EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT
AGREEMENT is made this 22nd day of
October,
2007 (“Effective Date”), by and between Southside Bank ("the
Company”), and Xxx Xxxxxx (the
“Employee”).
INTRODUCTION
The
Board of Directors of the
Company (the “Board”) has determined that it is in the best interests
of the Company to retain the Employee’s services and to
reinforce and encourage the continued attention and dedication of the Employee
to his assigned duties.
AGREEMENT
WHEREAS,
during his
employment, Employee will establish and maintain relations and contacts with
the
clients, employees, and suppliers of the Company, all of which
constitute valuable goodwill of the Company's business;
and
WHEREAS,
during his
employment, Employee will learn and will have access to important Confidential
Information and Trade Secrets (as defined herein) related to the
Company's business; and
WHEREAS,
Employee
and the Company desire to enter into this Agreement in order to
memorialize the terms and conditions of Employee's employment.
NOW,
THEREFORE, in
consideration of Employee's employment with the Company, a wholly owned
subsidiary of Southside Bancshares, Inc. (“SBSI”) and in consideration
of the additional promises and the mutual covenants herein contained,
the Company and the Employee hereby agree as
follows:
1. Employment. Upon
the terms and subject to the conditions contained in this Agreement, the
Employee is hereby deemed to be employed under the terms of this Agreement
on
the Effective Date as the President and Chief Operating Officer of the
Company. The Employee agrees to provide full-time services for the
Company during the term of this Agreement. The Employee agrees to
devote his best efforts to the business of the Company, and shall perform his
duties in a diligent, trustworthy, and business-like manner, all for the purpose
of advancing the business of the Company. Notwithstanding the above,
the Employee may engage in other business interests or investments which do
not
conflict with the interests of Company or materially prevent the Employee from
performing his contemplated services hereunder on behalf of the
Company.
2. Duties. In
his capacity as President and Chief Operating Officer of the Company, the
Employee shall have such responsibilities and shall render such services as
shall be assigned to him from time to time by the Chief Executive Officer of
the
Company, which shall be consistent with the responsibilities of similarly
situated executives of comparable companies in similar lines of
business. The Employee’s duties may, from time to time, be changed or
modified at the discretion of the Chief Executive Officer.
3. Employment
Term. Unless earlier terminated in accordance with Section 5
hereof, the Employee’s employment shall be for a three (3) year term (the
“Initial Term”), beginning on the Effective Date. Beginning on the
first anniversary of the Effective Date and on each anniversary of the Effective
Date thereafter, Employee's employment with Company shall, without further
action by the Employee or the Company, be extended by an additional one-year
period (with any such extended period being referred to as the "Extended Term");
provided, however, that either party may cause Employee's
employment to cease to extend automatically by giving written notice to the
other party not less than ninety (90) days prior to the next annual anniversary
of the Effective Date. Upon such notice, Employee's employment shall
terminate upon the expiration of the Initial Term or the then-current Extended
Term, including any prior extensions. If Company elects to terminate
the automatic extension, Section 9 shall no longer be applied following
termination of employment. For purposes of this Agreement, the entire
period of Employee's employment shall be referred to as the "Employment
Period."
4. Compensation
and Benefits.
(a) Base
Salary. As of the Effective Date of this Agreement, the Company
agrees to pay the Employee during the term of this Agreement an initial base
salary of $300,500.00 per year (the "Base Salary"), payable in accordance with
Company’s normal payroll practices with such payroll deductions and withholdings
as are required by law or are otherwise authorized by
Employee. The Employee’s Base Salary shall be reviewed no less
frequently than annually by the Compensation Committee of the Board of Directors
of SBSI (the “Compensation Committee”). During the term of this
Agreement, it is agreed that Company may not reduce Employee’s Base Salary in
any calendar year by an amount in excess of five (5%) percent of the Base Salary
unless such reduction is part of a general reduction in compensation among
employees of the same or similar category.
(b) Annual
Incentive Payment. In addition to other compensation to be paid under this
Section 4, each year during the Employment Period the Employee shall be eligible
to receive an annual incentive payment (the “Annual Incentive Payment”), which
shall not be less than 12.5% of Base Salary. The amount actually
awarded and paid to the Employee each year will be determined by the
Compensation Committee and may be based on specific performance criteria to
be
identified under a separate communication. Any payments made under
this section shall be paid no later than March 15 of the following calendar
year.
(c) Incentive,
Savings and Retirement Plans. During the Employment Period, the
Employee shall be entitled to participate in all incentive, savings and
retirement plans, practices, policies and programs made available by the Company
to officers of comparative level with Employee (the "Peer
Executives").
(d) Welfare
Benefit Plans. During the Employment Period, the Employee and the
Employee’s eligible dependents shall be eligible for participation in, and shall
receive all benefits under, the welfare benefit plans, practices, policies
and
programs provided by the Company (including, without limitation, medical,
prescription, dental, disability, employee life, group life, accidental death
and travel accident insurance plans and programs) (“Welfare Plans”) to the
extent applicable generally to Peer Executives.
(e) Fringe
Benefits. During the Employment Period, to the extent approved by
the Board of Directors, the Employee shall be entitled to fringe benefits in
accordance with the plans, practices, programs and policies of the Company
on
the same basis as other Peer Executives.
(f) Vacation. During
the Employment Period, the Employee will be entitled to such period of paid
vacation as may be provided under any plans, practices, programs and policies
of
the Company available to other Peer Executives; provided, however,
that Employee shall be entitled to a minimum of four (4) weeks paid
vacation.
(g) Reimbursement
of Expenses. During the Employment Period, the Company shall
reimburse the Employee in accordance with Company’s expense reimbursement
policies for all reasonable, ordinary and necessary business expenses incurred
by the Employee in the course of his duties conducted on behalf of the
Company. In addition, the Company may pay the Employee’s annual dues
at a local country club, and expenses related to the Employee’s use of such
country club for matters related to the business of the Company. The
Company shall also reimburse Employee’s reasonable expenses for continuing
education courses necessary to maintain any certifications or licenses Employee
may hold.
5. Termination
of Employment. The Employee’s employment may be terminated at any
time by either party for the reasons set forth in this Section 5.
(a) Termination
by the Employee. Employee may terminate his employment during the
Employment Period for Good Reason (but only in the event of a Change in Control,
as defined in Section 7 hereof), or for no reason. For the purpose of
this Agreement, “Good Reason” shall mean:
(i) Without
the Employee’s express written consent, the assignment to the Employee of any
duties or responsibilities inconsistent in any material respect with the
Employee’s position (including status, offices, titles and reporting
relationships), authority, duties or responsibilities as in effect of the
Effective Date, or any other action by the Company which results in a diminution
in such position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in bad
faith
and which is remedied by the Company promptly after receipt of notice thereof
given by the Employee;
(ii) A
reduction by the Company in the Employee’s Base Salary;
(iii) The
failure by the Company (a) to continue in effect any compensation plan in which
the Employee participates as of the Effective Date that is material to the
Employee’s total compensation, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to such
plan,
or (b) to continue the Employee’s participation therein (or in such substitute
or alternative plan) on a basis not materially less favorable, both in terms
of
the amount of benefits provided and the level of the Employee’s participation
relative to other participants;
(iv) Any
failure of the Company to obtain the assumption of, or the agreement to perform,
this Agreement by any successor as contemplated in Section 13(b)
hereof;
(v) The
material breach by the Company of any other provision of this Agreement;
or
(vi) The
Company requiring the Employee to be based anywhere other than Xxxxx County,
or,
in the event the Employee consents to any relocation, the failure by the Company
to pay (or to reimburse the Employee) for all reasonable moving expenses
incurred by the Employee relating to a change of the Employee’s principal
residence in connection with such relocation and to indemnify the Employee
against any loss realized on the sale of the Employee’s principal residence in
connection with any such change of residence.
Good
Reason shall
not include the Employee’s death or Disability or Retirement; provided that the
Employee’s mental or physical incapacity following the occurrence of an event
described in clause (i) – (vi) above shall not affect the Employee’s ability to
terminate for Good Reason. The Employee’s continued employment shall
not constitute consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason hereunder. Any good faith
determination of Good Reason made by the Employee shall be deemed prima facie
evidence that qualifies for termination for Good Reason but such determination
by the Employee may be contested and disputed by the Company. The
Company shall have an opportunity to cure any claimed event of Good Reason
within 30 days of receiving written notice from the Employee and the Board’s
good faith determination of cure shall be binding. The Company shall
notify the Employee of the timely cure of any claimed event of Good Reason
and
the manner in which such cure was effected, and any Notice of Termination
delivered by the Employee based on such claimed Good Reason shall be deemed
withdrawn and shall not be effective to terminate the Agreement.
(b) Termination
by the Company. The Company may terminate the Employee’s
employment during the Employment Period with or without Cause. For
purposes of this Agreement, “Cause” shall mean:
(i) Employee’s
material failure to perform Employee’s duties with the Company (other than any
such failure resulting from incapacity due to physical or mental illness),
after
a written demand for performance is delivered to Employee by the Company which
specifically identifies the manner in which the Company believes that Employee
has intentionally and materially failed to perform Employee’s duties;
or
(ii) Employee’s
engaging in any illegal conduct or misconduct that is materially and
demonstrably injurious to the Company, its financial condition, or its
reputation; or
(iii) Employee’s
engaging in any act or omission that constitutes, on the part of the Employee,
fraud, theft, misappropriation, embezzlement, breach of fiduciary duty or
dishonesty; or
(iv) Entry
of an order by any state or federal regulatory agency either removing Employee
from Employee’s position with the Company or its affiliates or prohibiting
Employee from participating in the conduct of the affairs of the Company;
or
(v) Employee’s
failure to cure a material breach of any provision of this Agreement after
a
written demand for cure is delivered to Employee by the
Company.
Termination
for
Cause shall only occur after the Board, in its sole and absolute discretion,
has
made a full and thorough determination of “Cause.”
Additionally,
Employee's employment may be terminated by Company as a result of a Change
in
Control, as defined in Section 7 hereof. Such a termination of
employment shall be treated the same as a termination without Cause for purposes
of Section 6 of this Agreement.
(c) Death,
Retirement or Disability. The Employee’s employment shall
terminate automatically upon the death or Retirement of the Employee during
the
Employment Period. For purposes of this Agreement, “Retirement” shall
mean normal retirement as defined in the Company’s then-current retirement plan,
or if there is no such retirement plan, “Retirement” shall mean voluntary
termination after attaining age 65. If the Company determines in good
faith that the Disability of the Employee has occurred during the Employment
Period (pursuant to the definition of Disability set forth below), it may give
to the Employee written notice of its intention to terminate the Employee’s
employment. In such event, the Employee’s employment with the Company
shall terminate effective on the 30th day after receipt of such written notice
by the Employee (the “Disability Effective Date”), provided that, within the 30
days after such receipt, the Employee shall not have returned to full-time
performance of the Employee’s duties. For purposes of this Agreement,
“Disability” shall mean the inability of the Employee, as determined by the
Board, to perform the essential functions of his regular duties and
responsibilities, with or without reasonable accommodation, due to a medically
determinable physical or mental illness which has lasted (or can reasonably
be
expected to last) for a period of six (6) consecutive months.
(d) Notice
of Termination. Any termination by the Company for Cause, or by
the Employee for Good Reason in the event of a Change in Control, shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 13(d) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, (ii) to the
extent applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Employee's employment under
the provision so indicated and (iii) specifies the termination
date. The failure by the Employee 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 Employee or the Company,
respectively, hereunder or preclude the Employee or the Company, respectively,
from asserting such fact or circumstance in enforcing the Employee's or the
Company's rights hereunder.
(e) Date
of Termination. "Date of Termination" means (i) if the Employee's
employment is terminated by the Company for Cause, or by the Employee for Good
Reason in the event of a Change in Control, the date of termination as specified
in the Notice of Termination, (ii) if the Employee's employment is terminated
by
the Company other than for Cause, the Date of Termination shall be either the
date on which the Company notifies the Employee of such termination or a date
otherwise specified by the Company, (iii) if the Employee's employment is
terminated by reason of death, Retirement or Disability, the Date of Termination
shall be the date of the death or Retirement of the Employee or the Disability
Effective Date, as the case may be, and (iv) if the Employee's employment is
terminated by the Employee without Good Reason in the event of a Change in
Control, the Date of Termination shall be at least two (2) weeks from the date
that the Employee notifies the Company of his resignation (during which two
(2)
week period Employee may be required, in the discretion of Company, to continue
to perform services on behalf of Company).
6. Obligations
of the Company upon Termination.
(a) Termination
by Employee except for Good Reason in the event of a Change in Control;
Termination by Company with Cause. If, during the Employment
Period, the Employee terminates his employment without Good Reason or the
Company terminates Employee's employment with Cause, Employee shall be entitled
to receive his accrued but unpaid Base Salary up to and including the Date
of
Termination as well as all previously vested benefits. Employee shall
not be entitled to receive any additional compensation or benefits from
Company.
(b) Termination
by the Company without Cause; Termination by Employee for Good Reason in the
event of a Change in Control. If, during the
Employment Period, the Company terminates the Employee’s employment without
Cause (excluding termination for death, Retirement or Disability) or as a result
of a Change in Control (as defined in Section 7 of this Agreement), or the
Employee terminates his employment for Good Reason in the event of a Change
in
Control, and in any case only provided that Employee executes a release in
a
form mutually acceptable to the parties (the “Release”), then the following
shall occur:
(i) the
Company shall provide to the Employee in a single lump sum cash payment within
30 days after the Date of Termination, or if later, within five days after
the
Release becomes effective and nonrevocable, the aggregate of the following
amounts, to the extent not previously paid to the Employee:
(a)
the Employee’s
accrued but unpaid Base Salary through the Date of Termination;
(b)
a pro-rata
bonus for the year in which the Date of Termination occurs, computed as the
product of (x) the Employee’s Target Bonus (as defined by Company policy) for
such year and (y) a fraction, the numerator of which is the number of days
in
the current fiscal year through the Date of Termination, and the denominator
of
which is 365;
(c)
any accrued pay
in lieu of unused vacation (in accordance with the Company’s vacation
policy);
(d)
unless the
Employee has a later payout date that is required in connection with the terms
of a deferral plan or agreement, any vested compensation previously deferred
by
the Employee (together with any amount equivalent to accrued interest or
earnings thereon); and
(e)
a severance
payment equal to the monthly salary for the remainder of the Initial Term or
the
then-current Extended Term, whichever is applicable, plus the sum of ten
thousand dollars ($10,000).
Provided,
however, that in lieu of Section 6(b)(i)(e), the severance payment in the
event of a Change of Control shall be calculated pursuant to clause (x) or
(y)
below, as applicable:
(x) if
the Date of Termination occurs more than six (6)
months prior to the closing of a pending event that
results in a Change of Control or more than two (2) years after the occurrence
of a Change of Control, the severance payment shall be the product of two times
the sum of (1) the Employee’s Base Salary in effect as of the Date of
Termination (ignoring any decrease in the Employee’s Base Salary unless
consented to by the Employee), and (2) the greater of the average of the annual
bonuses earned by the Employee for the two fiscal years in which annual bonuses
were paid immediately preceding the year in which the Date of Termination
occurs, or the Employee’s Target Bonus for the year in which the Date of
Termination occurs; or
(y) if
the Date of Termination occurs within six months prior or within two
years after the occurrence of a Change of Control, the
severance payment shall be the product of 2.99 times the sum of (1) the
Employee’s Base Salary in effect as of the Date of Termination, and (2) the
greater of the average of the annual bonuses earned by the Employee for the
two
fiscal years in which annual bonuses were paid immediately preceding the year
in
which the Date of Termination occurs, or the Employee’s Target Bonus for the
year in which the Date of Termination occurs.
(ii) all
grants of stock options and other equity awards granted by the Company or the
SBSI Compensation Committee, and held by the Employee as of the Date of
Termination will become immediately vested and exercisable as of the Date of
Termination and, to the extent necessary, this Agreement is hereby deemed an
amendment of any such outstanding stock option or other equity award;
and
(iii) to
the extent not theretofore paid or provided, the Company shall timely pay or
provide to the Employee any other amounts or benefits required to be paid or
provided or which the Employee is eligible to receive under any plan, program,
policy or practice of the Company to the extent provided to Peer Executives
prior to the Date of Termination (such other amounts and benefits shall be
hereinafter referred to as the “Other Benefits”).
(c) Death. If
the Employee’s employment is terminated by reason of Employee’s death during the
Employment Period, then this Agreement will terminate without further
obligations to Employee, other than for payment to Employee's estate or
beneficiaries of Employee's accrued but unpaid Base Salary up to and including
the Date of Termination as well as Other Benefits. Employee's estate
or beneficiaries shall not be entitled to receive any additional compensation
or
benefits from Company. With respect to the provision of Other
Benefits, the term Other Benefits as used in this Section 6(c) shall
include, without limitation, and Employee's estate or beneficiaries shall be
entitled after the Date of Termination to receive, death and other benefits
under such plans, programs, practices and policies relating to death, if any,
as
are applicable to Employee on the Date of Termination.
(d) Retirement. If
Employee’s employment is terminated by reason of Employee’s Retirement during
the Employment Period, this Agreement shall terminate without further
obligations to Employee, other than for payment of accrued but unpaid Base
Salary up to and including the Date of Termination and the timely payment or
provision of Other Benefits. With respect to the provision of Other
Benefits, the term Other Benefits as used in this Section 6(d) shall
include, without limitation, and Employee shall be entitled after the Date
of
Termination to receive, retirement and other benefits under such plans,
programs, practices and policies relating to retirement, if any, as are
applicable to Employee on the Date of Termination.
(e) Disability.
If the Employee’s employment is terminated by reason of Employee’s Disability
during the Employment Period, then this Agreement will terminate without further
obligations to Employee, other than for payment of
Employee's accrued but unpaid Base Salary up to and including the
Date of Termination as well as Other Benefits. Employee shall not be
entitled to receive any additional compensation or benefits from
Company. With respect to the provision of Other Benefits, the term
Other Benefits as used in this Section 6(e) shall include, without
limitation, and Employee shall be entitled after the Date of Termination to
receive, disability and other benefits under such plans, programs, practices
and
policies relating to disability, if any, as are applicable to Employee on the
Date of Termination.
(f) Expiration
of Employment Period. If the Employee’s employment shall be
terminated due to the expiration of the Employment Period as provided for in
Section 3, this Agreement shall terminate without further obligations to the
Employee, other than for payment of Employee's accrued but unpaid Base Salary
up
to and including the Date of Termination and the timely payment or provision
of
Other Benefits. Employee shall not be entitled to receive any
additional compensation or benefits from Company.
(g) Internal
Revenue Code Section 280G.
(i) Anything
in this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the benefit
of the Employee (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise) (a "Payment" would be
subject to the excise tax imposed by Section 4999 of the Code (the "Excise
Tax"), then, prior to the making of any Payment to the Employee, a calculation
shall be made comparing (i) the net benefit to the Employee of the Payment
after
payment of the Excise Tax, to (ii) the net benefit to the Employee if the
Payment had been limited to the extent necessary to avoid being subject to
the
Excise Tax. If the amount calculated under (i) above is less than the
amount calculated under (ii) above, then the Payment shall be limited to the
extent necessary to avoid being subject to the Excise Tax (the “Reduced
Amount”). In that event, the Employee shall direct which Payments are
to be modified or reduced.
(ii) Unless
otherwise agreed upon by
the Company and the Employee, all determinations required to be made under
this
Section 6(g), including the assumptions to be used in arriving at such
determination, shall be made by an independent accounting firm mutually
acceptable to the Company and the Employee (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and the Employee
within 15 business days of the receipt of notice from the Employee that there
has been a Payment, or such earlier time as is requested by the
Company. All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any determination by the Accounting Firm shall
be binding upon the Company and the Executive
(h) Limitation
of Benefits. Notwithstanding any other provision of this
Agreement, nothing shall obligate the Company to make any payment to the
Employee that is prohibited by the provisions of 12 U.S.C. § 1828(k) or the
implementing regulations of the FDIC; provided, however, the Company shall
exercise commercially reasonable efforts to obtain the approval of the Board
of
Governors of the Federal Reserve System, and the concurrence of the FDIC, to
make the payments provided herein (or, to the extent that they will not approve
payment in full, such lesser portion as shall be acceptable to
them).
7. Change
in Control. For purposes of this Agreement, “Change in Control”
shall mean the occurrence of any one of the following: a Change in
the Actual Control of the Company or SBSI as described in Section 7(i), a Change
in Effective Control, as described in Section 7(ii), and a Change in the
Ownership of the Company’s or SBSI's Assets, as described in Section
7(iii).
(i) Change
in Actual Control shall mean the acquisition by any one person, or more than
one
person acting as a group (as defined in subsection (iv), below) of ownership
of
stock of the Company or SBSI that, together with stock held by such person
or
group, constitutes more than 50 percent of the total fair market value or total
voting power of the stock of the Company or SBSI, respectively. However, if
any
one person, or more than one person acting as a group, is considered to own
more
than 50 percent of the total fair market value or total voting power of the
stock of the Company or SBSI, the acquisition of additional stock by the same
person or persons is not considered to cause a change in the ownership of the
Company or SBSI, respectively, or to cause a Change in the Effective Control
(within the meaning of Section 7(a)(ii)) of the Company or SBSI, respectively.
An increase in the percentage of stock owned by any one person, or persons
acting as a group, as a result of a transaction in which the Company or SBSI
acquires its stock in exchange for property will be treated as an acquisition
of
stock for purposes of this section. Notwithstanding the foregoing,
the acquisition of the common stock of SBSI by any direct or indirect subsidiary
or affiliate of the Company shall not be considered to cause a Change in
Control.
(ii) Change
in Effective Control shall mean: (A) the acquisition by any one person, or
more
than one person acting as a group (as defined in Section (iv), below), during
any 12-month period of stock of the Company or SBSI possessing 35 percent or
more of the total voting power of the stock of the Company or SBSI,
respectively; or (B) the replacement, of a majority of members of the Company’s
board of directors during any 12-month period by directors whose appointment
or
election is not endorsed by a majority of the members of the Company’s board of
directors prior to the date of election in accordance with Treasury Regulation
§
1.409A-1(g)(5)(iv)(A)(2). Notwithstanding the foregoing, (x) if any one person,
or more than one person acting as a group, is considered to effectively control
the Company or SBSI (within the meaning of this subsection (ii)), the
acquisition of additional control of the Company or SBSI, respectively, by
the
same person or persons is not considered to cause a Change in Control and (y)
the acquisition of the common stock of SBSI by any direct or indirect subsidiary
or affiliate of the Company shall not be considered to cause a Change in
Control.
(iii) Change
in the Ownership of the Company’s or SBSI's Assets shall mean the acquisition by
any one person, or more than one person acting as a group (as defined in
subsection (iv), below), during any 12-month period of assets from the Company
or SBSI 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 Company
or SBSI, respectively, immediately prior to such acquisition or
acquisitions. Notwithstanding the foregoing, there is no change in control
event under this section when there is a transfer to an entity that is
controlled by the Company or the shareholders of the Company immediately after
the transfer.
(iv) Persons
acting as a group. For purposes of this Section 7, persons will not be
considered to be acting as a group solely because they purchase or own stock
of
the same corporation at the same time, or as a result of the same public
offering. 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 corporation.
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.
8. Delivery
of Documents upon Termination. The Employee shall deliver to the
Company or its designee at the termination of the Employee’s employment all
correspondence, memoranda, notes, records, drawings, sketches, plans, customer
lists, product compositions, and other documents and all copies thereof, made,
composed or received by the Employee, solely or jointly with others, that are
in
the Employee’s possession, custody, or control at termination and that are
related in any manner to the past, present, or anticipated business or any
member of the Company.
9. Restrictions
on Conduct.
(a) General. Employee
and the Company understand and agree that the purpose of the provisions of
this
Section 9 is to protect the legitimate business interests of the Company, as
more fully described below, and is not intended to eliminate Employee’s
post-employment competition with the Company per se, nor is it intended
to impair or infringe upon Employee’s right to work, earn a living, or acquire
and possess property from the fruits of his labor. Employee hereby
acknowledges that Employee has received good and valuable consideration for
the
post-employment restrictions set forth in this Section 9 in the form of his
employment and the compensation and benefits provided for
herein. Employee hereby further acknowledges that the post-employment
restrictions set forth in this Section 9 are reasonable and that they do not,
and will not, unduly impair his ability to earn a living after the termination
of this Agreement.
In
addition, the
parties acknowledge: (A) that Employee’s services under this Agreement require
special expertise and talent in the provision of Competitive Services (as
defined herein) and that Employee will have substantial contacts with customers,
suppliers, advertisers, vendors and employees of the Company; (B) that pursuant
to this Agreement, Employee will be placed in a position of trust and
responsibility and he will have access to a substantial amount of Confidential
Information and Trade Secrets (as defined herein) and that the Company is
placing him in such position and giving him access to such information in
reliance upon his agreement not to compete with the Company during the
Restricted Period (as defined herein); (C) that due to his management duties,
Employee will be the repository of a substantial portion of the goodwill of
the
Company and would have an unfair advantage in competing with the Company for
business from its customers; (D) that due to Employee’s special experience and
talent, the loss of Employee’s services to the Company under this Agreement
cannot reasonably or adequately be compensated solely by damages in an action
at
law; (E) that Employee is capable of competing with the Company; and (F) that
Employee is capable of obtaining gainful, lucrative and desirable employment
that does not violate the restrictions contained in this Agreement.
Therefore,
subject
to the limitations of reasonableness imposed by law, Employee shall be subject
to the restrictions set forth in this Section 9.
(b) Definitions.
“Competitive
Services” means responsible for the day to day operations of the
Company in accordance with policies, goals and objectives.
“Confidential
Information” means all information regarding the Company, its
activities, business or clients that is the subject of reasonable efforts by
the
Company to maintain its confidentiality and that is not generally disclosed
by
practice or authority to persons not employed by the Company, but that does
not
rise to the level of a Trade Secret. “Confidential Information” shall
include, but is not limited to, financial plans and data concerning the Company;
management planning information; business plans; operational methods; market
studies; marketing plans or strategies; product development techniques or plans;
customer lists; details of customer contracts; current and anticipated customer
requirements; past, current and planned research and development; business
acquisition plans; and new personnel acquisition plans. “Confidential
Information” shall not include information that has become generally available
to the public by the act of one who has the right to disclose such information
without violating any right or privilege of the Company. This
definition shall not limit any definition of “confidential information” or any
equivalent term under state or federal law.
“Person”
means any individual or any corporation, partnership, joint venture, limited
liability company, association or other entity or enterprise.
“Principal
or Representative” means a principal, owner, partner, shareholder,
joint venturer, investor, member, trustee, director, officer, manager, employee,
agent, representative or consultant.
“Protected
Customers” means any Person to whom the Company sold its products or
services or solicited to sell its products or services during the Employment
Period.
“Protected
Employees” means employees of the Company who were
employed by the Company at any time during the Employment Period.
“Restricted
Period” means the Employment Period and a period extending one (1) year
from the termination of Employee’s employment with the Company for any reason
whatsoever.
"Restricted
Territory" means Xxxxx County, Texas and any
other area or location where the Employee has provided services to the Company
during the Employment Period.
“Restrictive
Covenants” means the restrictive covenants contained in Section 9(c)
hereof.
“Trade
Secret” means all information, without regard to form, including, but
not limited to, technical or nontechnical data, a formula, a pattern, a
compilation, a program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, product plans, distribution lists or a list
of
actual or potential customers, advertisers or suppliers which is not commonly
known by or available to the public and which information: (A)
derives economic value, actual or potential, from not being generally known
to,
and not being readily ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use; and (B) is the subject of
efforts that are reasonable under the circumstances to maintain its
secrecy. Without limiting the foregoing, Trade Secret means any item
of confidential information that constitutes a “trade secret(s)” under
applicable common law or statutory law.
(c) Restrictive
Covenants.
|
|
(i)
|
Covenant
Not to Compete. In consideration of the compensation and
benefits being paid and to be paid by the Company to Employee hereunder,
Employee hereby agrees that, during the Restricted Period, Employee
will
not, without prior written consent of the Company, directly or indirectly,
sell or otherwise provide Competitive Services within the Restricted
Territory on his own behalf or as a Principal or Representative of
any
other Person; provided, however, that the provisions of this
Agreement shall not be deemed to prohibit the ownership by Employee
of not
more than five percent (5%) of any class of securities of any corporation
having a class of securities registered pursuant to the Securities
Exchange Act of 1934, as amended.
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(ii) Restriction
on Disclosure and Use of Confidential Information and Trade
Secrets. Employee understands and agrees that the Confidential
Information and Trade Secrets constitute valuable assets of the Company and
may
not be converted to Employee’s own use. Accordingly, Employee hereby
agrees that Employee shall not, directly or indirectly, at any time during
the
Restricted Period, reveal, divulge, or disclose to any Person not expressly
authorized by the Company any Confidential Information, and Employee shall
not,
directly or indirectly, at any time during the Restricted Period, use or make
use of any Confidential Information in connection with any business activity
other than that of the Company. Throughout the term of this Agreement
and at all times after the date that this Agreement terminates for any reason,
Employee shall not directly or indirectly transmit or disclose any Trade Secret
of the Company to any Person, and shall not make use of any such Trade Secret,
directly or indirectly, for himself or for others, without the prior written
consent of the Company. The parties acknowledge and agree that this
Agreement is not intended to, and does not, alter either the Company’s rights or
Employee’s obligations under any applicable state or federal statutory or common
law regarding trade secrets and unfair trade practices.
Anything
herein to
the contrary notwithstanding, Employee shall not be restricted from disclosing
or using Confidential Information that is required to be disclosed by law,
court
order or other legal process; provided, however, that in the event
disclosure is required by law, Employee shall provide the Company with prompt
notice of such requirement so that the Company may seek an appropriate
protective order prior to any such required disclosure by Employee.
(iii) Nonsolicitation
of Protected Employees. Employee understands and agrees that the
relationship between the Company and each of its Protected Employees constitutes
a valuable asset of the Company and may not be converted to Employee’s own
use. Accordingly, Employee hereby agrees that during the Restricted
Period, Employee shall not directly or indirectly, on Employee’s own behalf or
as a Principal or Representative of any Person, solicit or induce any Protected
Employee to terminate his or her employment relationship with the Company or
to
enter into employment with any other Person.
(iv) Restriction
on Relationships with Protected Customers. Employee understands
and agrees that the relationship between the Company and each of its Protected
Customers constitutes a valuable asset of the Company and may not be converted
to Employee’s own use. Accordingly, Employee hereby agrees that,
during the Restricted Period, Employee shall not, without the prior written
consent of the Company, directly or indirectly, on Employee’s own behalf or as a
Principal or Representative of any Person, solicit, divert, take away or attempt
to solicit, divert or take away a Protected Customer; provided,
however, that the prohibition of this covenant shall apply only to
Protected Customers with whom Employee had Material Contact on the Company’s
behalf during the Employment Period. For purposes of this Agreement,
Employee had “Material Contact” with a Protected Customer if (a) he had business
dealings with the Protected Customer on the Company’s behalf; (b) he was
responsible for supervising or coordinating the dealings between the Company
and
the Protected Customer; or (c) he obtained Trade Secrets and/or Confidential
Information about the customer as a result of his association with the
Company.
(d) Enforcement
of Restrictive Covenants.
(i) Rights
and Remedies Upon Breach. In the event Employee breaches, or
threatens to commit a breach of, any of the provisions of the Restrictive
Covenants, the Company shall have the following rights and remedies, which
shall
be independent of any others and severally enforceable, and shall be in addition
to, and not in lieu of, any other rights and remedies available to the Company
at law or in equity:
(A) the
right and remedy to enjoin, preliminarily and permanently and without the
necessity of posting bond, Employee from violating or threatening to violate
the
Restrictive Covenants and to have the Restrictive Covenants specifically
enforced by any court of competent jurisdiction, it being agreed that any breach
or threatened breach of the Restrictive Covenants would cause irreparable injury
to the Company and that money damages would not provide an adequate remedy
to
the Company;
(B) the
right and remedy to require Employee to account for and pay over to the Company
all compensation, profits, monies, accruals, increments or other benefits
derived or received by Employee as the result of any transactions constituting
a
breach of the Restrictive Covenants; and
(C) the
right and remedy to require Employee to pay the reasonable attorneys’ fees
incurred by Company in enforcing the Restrictive Covenants.
(ii) Severability
of Covenants. Employee acknowledges and agrees that the
Restrictive Covenants are reasonable and valid in time and scope and in all
other respects. The covenants set forth in this Agreement shall be
considered and construed as separate and independent
covenants. Should any part or provision of any covenant be held
invalid, void or unenforceable in any court of competent jurisdiction, such
invalidity, voidness or unenforceability shall not render invalid, void or
unenforceable any other part or provision of this Agreement.
(iii) Reformation. The
parties hereunder agree that it is their intention that the Restrictive
Covenants be enforced in accordance with their terms to the maximum extent
possible under applicable law. If any portion of the foregoing
provisions is found to be invalid or unenforceable by a court of competent
jurisdiction, the invalid or unreasonable term shall be redefined, or a new
enforceable term provided, such that the intent of the Company and Employee
in
agreeing to the provisions of this Agreement will not be impaired and the
provision in question shall be enforceable to the fullest extent of applicable
law.
10. Publicity
and Advertising. The Employee agrees that the Company may use the
Employee’s name, picture, or likeness for any advertising, publicity, or other
business purpose at any time, during the term of the Agreement by the Company
and may continue to use materials generated during the term of the Agreement
for
a period of 6 months thereafter. The Employee shall receive no
additional consideration if the Employee’s name, picture or likeness is so
used. The Employee further agrees that any negatives, prints or other
material for printing or reproduction purposes prepared in connection with
the
use of the Employee’s name, picture or likeness by the Company shall be and are
the sole property of the Company.
11. Dispute
Resolution. Subject to the Company’s right to seek injunctive
relief in court as provided in Section 9 of this Agreement, any dispute,
controversy or claim arising out of or in relation to or connection to this
Agreement, including without limitation any dispute as to the construction,
validity, interpretation, enforceability or breach of this Agreement, including
a claim for indemnification under Section 12, shall be resolved either as
provided by applicable law, or, at the option of either party, by impartial
binding arbitration. In the event that either the Company or the
Employee demands arbitration, the Employee and the Company agree that such
arbitration shall be the exclusive, final and binding forum for the ultimate
resolution of such claims, subject to any rights of appeal that either party
may
have under the Federal Arbitration Act and/or under applicable state law dealing
with the review of arbitration decisions.
(a) Arbitration. Arbitration
shall be heard and determined by one arbitrator, who shall be impartial and
who
shall be selected by mutual agreement of the parties; provided, however, that
if
the dispute involves more than $1,000,000, then the arbitration shall be heard
and determined by three (3) arbitrators. If three (3) arbitrators are
necessary as provided above, then (i) each side shall appoint an arbitrator
of
its choice within thirty (30) days of the submission of a notice of arbitration
and (ii) the party-appointed arbitrators shall in turn appoint a presiding
arbitrator of the tribunal within thirty (30) days following the appointment
of
the last party-appointed arbitrator. If any party fails or refuses to
appoint an arbitrator, the arbitration shall proceed with one (1)
arbitrator.
(b) Demand
for Arbitration. In the event that the Employee or the Company
initially elects to file suit in any court, the other party will have 60 days
from the date that it is formally served with a summons and a copy of the suit
to notify the party filing the suit of the non-filing party’s demand for
arbitration. In that case, the suit must be dismissed by consent of
the parties or by the court on motion, and arbitration commenced with the
arbitrators. In situations where suit has not been filed, either the
Employee or the Company may initiate arbitration by serving a written demand
for
arbitration upon the other party. Such a demand must be served within
twelve months of the events giving rise to the dispute. Any claim
that is not timely made will be deemed waived.
(c) Proceedings. Unless
otherwise expressly agreed in writing by the parties to the arbitration
proceedings:
(i) The
arbitration proceedings shall be held in Tyler, TX;
(ii) The
arbitrators shall be and remain at all times wholly independent and
impartial;
(iii) The
arbitration proceedings shall be conducted in accordance with the Employment
Arbitration Rules of the American Arbitration Association, as amended from
time
to time;
(iv) Any
procedural issues not determined under the arbitral rules selected pursuant
to
item (iii) above shall be determined by the law of the place of arbitration,
other than those laws which would refer the matter to another
jurisdiction;
(v) The
costs of the arbitration proceedings (including attorneys’ fees and costs) shall
be borne in the manner determined by the arbitrators;
(vi) The
arbitrators may grant any remedy or relief that would have been available to
the
parties had the matter been heard in court;
(vii) The
decision of the arbitrators shall be reduced to writing; final and binding
without the right of appeal; the sole and exclusive remedy regarding any claims,
counterclaims, issues or accounting presented to the arbitrators; made and
promptly paid in United States dollars free of any deduction or offset; and
any
costs or fees incident to enforcing the award shall to the maximum extent
permitted by law, be charged against the party resisting such
enforcement;
(viii) The
award shall include interest from the date of any breach or violation of this
Agreement, as determined by the arbitral award, and from the date of the award
until paid in full, at 6% per annum; and
(ix) Judgment
upon the award may be entered in any court having jurisdiction over the person
or the assets of the party owing the judgment or application may be made to
such
court for a judicial acceptance of the award and an order of enforcement, as
the
case may be.
(d) Acknowledgement
of Parties. The Company and Employee understand and acknowledge
that this Agreement means that neither can pursue an action against the other
in
a court of law regarding any employment dispute, except for claims involving
workers’ compensation benefits or unemployment benefits, and except as set forth
elsewhere in this Agreement, in the event that either party notifies the other
of its demand for arbitration under this Agreement. The Company and
Employee understand and agree that this Section 11, concerning arbitration,
shall not include any controversies or claims related to any agreements or
provisions (including provisions in this Agreement) respecting confidentiality,
proprietary information, non-competition, non-solicitation, trade secrets,
or
breaches of fiduciary obligations by the Employee, which shall not be subject
to
arbitration.
(e) Consultation. Employee
has been advised of the Employee’s right to consult with an attorney prior to
entering into this Agreement.
12. Indemnification. The
Company shall indemnify, defend, protect and hold harmless Employee, from and
against all actions, suits or proceedings (whether civil, criminal,
administrative, arbitrative or investigative) (collectively, “Proceedings”), and
all other claims, demands, losses, damages, liabilities, judgments, awards,
penalties, fines, settlements, costs and expenses (including court costs and
reasonable attorneys’ fees), arising out of the management of the Company or
Employee’s service. This indemnity shall apply to matters that arise
out of the negligence, strict liability or other fault or responsibility by
Employee, provided however, that this indemnity shall not apply to matters
arising out of the gross negligence, willful misconduct, bad faith or
intentional breach of this Agreement by Employee.
(a) Advance
Payment. The right to indemnification conferred in Section 12
shall include the right to be paid or reimbursed by the Company the reasonable
expenses incurred by Employee who was, is or is threatened to be made a named
defendant or respondent in a Proceeding in advance of the final disposition
of
the Proceeding and without any determination as to Employee’s
ultimate entitlement to indemnification; provided, however, that the payment
of
such expenses incurred by Employee in advance of the final disposition of a
Proceeding, shall be made only upon delivery to the Company of a written
affirmation by Employee of Employee’s good faith belief that Employee has met
the standard of conduct necessary for indemnification under this Section 12
and
a written undertaking, by or on behalf of Employee, to repay all amounts so
advanced if it shall ultimately be determined that such indemnified Employee
is
not entitled to be indemnified under this Section 12 or
otherwise. The Company shall also pay or reimburse Employee for
reasonable expenses in connection with Employee's appearance as a witness or
other participation in a Proceeding.
(b) Nonexclusivity
of Rights. The right to indemnification and the advancement and
payment of expenses conferred in this Section 12 shall not be exclusive of
any
other right which Employee, indemnified pursuant to Section 12, may have or
hereafter acquire under any Law or Agreement.
13. Miscellaneous
Provisions.
(a) Third-Party
Beneficiaries. The parties acknowledge and agree that the Company
and SBSI, and its direct and indirect subsidiaries and affiliated companies
are
intended to be beneficiaries of this Agreement and shall have every right to
enforce the terms and provisions of this Agreement in accordance with the
provisions of this Agreement.
(b) Successors
of the 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, by agreement
in
form and substance satisfactory to the Employee, expressly to assume 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 prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Employee to compensation from the Company in the same amount
and on the same terms as the Employee would be entitled hereunder if the
Employee terminated his employment for Good Reason in the event of a Change
in
Control, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, “Company” as hereinbefore
defined shall include any successor to its business and/or assets as aforesaid
which executes and delivers the agreement provided for in this Section 13 or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
(c) Employee’s
Heirs, etc. The Employee may not assign the Employee’s rights or
delegate the Employee’s duties or obligations hereunder without the written
consent of the Company. This Agreement shall inure to the benefit of
and be enforceable by the Employee’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Employee should die while any amounts would still be
payable to the Employee hereunder as if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with
the
terms of this Agreement to the Employee’s designee or, if there be no such
designee, to the Employee’s estate.
(d) Notices. Any
notice or communication required or permitted under the terms of this Agreement
shall be in writing and shall be delivered personally, or sent by registered
or
certified mail, return receipt requested, postage prepaid, or sent by nationally
recognized overnight carrier, postage prepaid, or sent by facsimile transmission
to the Company at the Company’s principal office and facsimile number in Tyler,
TX or to the Employee at the address and facsimile number, if any,
appearing on the books and records of the Company. Such notice or
communication shall be deemed given (a) when delivered if personally delivered;
(b) five mailing days after having been placed in the mail, if delivered by
registered or certified mail; (c) the business day after having been placed
with
a nationally recognized overnight carrier, if delivered by nationally recognized
overnight carrier, and (d) the business day after transmittal when transmitted
with electronic confirmation of receipt, if transmitted by
facsimile. Any party may change the address or facsimile number to
which notices or communications are to be sent to it by giving notice of such
change in the manner herein provided for giving notice. Until changed
by notice, the following shall be the address and facsimile number to which
notices shall be sent:
If
to the Company,
to: Southside
Bank
0000
Xxxxx Xxxxxxx
Xxxxx,
Xxxxx 00000
FAX:
000-000-0000
TELE: 903-531-7111
If
to the Employee,
to: Xxx
Xxxxxx
0000
Xxxxxxxxxx Xxxx
Xxxxx,
Xxxxx 00000
FAX:
000-000-0000
TELE: 903-531-7111
(e) Amendment
or Waiver. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to
in writing signed by the Employee and such officer as may be specifically
designated by the Board (which shall not include the Employee). No
waiver by either party hereto at any time of any breach by the other party
hereto of or compliance with, any condition or provision of this Agreement
to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party that are not set forth expressly in this Agreement.
(f) Invalid
Provisions. Should any portion of this Agreement be adjudged or
held to be invalid, unenforceable or void, such holding shall not have the
effect of invalidating or voiding the remainder of this Agreement and the
parties hereby agree that the portion so held invalid, unenforceable or void
shall if possible, be deemed amended or reduced in scope, or otherwise be
stricken from this Agreement to the extent required for the purposes of validity
and enforcement thereof.
(g) Unreasonable
Compensation. If any portion of the Compensation and Benefits
provided by this Agreement should be deemed to be unreasonable or
disproportionate to the services the Employee provides (under 12 C.F.R. 364
or
other applicable law), the Company shall reduce such Compensation and Benefits
to the maximum amount that would be reasonable or proportionate.
(h) Survival
of the Employee’s Obligations. The Employee’s obligations under
this Agreement shall survive regardless of whether the Employee’s employment by
the Company is terminated, voluntarily or involuntarily, by the Company or
the
Employee, with or without Cause. Employee acknowledges that new,
independent and valuable benefits have been received by Employee by virtue
of
this Agreement and such constitutes consideration for Employee’s agreements
herein.
(i) Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original but all of which together will constitute one and
the
same instrument.
(j) Governing
Law. This Agreement and any action or proceeding related to it
shall be governed by and construed under the laws of the State of
Texas.
(k) Captions
and Gender. The use of Captions and Section headings herein is
for purposes of convenience only and shall not effect the interpretation or
substance of any provisions contained herein. Similarly, the use of
the masculine gender with respect to pronouns in this Agreement is for purposes
of convenience and includes either sex who may be a signatory.
(l) Effect
on Prior Agreements. This Agreement, and any attachments,
represent the entire understanding between the parties hereto and supersedes
in
all respects any other prior Agreement or understanding between the Company
and
the Employee regarding the Employee’s employment, provided, however, that if the
Company determines, after a review of the final regulations issued under Section
409A of the Code and all applicable IRS guidance, that this Agreement should
be
further amended to avoid triggering the tax and interest penalties imposed
by
Section 409A of the Code, the Company may amend this Agreement to the extent
necessary to avoid triggering the tax and interest penalties imposed by Section
409A of the Code.
(m) Independent
Consideration. Employee acknowledges that this Agreement is fully
supported by new and independent consideration to Employee and fully meets
the
requirements of Texas laws as they relate to employment agreements that contain
non-compensation agreements. Employee agrees to all of the terms of
this Agreement as part of receiving the new and independent consideration
extended to Employee under this Agreement.
IN
WITNESS WHEREOF,
the Employee and a duly authorized Company officer have signed this Agreement
as
of the date first written above.
THE
EMPLOYEE: SOUTHSIDE
BANK
/s/
Xxx Xxxxxx By: /s/ X.
X. Xxxxxxx
XXX
XXXXXX Title: Chairman
and CEO
