Exhibit 10.1
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FIRST AMENDMENT OF THE N. XXXXXXX XXXXX EMPLOYMENT AGREEMENT
WHEREAS, 1st Independence Financial Group, Inc. (the "Parent") entered
into an employment agreement on July 9, 2004 (the "Agreement") with N. Xxxxxxx
Xxxxx (the "Executive"), and joined by 1st Independence Bank; and
WHEREAS, the American Jobs Creation Act was signed into law by the
President of the United States on October 22, 2004 creating a new Section 409A
of the Internal Revenue Code of 1986, as amended (the "Code") governing the
content and operation of nonqualified deferred compensation arrangements with
respect to amounts deferred after December 31, 2004; and
WHEREAS, final regulations under Code Section 409A, issued on April 10,
2007, require all arrangements subject to Code Section 409A be amended to comply
with Code Section 409A no later than December 31, 2008; and
WHEREAS, the Parent has determined that the Agreement is subject to
Code Section 409A and should be amended to comply with the requirements of Code
Section 409A and to specify the circumstances under which the Executive should
receive a payment upon the occurrence of a "Change in Control" of the Parent;
and
WHEREAS, counsel has prepared, and the Compensation Committee of the
Board of Directors of the Parent has reviewed and approved for adoption, the
First Amendment of the Agreement to give effect to, and to carry out the
intentions of, the foregoing recitals;
NOW, THEREFORE, the Agreement is hereby amended, effective as of
December 31, 2007, in the following particulars:
1. By replacing the last sentence of Section 3 in its entirety with the
following:
"Notwithstanding the foregoing, this Agreement shall
automatically terminate (and the Term of this Agreement shall
thereupon end) without notice when the Executive attains age
65 of age or upon payment following a Change in Control
pursuant to subsection 8(e)."
2. By replacing the phrase "(as defined in Section 8(b)(v)" in the
second sentence of subsection 5(c) with "(as defined in subsection
8(e)".
3. By replacing subsection 6(a) in its entirety with the following:
"(A) So long as Executive is employed by Parent and Bank
pursuant to this Agreement, Executive shall receive
reimbursement from Parent or Bank, as appropriate, for all
reasonable business expenses incurred in the course of his
employment by Parent and Bank, upon submission to Bank of
written vouchers and statements for reimbursement; provided,
however, any such reimbursement shall be made by Parent or
Bank, as appropriate, by the end of the year following the
year in which the expense was incurred."
4. By replacing the introductory sentence to Section 8 in its entirety
with the following:
"8. Termination and Other Payments. In the event of
termination of Executive's employment pursuant to Section 7
hereof, or upon the occurrence of a Change in Control as
defined in subsection 8(e), compensation shall continue to be
paid to Executive as follows:"
5. By replacing subsection 8(b)(i) in its entirety with the following:
"(i) compensation provided for herein (including Base
Compensation) shall be paid to him in a single sum payment
within 30 days following the date of his termination, and
Executive shall continue to participate in the Executive
benefit, retirement and compensation plans and other
perquisites as provided in Sections 5 and 6 hereof, through
the date of termination specified in the notice of termination
in a manner consistent with the applicable terms of the
governing plan documents. Any benefits payable under
insurance, health, retirement and bonus plans as a result of
Executive's participation in such plans through such date
shall be paid when due under those plans."
6. By deleting subsection 8(b)(ii), (iii) and (v) in their entirety
and renumbering subsection 8(b)(iv) as subsection 8(v)(ii).
7. By replacing subsection 8(c) in its entirety with the following:
"(c)In event of a termination pursuant to subsection 7(e),
compensation provided for herein (including Base Compensation)
shall be paid to him in a single sum payment within 30 days
following the date of his termination, and Executive shall
continue to participate in the Executive benefit, retirement
and compensation plans and other perquisites as provided in
Sections 5 and 6 hereof in a manner consistent with the
applicable terms of the governing plan documents, (i) in the
event of the Executive's death, through the date of his death,
or (ii) in the event of Executive's disability, through the
date of proper notice of disability as required by subsection
7(e). Any benefits payable under insurance, health, retirement
and bonus plans as a result of Employer's participation in
such plans through such date shall be paid when due under
those plans."
8. By adding a new subsection 8(e) to read as follows:
"(e)In the event of a Change of Control (as defined below),
Executive shall be paid an amount equal to the product of 2.99
times Executive's 'base amount' as defined in Section
280G(b)(3) of the Internal Revenue Code of 1986, as amended
(the 'Code') and any final regulations thereunder, less the
value of any benefits provided or rights accelerated by the
Change of Control, as determined pursuant to Code Section 280G
and any proposed or final regulations thereunder. Said sum
shall be paid, in one (1) lump sum within 30 days after the
occurrence of such Change in Control, and such payments shall
be in lieu of any other future payments which Executive would
be otherwise entitled to receive under this Agreement.
Notwithstanding the foregoing, all sums payable hereunder
shall be reduced in such manner and to such extent so that no
such payments made hereunder when aggregated with all other
payments or benefits to be made to or provided to Executive by
Parent or Bank shall be deemed an 'excess parachute payment'
in accordance with Code Section 280G and be subject to the
excise tax provided in Code Section 4999(a).
For purposes of this subsection, a 'Change in Control' will
occur upon one of the following events:
(i) A Change in Control will occur on the date that any
person, or group of persons (as defined in this subsection
below), acquires ownership of stock of the Parent that,
together with any stock held by the person or group,
constitutes more than 50 percent of the total fair market
value or total voting power of the issued and outstanding
shares of common stock of the Parent. However, if any person
or group is considered to own more than 50 percent of the
total fair market value or total voting power of the issued
and outstanding stock of the Parent, the acquisition of
additional stock by the same person or group will not be
considered to cause a Change in Control. An increase in the
percentage of stock owned by any person or group as a result
of a transaction in which the Parent acquires its stock in
exchange for property will be treated as an acquisition of
stock.
For purposes of this subsection and subsection 8(e)(ii),
persons will not be considered to be acting as a group solely
because they purchase or own stock at the same time. However,
persons will be considered to be acting as a group if they are
owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock or similar
business transaction with the Parent. If a person, including
an entity, owns stock in both corporations that enter into a
merger, consolidation, purchase or acquisition of stock or
similar transaction, such shareholder is considered to be
acting as a group with other shareholders in a corporation
prior to the transaction giving rise to the change and not
with respect to the ownership interest in the other
corporation.
(ii) A Change in Control will occur when: (1) any person or
group (as defined in subsection 8(e)(1)) acquires, or has
acquired during the 12-month period ending on the date of the
most recent acquisition by such person(s), ownership of stock
of the Parent which possesses 30 percent or more of the total
voting power of the Parent's issued and outstanding shares; or
(2) a majority of members of the Board is replaced during any
12-month period by directors whose appointment or election is
not endorsed by a majority of the members of the Board prior
to the date of the appointment or election (excluding the
replacement of directors who resign from the Board). However,
if any person or group is considered to effectively control
the Parent, the acquisition of additional control of the
Parent by the same person(s) will not be considered to cause a
Change in Control.
(iii) A Change in Control will occur on the date that any
person or group acquires, or has acquired during the 12-month
period ending on the date of the most recent acquisition by
such person(s), assets from the Parent that have a total gross
fair market value equal to or more than 40 percent of the
total gross fair market value of all of the assets of the
Parent and its affiliates immediately prior to such
acquisition(s). For purposes of this subsection, 'gross fair
market value' means the value of the assets of the Parent and
its affiliates, or the value of the assets being disposed of,
determined without regard to any liabilities associated with
such assets. Notwithstanding the foregoing provisions of this
subsection, there will be no Change in Control under this
subsection in the case of a transfer to an entity that is
controlled by the shareholders of the transferring corporation
immediately after the transfer; furthermore, a transfer of
assets by the Parent is not treated as a Change in Control if
the assets are transferred to: (1) a shareholder of the Parent
(immediately before the asset transfer) in exchange for or
with respect to the stock of the Parent; (2) an entity, 50
percent or more of the total value or voting power of which is
owned, directly or indirectly, by the Parent; (3) a person, or
group of persons, that owns, directly or indirectly, 50
percent or more of the total value or voting power of all the
Parent's issued and outstanding stock, or (4) an entity, at
least 50 percent of the total value or voting power of which
is owned, directly or indirectly, by a person described in
(3); furthermore, a transfer of assets the proceeds of which
are retained by the transferor corporation(s) to finance
continuing operations, rather than distributed to
shareholders, including, for example, the securitization or
monetization of the Parent's accounts receivable, will be
disregarded for purposes of this subsection. For purposes of
this subsection and except as otherwise provided herein, a
person's status will be determined immediately after the
transfer of the assets. For example, a transfer to a
corporation in which the transferor corporation has no
ownership interest before the transaction, but which is a
majority-owned subsidiary of the transferor corporation after
the transaction, will not be treated as a Change in Control.
For purposes of this subsection, persons will not be
considered to be acting as a group solely because they
purchase assets of the same corporation at the same time.
However, persons will be considered to be acting as a group if
they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of assets, or similar
business transaction with the corporation. If a person,
including an entity shareholder, owns stock in both
corporations that enter into a merger, consolidation, purchase
or acquisition of assets, or similar transaction, such
shareholder is considered to be acting as a group with other
shareholders in a corporation only to the extent of the
ownership in that corporation before the transaction giving
rise to the change and not with respect to the ownership
interest in the other corporation.
Notwithstanding the foregoing provisions of this Section, the
acquisition of the Parent's stock by the 1st Independence
Financial Group, Inc. Employee Stock Ownership and 401(k) Plan
will not constitute a Change in Control."
9. By adding a new subsection 8(f) to read as follows:
"(f) If Executive qualifies as a Key Employee (as defined in
subsection 8(f)(i)) at the time of his Separation from Service
(as defined in subsection 8(f)(ii)), Parent may not make a
payment of 'deferred compensation' as defined by Treasury
Regulation &1.409A-1(A) earlier than six months following the
date of Executive's Separation from Service (or, if earlier,
the date of the Executive's death). Payments to which the Key
Employee would otherwise be entitled during the first six
months following the date of his Separation from Service will
be accumulated and paid to Executive on the first day of the
seventh month following Executive's Separation from Service.
(i) 'Key Employee' means an employee who is:
(1) An officer of Parent having annual
compensation greater than $140,000;
(2) A five percent owner of Parent; or
(3) A one percent owner of Parent having an
annual compensation from the employer of
more than $150,000.
For purposes of subsection 8(f)(i)(1), no more than 50
employees (or, if lesser, the greater of three or 10 percent
of the employees) shall be treated as officers. The $140,000
amount in subsection 8(f)(i)(1) will be adjusted at the same
time and in the same manner as under Code Section 415(d),
except that the base period shall be the calendar quarter
beginning July 1, 2001, and any increase under this sentence
which is not a multiple of $5,000 shall be rounded to the next
lower multiple of $5,000.
(ii) 'Separation from Service' means the date on which
Executive dies, retires or otherwise experiences a Termination
of Employment with the Parent or the Bank. Provided, however,
a Separation from Service does not occur if the Executive is
on military leave, sick leave or other bona fide leave of
absence if the period of such leave does not exceed six
months, or if longer, so long as the Executive retains a right
to reemployment with the Parent or Bank under an applicable
statute or by contract. For purposes of this subsection, a
leave of absence constitutes a bona fide leave of absence only
if there is a reasonable expectation that the Executive will
return to perform services for the Bank or the Parent. If the
period of leave exceeds six months and the Executive does not
retain the right to reemployment under an applicable statute
or by contract, the employment relationship is deemed to
terminate on the first date immediately following such
six-month period. Notwithstanding the foregoing, where a leave
of absence is due to any medically determinable physical or
mental impairment that can be expected to result in death or
can be expected to last for a continuous period of not less
than six months, where such impairment causes the Executive to
be unable to perform the duties of his position of employment
or any substantially similar position of employment, a
29-month period of absence may be substituted for such
six-month period. The Executive shall incur a 'Termination of
Employment' for purposes of this subsection when a termination
of employment has occurred under Treasury Regulation
1.409A-1(h)(ii)."
10. By deleting subsection 9(f) of the Agreement.
IN WITNESS WHEREOF, the Parent and Bank, by their duly authorized
officers, and the Executive have executed this First Amendment of the Agreement
effective as of this 31st day of December, 2007.
1st INDEPENDENCE FINANCIAL GROUP, INC.
By:______________________________________________
1st INDEPENDENCE BANK, INC.
By:______________________________________________
EXECUTIVE
__________________________________________________
N. Xxxxxxx Xxxxx
