Exhibit 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
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THIS AGREEMENT, originally entered into the 31st day of December, 1996
(and as amended February 8, 1997), and effective February 1, 1997 (the
"Effective Date"), is hereby amended and restated this 19th day of August, 1997,
by and between Lexington First Federal Savings Bank (the "Bank") and Xxxxxx X.
Xxxxxx (the "Employee").
WHEREAS, the Employee has heretofore been employed by the Bank as its
President and is experienced in all phases of the business of the Bank; and
WHEREAS, the Board of Directors of the Bank (the "Board") believes it
is in the best interests of the Bank to enter into this Agreement with the
Employee in order to assure continuity of management of the Bank and to
reinforce and encourage the continued attention and dedication of the Employee
to his assigned duties; and
WHEREAS, the parties desire by this writing to set forth the continuing
employment relationship of the Bank and the Employee.
NOW, THEREFORE, it is AGREED as follows:
1. Defined Terms
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When used anywhere in this Agreement, the following terms shall have
the meaning set forth herein.
(a) "Change in Control" shall mean the
occurrence of a plan of reorganization, merger, consolidation, sale of all or
substantially all the assets of the Bank or the Company or similar transaction
in which the Bank or the Company is not the resulting entity.
(b) "Company" shall mean Community National
Corporation.
(c) "Code" shall mean the Internal Revenue Code
of 1986, as amended from time to time, and as interpreted through applicable
rulings and regulations in effect from time to time.
(d) "Code (S)280G Maximum" shall mean product
of 2.99 and his "base amount" as defined in Code (S)280G(b)(3).
(e) "Disability" shall mean a physical or
mental infirmity which impairs the Employee's ability to substantially perform
his duties under this Agreement and which results in the Employee becoming
eligible for long-term disability benefits under the Bank's defined benefit
retirement plan.
(f) "Good Reason" shall mean any of the
following events, which has not been consented to in advance by the Employee in
writing: (i) the requirement that the Employee move his personal residence, or
perform his principal executive functions, more than thirty (30) miles from his
primary office as of the later of the Effective Date and the most recent
voluntary relocation by the Employee; (ii) a material reduction in the
Employee's base compensation as the same may be increased from time to time,
unless part of an overall reduction applied to all senior management or agreed
to by the Employee.
(g) "Just Cause" shall mean, in the good faith
determination of the Bank's Board of Directors, the Employee's personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, willful violation
of any law, rule or regulation
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(other than traffic violations or similar offenses) or final cease-and-desist
order, or material breach of any provision of this Agreement. The Employee shall
have no right to receive compensation or other benefits for any period after
termination for Just Cause. No act, or failure to act, on the Employee's part
shall be considered "willful" unless he has acted, or failed to act, with an
absence of good faith and without a reasonable belief that his action or failure
to act was in the best interest of the Bank and the Company.
(h) "Protected Period" shall mean the period
that begins on the date six months before a Change in Control and ends on the
later of the first annual anniversary of the Change in Control or the expiration
date of this Agreement.
(i) "Trust" shall mean a grantor trust that is
designed in accordance with Revenue Procedure 92-64 and has a trustee
independent of the Bank and the Company.
2. Employment. The Employee is employed as the President of the
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Bank. The Employee shall render such administrative and management services for
the Bank as are currently rendered and as are customarily performed by persons
situated in a similar executive capacity. The Employee shall also promote, by
entertainment or otherwise, as and to the extent permitted by law, the business
of the Bank. The Employee's other duties shall be such as the Board may from
time to time reasonably direct, including normal duties as an officer of the
Bank.
3. Base Compensation. The Bank agrees to pay the Employee
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during the term of this Agreement a salary at the rate of $65,000 per annum,
payable in cash not less frequently than monthly. The Board shall review, not
less often than annually, the rate of the Employee's salary, and in its sole
discretion may decide to increase his salary, which salary shall, subject to
Board review and approval, be increased on an annual basis by an amount which is
at least equal to the annual average increase in the Consumer Price Index, as
published by the U.S. Department of Labor's Bureau of Labor Statistics for the
twelve months then most recently reported.
4. (a) Participation in Retirement, Medical and Other
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Plans. During the term of this Agreement, the Employee shall be eligible to
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participate in the same manner as all other employees of the Bank in all
benefits of the Bank.
(b) Employee Benefits; Expenses. The Employee shall be
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eligible to participate in any fringe benefits which are or may become available
to the Bank's senior management employees, including for example: any stock
option or incentive compensation plans, and any other benefits which are
commensurate with the responsibilities and functions to be performed by the
Employee under this Agreement. The Employee shall be reimbursed for all
reasonable out-of-pocket business expenses which he shall incur in connection
with his services under this Agreement upon substantiation of such expenses in
accordance with the policies of the Bank. Such expenses shall include (i) the
costs incurred by the Employee in moving the Employee and his family from
Waynesboro, Tennessee to Lexington, Tennessee, and (ii) reimbursement to the
Employee of the real estate commission (in an amount not to exceed 3% of the
sale price of his personal residence) in connection with the Employee's sale of
his personal residence in Waynesboro, Tennessee (which real estate commission
reimbursement shall be paid upon receipt of the closing statement of such sale).
5. Term. The Bank hereby employs the Employee, and the
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Employee hereby accepts such employment under this Agreement, for the period
commencing on the Effective Date and ending thirty-six months thereafter (or
such earlier date as is determined in accordance with Section 9). Additionally,
on each annual anniversary date from the Effective Date, the Employee's term of
employment may be extended for an additional one-year period beyond the then
effective expiration date if the Board determines in a duly adopted resolution
that the performance of the Employee has met the Board's requirements and
standards, and that this Agreement would then be extended upon such a
determination having been made. Only those members of the Board of Directors who
have no personal interest in this Employment Agreement shall discuss and vote on
the approval and subsequent review of this Agreement.
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6. Loyalty; Noncompetition.
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(a) During the period of his employment hereunder and
except for illnesses, reasonable vacation periods, and reasonable leaves of
absence, the Employee shall devote such adequate time, attention, skill, and
efforts as are required for the faithful performance of his duties hereunder;
provided, however, that the Employee may pursue personal business interests or
serve on the boards of directors of, and hold any other offices or positions in,
companies or organizations, which will not present any conflict of interest with
the Bank or any of its subsidiaries or affiliates, or have a substantial
negative effect on the performance of Employee's duties pursuant to this
Agreement, or violate any applicable statute or regulation. The Employee further
agrees to promptly reveal to other appropriate executives of the Bank all
matters coming to his attention pertaining to the business or interest of the
Bank. All data or information concerning the business activities of the Bank
which the Employee acquires or has acquired in connection with or as a result of
the performance of services for the Bank, whether under this agreement or prior
to the effective date of this agreement, shall be kept secret and confidential
by the Employee and shall be revealed only to the Bank unless otherwise
consents. This covenant of confidentiality shall extend beyond the term of this
Agreement and shall survive the termination of this Agreement for any reasons
but shall not restrict the Employee's employment with another like firm or
company so long as the confidentiality agreement is not breached.
(b) Nothing contained in this Section shall be deemed to
prevent or limit the Employee's right to invest in the capital stock or other
securities of any business dissimilar from that of the Bank, or, solely as a
passive or minority investor, in any business.
7. Standards. The Employee shall perform his duties under this
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Agreement in accordance with such reasonable standards as the Board may
establish from time to time. The Bank will provide Employee with the working
facilities and staff customary for similar executives and necessary for him to
perform his duties.
8. Vacation and Sick Leave. At such reasonable times as the
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Board shall in its discretion permit, the Employee shall be entitled, without
loss of pay, to absent himself voluntarily from the performance of his
employment under this Agreement, all such voluntary absences to count as
vacation time, provided that:
(a) The Employee shall be entitled to an annual vacation
in accordance with the policies that the Board periodically establishes for all
other employees of the Bank.
(b) In addition to the aforesaid paid vacations, the
Employee shall be entitled without loss of pay, to absent himself voluntarily
from the performance of his employment with the Bank for such additional periods
of time and for such valid and legitimate reasons as the Board may in its
discretion determine. Further, the Board may grant to the Employee a leave or
leaves of absence, with or without pay, at such time or times and upon such
terms and conditions as such Board in its discretion may determine.
(c) In addition, the Employee shall be entitled to an
annual sick leave benefit as established by the Board for all other employees of
the Bank.
9. Termination and Termination Pay. Subject to Sections 11 and
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12 hereof, the Employee's employment hereunder may be terminated under the
following circumstances:
(a) Death. The Employee's employment under this
Agreement shall terminate upon his death during the term of this Agreement, in
which event the Employee's estate shall be entitled to receive the compensation
due the Employee through the last day of the calendar month in which his death
occurred.
(b) Just Cause. The Board may, by written notice to the
Employee, immediately terminate his employment at any time, for Just Cause. The
Employee shall have no right to receive compensation or other benefits for any
period after termination for Just Cause.
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(c) Termination or Suspension Under Federal Law. (1) If
the Employee is removed and/or permanently prohibited from participating in the
conduct of the Bank's affairs by an order issued under Sections 8(e)(4) or
8(g)(1) of the Federal Deposit Insurance Act ("FDIA") (12 U.S.C. 1818(e)(4) and
(g)(1)), all obligations of the Bank under this Agreement shall terminate, as of
the effective date of the order, but vested rights of the parties shall not be
affected.
(1) If the Bank is in default (as defined in Section
3(x)(1) of FDIA), all obligations under this Agreement shall terminate as of the
date of default; however, this Paragraph shall not affect the vested rights of
the parties.
(2) All obligations under this Agreement shall
terminate, except to the extent that continuation of this Agreement is necessary
for the continued operation of the Bank: (i) by the Director of the Office of
Thrift Supervision ("Director of OTS"), or his or her designee, at the time that
the Federal Deposit Insurance Corporation ("FDIC") or the Resolution Trust
Corporation enters into an agreement to provide assistance to or on behalf of
the Bank under the authority contained in Section 13(c) of FDIA; or (ii) by the
Director of the OTS, or his or her designee, at the time that the Director of
the OTS, or his or her designee approves a supervisory merger to resolve
problems related to operation of the Bank or when the Bank is determined by the
Director of the OTS to be in an unsafe or unsound condition. Such action shall
not affect any vested rights of the parties.
(3) If a notice served under Section 8(e)(3) or (g)(1)
of the FDIA (12 U.S.C. 1818(e)(3) or (g)(1)) suspends and/or temporarily
prohibits the Employee from participating in the conduct of the Bank's affairs,
the Bank's obligations under this Agreement shall be suspended as of the date of
such service, unless stayed by appropriate proceedings. If the charges in the
notice are dismissed, the Bank may in its discretion (i) pay the Employee all or
part of the compensation withheld while its contract obligations were suspended,
and (ii) reinstate (in whole or in part) any of its obligations which were
suspended.
(4) Any payments made to the Employee pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with 12 U.S.C. Section 1828(k) and any regulations promulgated thereunder.
(d) Voluntary Termination by Employee. Subject to
Sections 11 and 12 hereof, the Employee may voluntarily terminate employment
with the Bank during the term of this Agreement, upon at least ninety (90) days'
prior written notice to the Board of Directors, in which case the Employee shall
receive only his compensation, vested rights and employee benefits up to the
date of his termination.
(e) Disability. (1) The Bank may terminate the
Employee's employment after having established the Employee's Disability, in
which event the Employee shall be entitled to the compensation and benefits
provided for under this Agreement for (i) any period during the term of this
Agreement and prior to the establishment of the Employee's Disability during
which the Employee is unable to work due to the physical or mental infirmity,
and (ii) any period of Disability which is prior to the Employee's termination
of employment pursuant to this Section 9(e).
(2) During any period that the Employee shall
receive disability benefits and to the extent that the Employee shall be
physically and mentally able to do so, he shall furnish such information,
assistance and documents so as to assist in the continued ongoing business of
the Bank and, if able, shall make himself available to the Bank to undertake
reasonable assignments consistent with his prior position and his physical and
mental health. The Bank shall pay all reasonable expenses incident to the
performance of any assignment given to the Employee during the disability
period.
(f) Without Just Cause; Constructive Discharge; Good
Reason. The Employee shall be entitled to receive the greater of $100,000 or the
salary provided pursuant to Section 3 hereof, up to the expiration date of this
Agreement, including any renewal term (the "Expiration Date") if he terminates
employment for one of the following reasons: (i) the Board, by written notice to
the Employee, immediately terminate his employment at any
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time for a reason other than his Disability or Just Cause, or (ii) the Employee
voluntarily terminates employment within 90 days of an event that constitutes
Good Reason.
10. No Mitigation. The Employee shall not be required to
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mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise and no such payment shall be offset or reduced by
the amount of any compensation or benefits provided to the Employee in any
subsequent employment.
11. Change in Control.
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(a) Trigger Events. The Employee shall be entitled to
collect the severance benefits set forth in Subsection (b) hereof in the event
that (i) there is a Change in Control as defined herein, or (ii) the Bank or the
Company or their successor(s) in interest terminate the Employee's employment
without his written consent and for any reason other than Just Cause during the
Protected Period, or the Employee resigns from his employment with the Bank for
Good Reason during the Protected Period, as defined herein.
(b) Amount of Severance Benefit. If the Employee becomes
entitled to collect severance benefits pursuant to Section 11(a) hereof:
(i) Upon the trigger event outlined in Section
11(a)(i) hereof occurring, the Bank shall pay the Employee a
benefit equal to $50,000, and
(ii) upon the trigger event outlined in Section
11(a)(ii) herein occurring, the Bank shall pay the Employee
a severance benefit equal to $100,000.
In the event that the Employee, the Bank, and the Company jointly agree
that the Employee has collected an amount exceeding the Code (S)280G Maximum,
the parties may agree in writing that such excess shall be treated as a loan ab
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initio which the Employee shall repay to the Bank, on terms and conditions
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mutually agreeable to the parties, together with interest at the applicable
federal rate provided for in Section 7872(f)(2)(B) of the Code.
(c) Funding of Grantor Trust upon Change in Control. Not
later than ten business days after a Change in Control, the Bank shall (i)
deposit in a Trust an amount equal to the severance benefit provided for in
Section 11(b), unless the Employee has previously provided a written release of
any claims under this Agreement, and (ii) provide the trustee of the Trust with
a written direction to hold said amount and any investment return thereon in a
segregated account for the benefit of the Employee, and to follow the procedures
set forth in the next paragraph as to the payment of such amounts from the
Trust. Upon the later of the Trust's final payment of all amounts due under the
following paragraph or the date fifteen months after the Change in Control, the
trustee of the Trust shall pay to the Bank the entire balance remaining in the
segregated account maintained for the benefit of the Employee. The Employee
shall thereafter have no further interest in the Trust.
During the 15-consecutive month period after a Change in Control, the
Employee may provide the trustee of the Trust with a written notice requesting
that the trustee pay to the Employee an amount designated in the notice as being
payable pursuant to this Agreement. Within three business days after receiving
said notice, the trustee of the Trust shall send a copy of the notice to the
Bank via overnight and registered mail return receipt requested. On the tenth
(10th) business day after mailing said notice to the Bank, the trustee of the
Trust shall pay the Employee the amount designated therein in immediately
available funds, unless prior thereto the Bank provides the trustee with a
written notice directing the trustee to withhold such payment. In the latter
event, the trustee shall submit the dispute to non-appealable binding
arbitration for a determination of the amount payable to the Employee pursuant
to this Agreement, and the costs of such arbitration shall be paid by the Bank.
The trustee shall choose the arbitrator to settle the dispute, and such
arbitrator shall be bound by the rules of the American Arbitration Association
in making his determination. The parties and the trustee shall be bound by the
results of the arbitration and, within 3 days of the determination by the
arbitrator, the trustee shall pay from the Trust the amounts required to be paid
to the Employee
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and/or the Bank, and in no event shall the trustee be liable to either party for
making the payments as determined by the arbitrator.
12. Indemnification. The Bank agrees that its Bylaws shall
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continue to provide for indemnification of directors, officers, employees and
agents of the Bank, including the Employee during the full term of this
Agreement, and to at all times provide adequate insurance for such purposes.
13. Reimbursement of Employee for Enforcement Proceedings. In
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the event that any dispute arises between the Employee and the Bank as to the
terms or interpretation of this Agreement, whether instituted by formal legal
proceedings or otherwise, including any action that the Employee takes to defend
against any action taken by the Bank or the Company, the Employee shall be
reimbursed for all costs and expenses, including reasonable attor neys' fees,
arising from such dispute, proceedings or actions, provided that the Employee
obtains either a written settlement or a final judgement by a court of competent
jurisdiction substantially in his favor. Such reimbursement shall be paid within
ten (10) days of Employee's furnishing to the Bank written evidence, which may
be in the form, among other things, of a canceled check or receipt, of any costs
or expenses incurred by the Employee.
14. Federal Income Tax Withholding. The Bank may withhold all
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federal and state income or other taxes from any benefit payable under this
Agreement as shall be required pursuant to any law or government regulation or
ruling.
15. Successors and Assigns.
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(a) Bank. This Agreement shall not be assignable by the
Bank, provided that this Agreement shall inure to the benefit of and be binding
upon any corporate or other successor of the Bank which shall acquire, directly
or indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank. The Bank agrees that it
will not merge or consolidate with any other corporation or organization, or
permit its business activities to be taken over by any other organization,
unless and until the succeeding or continuing corporation or other organization
shall expressly assume the rights and obligations of the Bank herein set forth.
The Bank further agrees that it will not cease its business activities or
terminate its existence, other than as heretofore set forth in this paragraph,
without having made adequate provision for the fulfillment of its obligation
hereunder.
(b) Employee. Since the Bank is contracting for the
unique and personal skills of the Employee, the Employee shall be precluded from
assigning or delegating his rights or duties hereunder without first obtaining
the written consent of the Bank; provided, however, that nothing in this
paragraph shall preclude (i) the Employee from designating a beneficiary to
receive any benefit payable hereunder upon his death, or (ii) the executors,
administrators, or other legal representatives of the Employee or his estate
from assigning any rights hereunder to the person or persons entitled thereunto.
(c) Attachment. Except as required by law, no right to
receive payments under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge, or
hypothecation or to exclusion, attachment, levy or similar process or assignment
by operation of law, and any attempt, voluntary or involuntary, to effect any
such action shall be null, void and of no effect.
16. Amendments. No amendments or additions to this Agreement
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shall be binding unless made in writing and signed by all of the parties, except
as herein otherwise specifically provided.
17. Applicable Law. Except to the extent preempted by Federal
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law, the laws of the State of Tennessee shall govern this Agreement in all
respects, whether as to its validity, construction, capacity, performance or
otherwise.
18. Severability. The provisions of this Agreement shall be
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deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.
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19. Entire Agreement. This Agreement, together with any
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understanding or modifications thereof as agreed to in writing by the parties,
shall constitute the entire agreement between the parties hereto and shall
supersede any prior agreement between the parties (including but not limited to
their agreement dated December 31, 1996, as amended February 8, 1997).
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first herein above written.
ATTEST: LEXINGTON FIRST FEDERAL SAVINGS BANK
By:
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Secretary Xxxxxxx Xxxxxx, Chairman of the Board
WITNESS:
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Xxxxxx X. Xxxxxx, Employee
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