Executive upon the termination of the
Executive's relationship with the Company or any subsidiary.
IN WITNESS WHEREOF, the Executive and the Company, pursuant to the authorization
from its Board, have caused this Agreement to be executed in its name on its
behalf,all as of the day and year first above written.
(s) E. Robinson McGraw
-----------------------------
EXECUTIVE
ATTEST THE PEOPLES HOLDING COMPANY
By (s) Martha Webb By (s) Robert C. Leake
-------------------- --------------------------
Secretary Chairman of the Board
EXHIBIT 99.1
STATEMENT OF THE CHIEF EXECUTIVE OFFICER AND THE CHIEF FINANCIAL OFFICER
OF THE PEOPLES HOLDING COMPANY
PURSUANT TO 18 U.S.C. SECTION 1350
Each of the undersigned hereby certifies in his capacity as an officer of The
Peoples Holding Company and its subsidiary (collectively the "Company") that
this Quarterly Report on Form 10-Q for the period ended September 30, 2002, as
filed with the Securities and Exchange Commission on the date hereof (this
"Report"), fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, and the information contained in this Report
fairly presents, in all material respects, the financial condition and results
of operations of the Company.
DATE: November 14, 2002 /s/ E. Robinson McGraw
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E. Robinson McGraw
Chief Executive Officer
DATE: November 14, 2002 /s/ Stuart R. Johnson
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Stuart R. Johnson
Chief Financial Officer