EXECUTIVE SEVERANCE AGREEMENT
Exhibit
10.3
AMENDED
AND RESTATED
THIS
AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT
(the
"Agreement"), made and entered into on the 1st day of March 2006, by and
between
Xxxxxxx First National Corporation (the "Company"), an Arkansas corporation,
and
Xxxxxx X. Xxxxxxx (the "Executive").
R
E C I T A L S:
The
Company acknowledges that the Executive has significantly contributed to
the
growth and success of the Company and is expected to continue to do so. As
a
publicly held corporation, a Change in Control of the Company may occur with
or
without the approval of the Board of Directors of the Company ("Board").
The
Board also recognizes that the possibility of such a Change in Control may
contribute to uncertainty on the part of senior management resulting in
distraction from their operating responsibilities or in the departure of
senior
management.
The
Board
believes that outstanding management is critical to advancing the best interests
of the Company and its shareholders. It is essential that the management
of the
Company's business be continued with a minimum of disruption during any proposed
bid to acquire the Company or to engage in a business combination with the
Company. The Company believes that the objective of securing and retaining
outstanding management will be achieved if certain of the Company's senior
management employees are given assurances of employment security so they
will
not be distracted by personal uncertainties and risks created by such
circumstances.
The
Company and Executive have agreed to certain amendments to the Executive
Severance Agreement executed by the parties on June 7, 2001 and have executed
this Agreement to implement such amendments.
NOW,
THEREFORE, in consideration of the mutual covenants and obligations herein
and
the compensation the Company agrees herein to pay the Executive, and of other
good and valuable consideration, the receipt and sufficiency of which is
hereby
acknowledged, the Company and the Executive agree as follows:
ARTICLE
1
TERM
OF AGREEMENT
1.1
Term.
This
Agreement shall become effective as of the date on which it is executed by
the
Company (the "Effective Date"). The Agreement shall be effective for thirty-six
months (36) and will automatically be extended for twelve (12) months as
of each
anniversary date of the Effective Date (the "Agreement Term") unless the
Agreement Term is terminated by the Company, upon written notification to
the
Executive, within thirty (30) days before an anniversary date of the Effective
Date, that the Agreement will terminate as of last day of the Agreement Term
as
in effect immediately prior to such anniversary date.
Unless
the Company has effectively terminated this Agreement as prescribed above
in
this Section 1.1, in the event of a Change in Control, the Agreement Term
shall
be amended to twenty-four (24) months commencing upon the Change in Control
Date
and shall then expire at the end of such twenty-four (24) month
period.
1.2
Change in Control,
means
if: (i) after the date of the Agreement, any person, including a "group"
as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes
the
owner or beneficial owner of Company securities having 25% or more of the
combined voting power of the then outstanding Company securities that may
be
cast for the election of the Company's directors (other than as a result
of an
issuance of securities initiated by the Company, or open market purchases
approved by the Board, as long as the majority of the Board approving the
purchases are directors at the time the purchases are made); or (ii) as the
direct or indirect result of, or in connection with, a cash tender or exchange
offer, a merger or other business combination, a sale of assets, a contested
election of directors, or any combination of these transactions, the persons
who
were directors of the Company before such transactions cease to constitute
a
majority of the Board, or any successor's board, within two years of the
last of
such transactions.
1.3
Control Change Date,
means
the date on which an event described in Section 1.2 occurs. If a Change in
Control occurs on account of a series of transactions, the Control Change
Date
is the date of the last of such transactions.
ARTICLE
2
TERMINATION
OF EMPLOYMENT
2.1
General.
Executive shall be entitled to receive Termination Compensation, as defined
in
Section 2.5, according to this Article if:
(a)
the
Executive's employment is involuntarily terminated as specified in Section
2.2,
or
(b)
the
Executive voluntarily terminates employment as specified in Section
2.3.
2.2
Termination by the Company.
(a)
Executive shall be entitled to receive Termination Compensation (as described
in
Section 2.5) if during an Agreement Term, Executive's employment is terminated
by the Company without Cause by reason of or after the occurrence of a Trigger
Event (as defined in Section 2.4) which occurs on or after a Control Change
Date.
(b)
Executive shall be entitled to receive Termination Compensation (as described
in
Section 2.5) if during an Agreement Term, Executive's employment is terminated
by the Company without Cause by reason of or after the occurrence of a Trigger
Event (as defined in Section 2.4) which occurs within the 180 days immediately
preceding a Control Change Date.
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(c)
Cause, means, for purposes of this Agreement, (i) willful and continued failure
by the Executive to perform his duties as established by the Board of Directors
of the Company; (ii) a material breach by the Executive of his fiduciary
duties
of loyalty or care to the Company; (iii) conviction of a felony; or (iv)
willful, flagrant, deliberate and repeated infractions of material published
policies and procedures of the Company of which the Executive has actual
knowledge (the "Cause Exception"). If the Company desires to discharge the
Executive under the Cause Exception, it shall give notice to the Executive
as
provided in Section 2.7 and the Executive shall have thirty (30) days after
notice has been given to him in which to cure the reason for the Company's
exercise of the Cause Exception. If the reason for the Company's exercise
of the
Cause Exception is timely cured by the Executive (as determined by a committee
appointed by the Board of Directors), the Company's notice shall become null
and
void.
2.3
Voluntary Termination. Executive
shall be entitled to receive Termination Compensation (as defined in Section
2.5) if a Change in Control occurs during an Agreement Term, and the Executive
voluntarily terminates employment during an Agreement Term and within six
(6)
months following the occurrence of a Trigger Event.
2.4
Trigger Event.
A
Trigger Event means, for purposes of this Agreement, the occurrence of any
one
of the following events:
|
(a)
|
the
failure by the Board to reelect or appoint the Executive to a position
with duties, functions and responsibilities substantially equivalent
to
the position held by the Executive on the Control Change
Date;
|
|
(b)
|
a
material modification by the Board of the duties, functions
responsibilities of the Executive without his
consent;
|
|
(c)
|
the
failure of the Company to permit the Executive to exercise such
responsibilities as are consistent with the Executive's position
and are
of such a nature as are usually associated with such office of
a
corporation engaged in substantially the same business as the
Company;
|
|
(d)
|
the
Company requires the Executive to relocate his employment more
than fifty
(50) miles from his place of employment, without the consent of
the
Executive, excluding reasonably required business travel or temporary
assignments for a reasonable period of
time;
|
|
(e)
|
a
reduction in Executive's compensation or benefits;
or
|
|
(f)
|
the
Company shall fail to make a payment when due to the
Executive.
|
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2.5
Termination Compensation.
Termination Compensation equal to 2.00 times Executive's Base Period Income
shall be paid in a single sum payment in cash or in common stock of the Company,
at the election of the Executive. Payment of Termination Compensation to
Executive shall be made on the later of the thirtieth (30th)
business day after Executive's employment termination or the first day of
the
month following his employment termination.
2.6
Base Period Income.
Executive's Base Period Income equals the sum of (i) his annual base salary
as
of Executive's termination date, and (ii) the greater of the average of any
incentive bonus payable to Executive for the Company's last two completed
fiscal
years or the Executive's target bonus opportunity for the then current year
under the Company's annual incentive plan.
2.7
Notice of Termination.
Any
termination by the Company under the Cause Exception or by the Executive
after a
Trigger Event shall be communicated by Notice of Termination to the other
party
hereto. A "Notice of Termination" shall be a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, (ii) 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 (iii) if the termination date is other than the date of receipt
of
such notice, specifies the effective date of termination.
ARTICLE
3
GROSS
UP OF PAYMENTS
In
the
event that any amounts required to be paid or distributed to the Executive
from
the Company, whether pursuant to this agreement or any other arrangement
or
agreement, shall constitute a parachute payment within the meaning of Section
280G of the Internal Revenue Code of 1986, as amended (the "Code"), or any
successor statutory provision ("Excess Parachute Payments") and the aggregate
of
such parachute payments and any other amounts or property otherwise required
to
be paid or distributed to the Executive by the Company would cause the Executive
to be subject to the excise tax on excess parachute payments under Section
4999
of the Code, or any successor or similar provision thereof, the Company shall
pay to the Executive such additional amounts as are necessary so that, after
taking into account any tax imposed by such Section 4999 or any successor
statutory provision, on any Excess Parachute Payments, as well as on payments
made pursuant to this sentence, and any federal or state income taxes payable
as
a result of any payments due to the Executive pursuant to this sentence,
the
Executive is in the same after-tax position the Executive would have been
in if
such Section 4999 or any successor statutory provision did not apply and
no
payments were made pursuant to this sentence.
ARTICLE
4
ATTORNEY'S
FEES
In
the
event that the Executive incurs any attorney's fees in protecting or enforcing
his rights under this Agreement, the Company shall reimburse the Executive
for
such reasonable attorneys' fees and for any other reasonable expenses related
thereto. Such reimbursement shall be made within thirty (30) days following
final resolution of the dispute or occurrence giving rise to such fees and
expenses.
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ARTICLE
5
WELFARE
BENEFIT PLAN EQUIVALENTS
5.1
Continuation of Coverage of Welfare Benefit Plans.
If the
Executive is entitled to receive Termination Compensation under this Agreement,
the Company shall maintain in full force and effect for the continued benefit
of
Executive and his eligible dependents, for a period of thirty-six (36) months
following the date of termination, each Welfare Benefit Plan in which the
Executive was entitled to participate immediately prior to the date of
termination, at the benefit levels then in effect with the Executive and
the
Company sharing the cost of coverage in the same manner as in effect upon
the
Control Change Date. In the event that the Executive's continued participation
in any such plan is not permitted thereunder, then the Company shall provide
the
Executive and his eligible dependents a benefit substantially similar to
and no
less favorable than the benefit provided under such plan immediately prior
to
such termination of coverage and the cost to the executive shall not exceed
the
cost which the Executive would have incurred had participation in the plan
been
permitted. At the termination of any period of coverage provided above, the
Executive shall have the option to have assigned to him, at no cost and no
apportionment of prepaid premiums, any assignable insurance owned by the
Company
and relating specifically to the Executive. In lieu of being provided with
the
benefits as described in the preceding sentence, the Executive may, at the
Executive's election and sole discretion, require the Company to include
in the
Executive's Termination Compensation a lump sum amount equal to the value
of the
benefits described in the preceding sentence. Notwithstanding the foregoing
or
the provisions of Section 5.2 below, the Company shall not be obligated to
continue the Executive's participation in the Xxxxxxx First Endorsement
Split-Dollar Life Insurance Program or provide any alternative benefits to
such
program after termination of the Executive's employment, except as specifically
provided pursuant to the terms of the program documents governing such
program.
5.2
Optional Additional Continuation of Coverage.
If the
Executive is at least 55 years of age when he becomes entitled to receive
Termination Compensation, then after the expiration of the period of extended
coverage under the Welfare Benefit Plans as set forth in Section 5.1 above,
the
Company shall permit the Executive, at his option, to further continue
participation in any Welfare Benefit Plan, if such Executive is not then
eligible to participate in any other plan sponsored by the then current employer
of the Executive or the Executive's spouse offering substantially similar
benefits. The Executive's continued participation under this Section 5.2
shall
(i) be at the sole cost and expense of the Executive, and (ii) shall terminate
upon the earliest of (A) the Executive becoming eligible to participate in
a
plan sponsored by the current employer of the Executive or the Executive's
spouse offering substantially similar benefits, (B) upon the date that the
Executive is no longer eligible to participate in the Welfare Benefit Plan,
or
(C) the Executive and the executive's spouse becoming eligible for Medicare
coverage. If the executive elects this continued coverage, the Company shall
use
its best efforts to cause the Welfare Benefit Plan to maintain the eligibility
of the Executive to participate therein or make alternative arrangements
to
provide the Executive and his spouse coverage reasonably equivalent to that
provided by the Welfare Benefit Plan at the equivalent cost to the Executive.
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5.3
Welfare Benefit Plan.
The
term Welfare Benefit Plan as used in this Article 5 refers to any plan, fund
or
program as defined under Section 3(1) of the Employee Retirement Income Security
Act ("ERISA"), which has been established and is maintained by the Company
for
the purpose of providing its employees or their beneficiaries, through the
purchase of insurance or otherwise, medical, surgical, hospital care or
benefits, or benefits in the event of sickness, accident, disability or death,
provided that such term shall not include the Xxxxxxx First Endorsement
Split-Dollar Life Insurance Program.
ARTICLE
6
MITIGATION
OF PAYMENT
The
Company and the Executive agree that, following the termination of employment
by
the Executive with Company, the Executive has no obligation to take any steps
whatsoever to secure other employment and such failure by the Executive to
search for or to find other employment upon termination from Company shall
in no
way impact the Executive's right to receive payment under any of the provisions
of this Agreement.
ARTICLE
7
DECISIONS
BY COMPANY; FACILITY OF PAYMENT
Any
powers granted to the Board hereunder may be exercised by a committee, appointed
by the Board, and such committee, if appointed, shall have general
responsibility for the administration and interpretation of this Agreement.
If
the Board or the committee shall find that any person to whom any amount
is or
was payable hereunder is unable to care for his affairs because of illness
or
accident, or has died, then the Board or the committee, if it so elects,
may
direct that any payment due him or his estate (unless a prior claim therefore
has been made by a duly appointed legal representative) or any part thereof
be
paid or applied for the benefit of such person or to or for the benefit of
his
spouse, children or other dependents, an institution maintaining or having
custody of such person, any other person deemed by the Board or committee
to be
a proper recipient on behalf of such person otherwise entitled to payment,
or
any of them, in such manner and proportion as the Board or committee may
deem
proper. Any such payment shall be in complete discharge of the liability
of the
Company therefore.
ARTICLE
8
INDEMNIFICATION
The
Company shall indemnify the Executive during his employment and thereafter
to
the maximum extent permitted by applicable law for any and all liability
of the
Executive arising out of, or in connection with, his employment by the Company
or membership on the Board; provided, that in no event shall such indemnity
of
the Executive at any time during the period of his employment by the Company
be
less than the maximum indemnity provided by the Company at any time during
such
period to any other officer or director under an indemnification insurance
policy or the bylaws or charter of the Company or by agreement.
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ARTICLE
9
SOURCE
OF PAYMENTS; NO TRUST
The
obligations of the Company to make payments hereunder shall constitute an
unsecured liability of the Company to the Executive. Such payments shall
be from
the general funds of the Company, and the Company shall not be required to
establish or maintain any special or separate fund, or otherwise to segregate
assets to assure that such payments shall be made, and neither the Executive
nor
his designated beneficiary shall have any interest in any particular asset
of
the Company by reason of its obligations hereunder. Nothing contained in
this
Agreement shall create or be construed as creating a trust of any kind or
any
other fiduciary relationship between the Company and the Executive or any
other
person. To the extent that any person acquires a right to receive payments
from
the Company hereunder, such right shall be no greater than the right of an
unsecured creditor of the Company.
ARTICLE
10
SEVERABILITY
All
agreements and covenants contained herein are severable, and in the event
any of
them shall be held to be invalid by any competent court, this Agreement shall
be
interpreted as if such invalid agreements or covenants were not contained
herein.
ARTICLE
11
ASSIGNMENT
PROHIBITED
This
Agreement is personal to each of the parties hereto, and neither party may
assign nor delegate any of his or its rights or obligations hereunder. Any
attempt to assign any rights or delegate any obligations under this Agreement
shall be void.
ARTICLE
12
NO
ATTACHMENT
Except
as
otherwise provided in this Agreement or required by applicable 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 execution, 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.
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ARTICLE
13
HEADINGS
The
headings of articles, paragraphs and sections herein are included solely
for
convenience of reference and shall not control the meaning or interpretation
of
any of the provisions of this Agreement.
ARTICLE
14
GOVERNING
LAW
The
parties intend that this Agreement and the performance hereunder and all
suits
and special proceedings hereunder shall be construed in accordance with and
under and pursuant to the laws of the State of Arkansas, and that in any
action,
special proceeding or other proceeding that may be brought arising out of,
in
connection with, or by reason of this Agreement, the laws of the State of
Arkansas, shall be applicable and shall govern to the exclusion of the law
of
any other forum, without regard to the jurisdiction in which any action or
special proceeding may be instituted.
ARTICLE
15
BINDING
EFFECT
This
Agreement shall be binding upon, and inure to the benefit of, the Executive
and
his heirs, executors, administrators and legal representatives and the Company
and its permitted successors and assigns.
ARTICLE
16
MERGER
OR CONSOLIDATION
The
Company will not consolidate or merge into or with another corporation, or
transfer all or substantially all of its assets to another corporation (the
"Successor Corporation") unless the Successor Corporation shall assume this
Agreement, and upon such assumption, the Executive and the Successor Corporation
shall become obligated to perform the terms and conditions of this
Agreement.
ARTICLE
17
ENTIRE
AGREEMENT
This
Agreement expresses the whole and entire agreement between the parties with
referenced to the employment of the Executive and, as of the effective date
hereof, supersedes and replaces any prior employment agreement, understanding
or
arrangement (whether written or oral) between the Company and the Executive.
Each of the parties hereto has relied on his or its own judgment in entering
into this Agreement.
8
ARTICLE
18
NOTICES
All
notices, requests and other communications to any party under this Agreement
shall be in writing and shall be given to such party at its address set forth
below or such other address as such party may hereafter specify for the purpose
by notice to the other party:
(a)
If to
the Executive:
Xxxxxx
X.
Xxxxxxx
000
Xxxx
Xxxx Xxxxx
Xxxxxxxx,
Xxxxxxxx 00000
(b)
If to
the Company:
Xxxxxxx
First National Corporation
Attention:
Chairman
000
Xxxx
Xxxxxx
P.
O. Xxx
0000
Xxxx
Xxxxx, Xxxxxxxx 00000
Each
such
notice, request or other communication shall be effective (i) if given by
mail,
72 hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (ii) if given by any other means,
when delivered at the address specified in this ARTICLE 18.
ARTICLE
19
MODIFICATION
OF AGREEMENT
No
waiver
or modification of this Agreement or of any covenant, condition, or limitation
herein contained shall be valid unless in writing and duly executed by the
party
to be charged therewith. No evidence of any waiver of modification shall
be
offered or received in evidence at any proceeding, arbitration, or litigation
between the parties hereto arising out of or affecting this Agreement, or
the
rights or obligations of the parties hereunder, unless such waiver or
modification is in writing, duly executed as aforesaid. The parties further
agree that the provisions of this ARTICLE 19 may not be waived except as
herein
set forth.
ARTICLE
20
TAXES
To
the
extent required by applicable law, the Company shall deduct and withhold
all
necessary Social Security taxes and all necessary federal and state withholding
taxes and any other similar sums required by laws to be withheld from any
payments made pursuant to the terms of this Agreement.
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ARTICLE
21
RECITALS
The
Recitals to this Agreement are incorporated herein and shall constitute an
integral part of this Agreement
IN
WITNESS WHEREOF, the parties have executed this Agreement on the day and
year
first above written.
| EXECUTIVE: | ||
| |
|
|
| By: | /s/ Xxxxxx X. Xxxxxxx | |
|
Xxxxxx X. Xxxxxxx |
||
| XXXXXXX FIRST NATIONAL CORPORATION | ||
| |
|
|
| By: | /s/ X. Xxxxxx May | |
|
X. Xxxxxx May, Chairman and CEO |
||
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