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EXHIBIT 10(F)
DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT is entered into, effective as of the date executed, by
and between SOUTHSIDE BANK of Tyler, Texas, a corporation organized and
existing under the laws of the State of Texas, hereinafter called BANK, and SAM
DAWSON, hereinafter called EXECUTIVE. This Agreement amends and restates the
Agreement executed as of June 30, 1994 by Sam Dawson, EXECUTIVE, and B. G.
Hartley for the BANK.
W I T N E S S E T H:
I.
The Board of Directors of BANK have determined that the service of
EXECUTIVE to BANK since employment of EXECUTIVE has been of exceptional merit
and has constituted an invaluable contribution to the general welfare of BANK.
The Board of Directors has further determined that the continued service of
EXECUTIVE on behalf of BANK is essential to the future growth and profit of
BANK and it is in the best interest of BANK to arrange for financial incentives
for EXECUTIVE to remain in the employment of BANK for the balance of his work
lifetime.
II.
BANK agrees to employ EXECUTIVE in such capacity as BANK may from time
to time determine. EXECUTIVE will continue in the employment of BANK in such
capacity and with such duties and responsibilities as may from time to time be
assigned to such EXECUTIVE. BANK shall have sole discretion over compensation
to be paid to EXECUTIVE for the performance of such services. EXECUTIVE agrees
to well and truly perform his duties and obligations as an employee of BANK and
will use his best efforts to furnish faithful and satisfactory services to
BANK. Nothing in this Agreement shall be construed as any limitation of the
BANK's right and privilege to discontinue the employment of the EXECUTIVE at
any time, subject to the deferred compensation provisions set forth in this
Agreement.
III.
It is specifically agreed that if EXECUTIVE remains in the employment
of BANK until his total and permanent disability, death, or retirement,
whichever occurs first, BANK agrees to pay the sum of FIVE HUNDRED THOUSAND AND
NO/100 DOLLARS ($500,000.00) to EXECUTIVE or his surviving spouse or designated
beneficiaries as hereinafter provided. Such deferred compensation shall be
payable commencing on the 1st day of the month following the first of the
following events to occur:
A. The total and permanent disability of EXECUTIVE. (For the
purposes of this Agreement, total and permanent disability shall be defined as
a physical or mental impairment, non-self-induced, as diagnosed by a medical
doctor selected by BANK, that so incapacitates or disables EXECUTIVE such that
EXECUTIVE is no longer able to perform the essential functions of his position
with reasonable accommodation and that in the opinion of such medical doctor,
such condition is permanent);
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B. The retirement of EXECUTIVE. (For the purposes of this
Agreement, retirement of EXECUTIVE shall be defined as EXECUTIVE's termination
of employment with the BANK at or after attainment of age sixty-five (65)); or
C. The death of EXECUTIVE.
Deferred compensation, when it commences, shall be payable in 120
equal consecutive monthly installments of FOUR THOUSAND ONE HUNDRED SIXTY-SIX
AND 67/100 DOLLARS ($4,166.67) each.
IV.
EXECUTIVE shall have the right to name a beneficiary other than his
spouse, provided, such designation of beneficiary be in writing and signed by
EXECUTIVE and EXECUTIVE's spouse, and delivered to BANK. Such designation of
beneficiary may provide for alternative beneficiaries if the designated
beneficiary fails to survive EXECUTIVE or fails to survive the term of payout,
as provided above. Failure to designate a beneficiary in accordance with the
terms hereof shall be deemed an election by EXECUTIVE that such benefit as
provided herein shall go to the surviving spouse or, should the EXECUTIVE'S
spouse die simultaneously or predecease him or die during the term of the
payment of benefits, to his then surviving children in equal portions.
V.
If EXECUTIVE should die prior to retirement and such death is the
result of a suicide, the death benefits provided in this Agreement shall not be
payable unless such suicide occurs after the lapsing of any anti-suicide
provisions contained in any insurance policy purchased by BANK upon the life of
EXECUTIVE, should BANK so elect to purchase such insurance for its own benefit.
If there is no policy, no death benefit shall be payable if death is the result
of a suicide.
VI.
If for any reason other than good cause, EXECUTIVE'S employment is
involuntarily terminated by BANK, such termination shall not terminate this
Agreement and such involuntary termination other than for good cause shall be
deemed the same as retirement for the purposes of this Agreement. For the
purposes of this Agreement, "good cause" shall be defined as action or inaction
equivalent to habitual dereliction of duty, gross insubordination, willful
misconduct, criminal conduct, gross negligence, or willful or malicious
violation of federal or state banking statutes with the intent by the EXECUTIVE
to derive personal financial benefit or to do financial harm to the Bank.
VII.
If, prior to a Change in Control, EXECUTIVE terminates employment (as
contrasted with termination initiated by BANK) prior to attainment of age 65
for any reason other than death or disability, no amounts shall be due
EXECUTIVE under this Agreement. If, after a Change in Control, the EXECUTIVE
terminates employment (as contrasted with termination initiated by BANK) prior
to
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attainment of age 65 for any reason other than death, disability, or good
reason, no amounts shall be due EXECUTIVE under this Agreement. After a Change
in Control, a termination for good reason shall be deemed the same as
retirement for the purposes of this Agreement. For purposes of this Agreement
"good reason" shall mean that the EXECUTIVE resigns from his position(s) with
the BANK after the occurrence of any of the following as determined by the
EXECUTIVE in good faith:
(i) Without his express written consent, the assignment
to the EXECUTIVE of any duties that are clearly inconsistent with his
positions, duties, responsibilities and status with the BANK as in
effect immediately before the execution of this Agreement or a
detrimental change in his titles or offices as in effect immediately
before execution of this Agreement, or any removal of the EXECUTIVE
from or any failures to re-elect the EXECUTIVE to any of such
positions, except in connection with the termination of his employment
for good cause or as a result of his disability or death;
(ii) A reduction of the EXECUTIVE'S base salary or overall
compensation (other than as a result of year to year variations in
bonuses consistent with past practices or consistent with the similar
reductions applied to the BANK's entire workforce) without the prior
written consent of the EXECUTIVE;
(iii) The BANK shall relocate its principal executive
offices or require EXECUTIVE to have as his principal location of work
any location which is in excess of thirty (30) miles from the current
location of the BANK or to travel away from his office in the course
of discharging his responsibilities or duties hereunder more than
thirty (30) consecutive calendar days or an aggregate of more than
ninety (90) calendar days in any consecutive three hundred sixty-five
(365) calendar-day period without in either case his prior consent; or
(v) Failure by the BANK to 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 BANK,
by agreement in form and substance satisfactory to the EXECUTIVE,
expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the BANK would be required to
perform it if no such succession had taken place.
(vi) As a result of a Change in Control of the BANK or of
Southside Bancshares, Inc. ("BHC") and a change in circumstances
thereafter significantly affecting his position, the EXECUTIVE is
rendered substantially unable to carry out, or has been substantially
hindered in the performance of, any of the authorities, powers,
functions, responsibilities or duties attached to his position
immediately prior to the Change in Control of the BANK, which
situation is not remedied within thirty (30) calendar days after
receipt by the BANK of written notice from the EXECUTIVE of such
determination. For purposes of this section, a "Change in Control"
shall be deemed to have occurred in the event of any of the following:
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(1) a change in the ownership of the capital
stock of the BANK where a corporation, person or group acting
in concert (a "Person") as described in Section 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), holds or acquires, directly or indirectly, beneficial
ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of a number of shares of capital stock of
the BANK or of BHC which constitutes 50% or more of the
combined voting power of the BANK's (or BHC's) then
outstanding capital stock then entitled to vote generally in
the election of directors; or
(2) the persons who were members of the Board of
Directors of the BANK or BHC immediately prior to a tender
offer, exchange offer, contested election or any combination
of the foregoing, cease to constitute a majority of the Board
of Directors; or
(3) the adoption by the Board of Directors of the
BANK or of the BHC of a merger, consolidation or
reorganization plan involving the BANK in which the BANK or
BHC is not the surviving entity, or a sale of all or
substantially all of the assets of the BANK or BHC. For
purposes of this Agreement, a sale of all or substantially all
of the assets of the BANK or BHC shall be deemed to occur if
any Person acquires (or during the 12-month period ending on
the date of the most recent acquisition by such Person, has
acquired) gross assets of the BANK or BHC that have an
aggregate fair market value equal to 50% of the fair market
value of all of the gross assets of the BANK or BHC
immediately prior to such acquisition or acquisitions; or
(4) a tender offer or exchange offer is made by
any Person which, if successfully completed, would result in
such Person beneficially owning (within the meaning of Rule
13d-3 promulgated under the Exchange Act) either 50% or more
of the BANK's or BHC's outstanding shares of Common Stock or
shares of capital stock having 50% or more of the combined
voting power of the BANK's or BHC's then outstanding capital
stock (other than an offer made by the BANK or BHC), and
sufficient shares are acquired under the offer to cause such
person to own 50% or more of the voting power; or
(5) any other transactions or series of related
transactions occurring which have substantially the same
effect as the transactions specified in any of the preceding
clauses of this subsection (vi).
(vii) The BANK's failure to perform any material provision
of this Agreement.
(viii) Any requirement by the BANK or the Board of Directors
of the BANK that the EXECUTIVE perform, assist, abet or approve any
act which is or could be construed to be illegal under any federal,
state or local law.
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VII.
Neither EXECUTIVE nor any beneficiary designated by EXECUTIVE shall
have any power or right to transfer, assign, anticipate, mortgage, commute or
otherwise encumber in advance any of the benefits payable hereunder, nor shall
such benefits be subject to seizure for payment of any debts or judgments of
EXECUTIVE or beneficiaries, nor shall such benefits be transferable by
operation of law in the event of bankruptcy, insolvency or otherwise.
VIII.
The BANK shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Agreement. The
EXECUTIVE, his Beneficiary or any successor-in-interest to him shall be and
remain simply a general creditor of the BANK in the same manner as any other
creditor having a general unsecured claim.
For purposes of the Internal Revenue Code, the BANK intends this
Agreement to be an unfunded, unsecured promise to pay on the part of the BANK.
For purposes of ERISA, the BANK intends that this Agreement be an unfunded
arrangement for the benefit of a select member of management, who is a highly
compensated employee of the BANK for the purpose of qualifying this Agreement
for the "top hat" plan exception under sections 201(2), 301(a)(3) and 401(a)(1)
of ERISA. "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
Should the BANK elect to satisfy its obligations under this Agreement,
in whole or in part, through the purchase of life insurance, mutual funds,
disability policies or annuities, the BANK reserves the absolute right, in its
sole discretion, to terminate such at any time, in whole or in part. Any such
funding shall in no event affect EXECUTIVE'S rights and it is not intended that
any BANK asset be segregated or considered a plan asset. At no time shall the
EXECUTIVE have or be deemed to have any lien nor right, title or interest in or
to any specific investment or to any assets of the BANK; rather the EXECUTIVE
shall remain a general unsecured creditor of the BANK.
If the BANK elects to invest in a life insurance, disability or
annuity policy upon the life of EXECUTIVE, the EXECUTIVE shall assist the BANK
by freely submitting to a physical exam and supplying such additional
information necessary to obtain such insurance or annuities.
IX.
The Board of Directors of the BANK shall have the exclusive power and
authority to interpret and construe the Agreement. The Board of Directors of
the BANK may engage agents to assist it and may engage legal counsel, who may
be counsel to the BANK. The Agreement may be amended, suspended or terminated,
in whole or in part, only by a written instrument signed by a duly authorized
officer of the BANK and by EXECUTIVE.
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X.
Whenever in this Agreement words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine, feminine or
neuter gender, whenever they should so apply.
Nothing contained in this Agreement shall affect the right of the
EXECUTIVE to participate in or be covered by any qualified or non-qualified
pension, profit sharing, group, bonus or other supplemental compensation or
fringe benefit plan constituting a part of the BANK's existing or future
compensation structure.
The validity and interpretation of this Agreement shall be governed by
the laws of the State of Texas or Federal laws, where applicable.
No provision of this Agreement shall be deemed or construed to create
specific employment rights to the EXECUTIVE nor limit the right of the BANK to
discharge the EXECUTIVE at any time with or without cause. In a similar
fashion, no provision shall limit the EXECUTIVE'S rights to voluntarily sever
his employment at any time.
The BANK shall deduct from the amount of any payment made pursuant to
this Agreement any amounts required to be paid or withheld by the BANK with
respect to federal or state taxes. By executing this Agreement, the EXECUTIVE
agrees to all such deductions.
In case any one or more of the provisions contained in this Agreement
shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions in this Agreement shall
not in any way be affected or impaired.
XI.
In the event of any claim or controversy arising out of or relating to
this Agreement or the breach of this Agreement, the parties agree that all such
claims or controversies shall be resolved by final and binding arbitration in
Smith County, Texas, in accordance with the Commercial Arbitration Rules of the
American Arbitration Association in effect on the date when the claim or
controversy first arises. Either party must communicate its request for
arbitration under this section in writing ("Arbitration Notice") to the other
party within one hundred twenty (120) days from the date the claim or
controversy first arises. Failure to communicate Arbitration Notice within one
hundred twenty (120) days shall constitute a waiver of any such claim or
controversy.
All claims or controversies subject to arbitration under this section
shall be submitted to an arbitration hearing within thirty (30) days from the
date Arbitration Notice is communicated by either party. All claims or
controversies submitted to arbitration under this section shall be resolved by
a panel of three (3) arbitrators who are licensed to practice law in the State
of Texas and who are experienced in the arbitration of employment disputes.
These arbitrators shall be selected in accordance with the applicable
Commercial Arbitration Rules or by agreement of the parties. Either party may
request that the arbitration proceeding be stenographically recorded by a
Certified Shorthand Reporter. The arbitrators shall issue a decision on any
claim or controversy within thirty (30) days from the date the arbitration
hearing is completed. The parties shall have the right to be represented by
legal counsel at any arbitration hearing. The costs of any arbitration
hearing, including the attorneys' fees incurred by both parties (including any
costs, expenses or attorneys' fees incurred in
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filing any lawsuit to compel arbitration under this section, if applicable),
shall be paid by the losing party or parties.
The arbitration provisions in this section are subject to the Federal
Arbitration Act, 9 U.S.C. Sections 1 et seq. (West 1994) (or any successor
provisions) and may be specifically enforced by any party, and submission to
arbitration proceedings compelled, by any Court of competent jurisdiction. The
decision of the arbitrators may be specifically enforced by any party in any
court of competent jurisdiction.
XII.
This Agreement shall be binding upon and inure to the benefit of
EXECUTIVE, his heirs and personal representative, and BANK and its successors
and assigns and supersedes all prior agreements between EXECUTIVE and BANK
regarding deferred compensation. It is specifically agreed that this is not a
contract of employment between the parties hereto and nothing herein shall
restrict the right of BANK to discharge EXECUTIVE, with or without cause, or
restrict the right of EXECUTIVE to terminate his employment. However,
termination of employment by EXECUTIVE prior to retirement for any reason not
specifically entitling EXECUTIVE to compensation under the preceding terms of
this Agreement shall terminate all obligations of BANK hereunder.
EXECUTED this ______ day of _______________________, 1997.
----------------------------------------
SAM DAWSON, EXECUTIVE
SOUTHSIDE BANK
By:
------------------------------------
B. G. HARTLEY, CHAIRMAN OF THE BOARD
ATTEST:
- -------------------------------------
VICE CHAIRMAN OF THE BOARD
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DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT is entered into, effective as of the date executed, by
and between SOUTHSIDE BANK of Tyler, Texas, a corporation organized and
existing under the laws of the State of Texas, hereinafter called BANK, and LEE
GIBSON, hereinafter called EXECUTIVE. This Agreement amends and restates the
Agreement executed as of June 30, 1994 by Lee Gibson, EXECUTIVE, and B. G.
Hartley for the BANK.
W I T N E S S E T H:
I.
The Board of Directors of BANK have determined that the service of
EXECUTIVE to BANK since employment of EXECUTIVE has been of exceptional merit
and has constituted an invaluable contribution to the general welfare of BANK.
The Board of Directors has further determined that the continued service of
EXECUTIVE on behalf of BANK is essential to the future growth and profit of
BANK and it is in the best interest of BANK to arrange for financial incentives
for EXECUTIVE to remain in the employment of BANK for the balance of his work
lifetime.
II.
BANK agrees to employ EXECUTIVE in such capacity as BANK may from time
to time determine. EXECUTIVE will continue in the employment of BANK in such
capacity and with such duties and responsibilities as may from time to time be
assigned to such EXECUTIVE. BANK shall have sole discretion over compensation
to be paid to EXECUTIVE for the performance of such services. EXECUTIVE agrees
to well and truly perform his duties and obligations as an employee of BANK and
will use his best efforts to furnish faithful and satisfactory services to
BANK. Nothing in this Agreement shall be construed as any limitation of the
BANK's right and privilege to discontinue the employment of the EXECUTIVE at
any time, subject to the deferred compensation provisions set forth in this
Agreement.
III.
It is specifically agreed that if EXECUTIVE remains in the employment
of BANK until his total and permanent disability, death, or retirement,
whichever occurs first, BANK agrees to pay the sum of FOUR HUNDRED THOUSAND AND
NO/100 DOLLARS ($400,000.00) to EXECUTIVE or his surviving spouse or designated
beneficiaries as hereinafter provided. Such deferred compensation shall be
payable commencing on the 1st day of the month following the first of the
following events to occur:
A. The total and permanent disability of EXECUTIVE. (For the
purposes of this Agreement, total and permanent disability shall be defined as
a physical or mental impairment, non-self-induced, as diagnosed by a medical
doctor selected by BANK, that so incapacitates or disables EXECUTIVE such that
EXECUTIVE is no longer able to perform the essential functions of his position
with reasonable accommodation and that in the opinion of such medical doctor,
such condition is permanent);
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B. The retirement of EXECUTIVE. (For the purposes of this
Agreement, retirement of EXECUTIVE shall be defined as EXECUTIVE's termination
of employment with the BANK at or after attainment of age sixty-five (65)); or
C. The death of EXECUTIVE.
Deferred compensation, when it commences, shall be payable in 120
equal consecutive monthly installments of THREE THOUSAND THREE HUNDRED
THIRTY-THREE AND 33/100 DOLLARS ($3,333.33) each.
IV.
EXECUTIVE shall have the right to name a beneficiary other than his
spouse, provided, such designation of beneficiary be in writing and signed by
EXECUTIVE and EXECUTIVE's spouse, and delivered to BANK. Such designation of
beneficiary may provide for alternative beneficiaries if the designated
beneficiary fails to survive EXECUTIVE or fails to survive the term of payout,
as provided above. Failure to designate a beneficiary in accordance with the
terms hereof shall be deemed an election by EXECUTIVE that such benefit as
provided herein shall go to the surviving spouse or, should the EXECUTIVE'S
spouse die simultaneously or predecease him or die during the term of the
payment of benefits, to his then surviving children in equal portions.
V.
If EXECUTIVE should die prior to retirement and such death is the
result of a suicide, the death benefits provided in this Agreement shall not be
payable unless such suicide occurs after the lapsing of any anti-suicide
provisions contained in any insurance policy purchased by BANK upon the life of
EXECUTIVE, should BANK so elect to purchase such insurance for its own benefit.
If there is no policy, no death benefit shall be payable if death is the result
of a suicide.
VI.
If for any reason other than good cause, EXECUTIVE'S employment is
involuntarily terminated by BANK, such termination shall not terminate this
Agreement and such involuntary termination other than for good cause shall be
deemed the same as retirement for the purposes of this Agreement. For the
purposes of this Agreement, "good cause" shall be defined as action or inaction
equivalent to habitual dereliction of duty, gross insubordination, willful
misconduct, criminal conduct, gross negligence, or willful or malicious
violation of federal or state banking statutes with the intent by the EXECUTIVE
to derive personal financial benefit or to do financial harm to the Bank.
VII.
If, prior to a Change in Control, EXECUTIVE terminates employment (as
contrasted with termination initiated by BANK) prior to attainment of age 65
for any reason other than death or disability, no amounts shall be due
EXECUTIVE under this Agreement. If, after a Change in Control,
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the EXECUTIVE terminates employment (as contrasted with termination initiated
by BANK) prior to attainment of age 65 for any reason other than death,
disability, or good reason, no amounts shall be due EXECUTIVE under this
Agreement. After a Change in Control, a termination for good reason shall be
deemed the same as retirement for the purposes of this Agreement. For purposes
of this Agreement "good reason" shall mean that the EXECUTIVE resigns from his
position(s) with the BANK after the occurrence of any of the following as
determined by the EXECUTIVE in good faith:
(i) Without his express written consent, the assignment
to the EXECUTIVE of any duties that are clearly inconsistent with his
positions, duties, responsibilities and status with the BANK as in
effect immediately before the execution of this Agreement or a
detrimental change in his titles or offices as in effect immediately
before execution of this Agreement, or any removal of the EXECUTIVE
from or any failures to re-elect the EXECUTIVE to any of such
positions, except in connection with the termination of his employment
for good cause or as a result of his disability or death;
(ii) A reduction of the EXECUTIVE'S base salary or overall
compensation (other than as a result of year to year variations in
bonuses consistent with past practices or consistent with the similar
reductions applied to the BANK's entire workforce) without the prior
written consent of the EXECUTIVE;
(iii) The BANK shall relocate its principal executive
offices or require EXECUTIVE to have as his principal location of work
any location which is in excess of thirty (30) miles from the current
location of the BANK or to travel away from his office in the course
of discharging his responsibilities or duties hereunder more than
thirty (30) consecutive calendar days or an aggregate of more than
ninety (90) calendar days in any consecutive three hundred sixty-five
(365) calendar-day period without in either case his prior consent; or
(v) Failure by the BANK to 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 BANK,
by agreement in form and substance satisfactory to the EXECUTIVE,
expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the BANK would be required to
perform it if no such succession had taken place.
(vi) As a result of a Change in Control of the BANK or of
Southside Bancshares, Inc. ("BHC") and a change in circumstances
thereafter significantly affecting his position, the EXECUTIVE is
rendered substantially unable to carry out, or has been substantially
hindered in the performance of, any of the authorities, powers,
functions, responsibilities or duties attached to his position
immediately prior to the Change in Control of the BANK, which
situation is not remedied within thirty (30) calendar days after
receipt by the BANK of written notice from the EXECUTIVE of such
determination. For purposes of this section, a "Change in Control"
shall be deemed to have occurred in the event of any of the following:
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(1) a change in the ownership of the capital
stock of the BANK where a corporation, person or group acting
in concert (a "Person") as described in Section 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), holds or acquires, directly or indirectly, beneficial
ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of a number of shares of capital stock of
the BANK or of BHC which constitutes 50% or more of the
combined voting power of the BANK's (or BHC's) then
outstanding capital stock then entitled to vote generally in
the election of directors; or
(2) the persons who were members of the Board of
Directors of the BANK or BHC immediately prior to a tender
offer, exchange offer, contested election or any combination
of the foregoing, cease to constitute a majority of the Board
of Directors; or
(3) the adoption by the Board of Directors of the
BANK or of the BHC of a merger, consolidation or
reorganization plan involving the BANK in which the BANK or
BHC is not the surviving entity, or a sale of all or
substantially all of the assets of the BANK or BHC. For
purposes of this Agreement, a sale of all or substantially all
of the assets of the BANK or BHC shall be deemed to occur if
any Person acquires (or during the 12-month period ending on
the date of the most recent acquisition by such Person, has
acquired) gross assets of the BANK or BHC that have an
aggregate fair market value equal to 50% of the fair market
value of all of the gross assets of the BANK or BHC
immediately prior to such acquisition or acquisitions; or
(4) a tender offer or exchange offer is made by
any Person which, if successfully completed, would result in
such Person beneficially owning (within the meaning of Rule
13d-3 promulgated under the Exchange Act) either 50% or more
of the BANK's or BHC's outstanding shares of Common Stock or
shares of capital stock having 50% or more of the combined
voting power of the BANK's or BHC's then outstanding capital
stock (other than an offer made by the BANK or BHC), and
sufficient shares are acquired under the offer to cause such
person to own 50% or more of the voting power; or
(5) any other transactions or series of related
transactions occurring which have substantially the same
effect as the transactions specified in any of the preceding
clauses of this subsection (vi).
(vii) The BANK's failure to perform any material provision
of this Agreement.
(viii) Any requirement by the BANK or the Board of Directors
of the BANK that the EXECUTIVE perform, assist, abet or approve any
act which is or could be construed to be illegal under any federal,
state or local law.
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VII.
Neither EXECUTIVE nor any beneficiary designated by EXECUTIVE shall
have any power or right to transfer, assign, anticipate, mortgage, commute or
otherwise encumber in advance any of the benefits payable hereunder, nor shall
such benefits be subject to seizure for payment of any debts or judgments of
EXECUTIVE or beneficiaries, nor shall such benefits be transferable by
operation of law in the event of bankruptcy, insolvency or otherwise.
VIII.
The BANK shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Agreement. The
EXECUTIVE, his Beneficiary or any successor-in-interest to him shall be and
remain simply a general creditor of the BANK in the same manner as any other
creditor having a general unsecured claim.
For purposes of the Internal Revenue Code, the BANK intends this
Agreement to be an unfunded, unsecured promise to pay on the part of the BANK.
For purposes of ERISA, the BANK intends that this Agreement be an unfunded
arrangement for the benefit of a select member of management, who is a highly
compensated employee of the BANK for the purpose of qualifying this Agreement
for the "top hat" plan exception under sections 201(2), 301(a)(3) and 401(a)(1)
of ERISA. "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
Should the BANK elect to satisfy its obligations under this Agreement,
in whole or in part, through the purchase of life insurance, mutual funds,
disability policies or annuities, the BANK reserves the absolute right, in its
sole discretion, to terminate such at any time, in whole or in part. Any such
funding shall in no event affect EXECUTIVE'S rights and it is not intended that
any BANK asset be segregated or considered a plan asset. At no time shall the
EXECUTIVE have or be deemed to have any lien nor right, title or interest in or
to any specific investment or to any assets of the BANK; rather the EXECUTIVE
shall remain a general unsecured creditor of the BANK.
If the BANK elects to invest in a life insurance, disability or
annuity policy upon the life of EXECUTIVE, the EXECUTIVE shall assist the BANK
by freely submitting to a physical exam and supplying such additional
information necessary to obtain such insurance or annuities.
IX.
The Board of Directors of the BANK shall have the exclusive power and
authority to interpret and construe the Agreement. The Board of Directors of
the BANK may engage agents to assist it and may engage legal counsel, who may
be counsel to the BANK. The Agreement may be amended, suspended or terminated,
in whole or in part, only by a written instrument signed by a duly authorized
officer of the BANK and by EXECUTIVE.
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13
X.
Whenever in this Agreement words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine, feminine or
neuter gender, whenever they should so apply.
Nothing contained in this Agreement shall affect the right of the
EXECUTIVE to participate in or be covered by any qualified or non-qualified
pension, profit sharing, group, bonus or other supplemental compensation or
fringe benefit plan constituting a part of the BANK's existing or future
compensation structure.
The validity and interpretation of this Agreement shall be governed by
the laws of the State of Texas or Federal laws, where applicable.
No provision of this Agreement shall be deemed or construed to create
specific employment rights to the EXECUTIVE nor limit the right of the BANK to
discharge the EXECUTIVE at any time with or without cause. In a similar
fashion, no provision shall limit the EXECUTIVE'S rights to voluntarily sever
his employment at any time.
The BANK shall deduct from the amount of any payment made pursuant to
this Agreement any amounts required to be paid or withheld by the BANK with
respect to federal or state taxes. By executing this Agreement, the EXECUTIVE
agrees to all such deductions.
In case any one or more of the provisions contained in this Agreement
shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions in this Agreement shall
not in any way be affected or impaired.
XI.
In the event of any claim or controversy arising out of or relating to
this Agreement or the breach of this Agreement, the parties agree that all such
claims or controversies shall be resolved by final and binding arbitration in
Smith County, Texas, in accordance with the Commercial Arbitration Rules of the
American Arbitration Association in effect on the date when the claim or
controversy first arises. Either party must communicate its request for
arbitration under this section in writing ("Arbitration Notice") to the other
party within one hundred twenty (120) days from the date the claim or
controversy first arises. Failure to communicate Arbitration Notice within one
hundred twenty (120) days shall constitute a waiver of any such claim or
controversy.
All claims or controversies subject to arbitration under this section
shall be submitted to an arbitration hearing within thirty (30) days from the
date Arbitration Notice is communicated by either party. All claims or
controversies submitted to arbitration under this section shall be resolved by
a panel of three (3) arbitrators who are licensed to practice law in the State
of Texas and who are experienced in the arbitration of employment disputes.
These arbitrators shall be selected in accordance with the applicable
Commercial Arbitration Rules or by agreement of the parties. Either party may
request that the arbitration proceeding be stenographically recorded by a
Certified Shorthand Reporter. The arbitrators shall issue a decision on any
claim or controversy within thirty (30) days from the date the arbitration
hearing is completed. The parties shall have the right to be
6
14
represented by legal counsel at any arbitration hearing. The costs of any
arbitration hearing, including the attorneys' fees incurred by both parties
(including any costs, expenses or attorneys' fees incurred in filing any
lawsuit to compel arbitration under this section, if applicable), shall be paid
by the losing party or parties.
The arbitration provisions in this section are subject to the Federal
Arbitration Act, 9 U.S.C. Sections 1 et seq. (West 1994) (or any successor
provisions) and may be specifically enforced by any party, and submission to
arbitration proceedings compelled, by any Court of competent jurisdiction. The
decision of the arbitrators may be specifically enforced by any party in any
court of competent jurisdiction.
XII.
This Agreement shall be binding upon and inure to the benefit of
EXECUTIVE, his heirs and personal representative, and BANK and its successors
and assigns and supersedes all prior agreements between EXECUTIVE and BANK
regarding deferred compensation. It is specifically agreed that this is not a
contract of employment between the parties hereto and nothing herein shall
restrict the right of BANK to discharge EXECUTIVE, with or without cause, or
restrict the right of EXECUTIVE to terminate his employment. However,
termination of employment by EXECUTIVE prior to retirement for any reason not
specifically entitling EXECUTIVE to compensation under the preceding terms of
this Agreement shall terminate all obligations of BANK hereunder.
EXECUTED this ______ day of _______________________, 1997.
----------------------------------------
LEE GIBSON, EXECUTIVE
SOUTHSIDE BANK
By:
------------------------------------
B. G. HARTLEY, CHAIRMAN OF THE BOARD
ATTEST:
- ----------------------------------
VICE CHAIRMAN OF THE BOARD
7
15
DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT is entered into, effective as of the date executed, by
and between SOUTHSIDE BANK of Tyler, Texas, a corporation organized and
existing under the laws of the State of Texas, hereinafter called BANK, and
JERYL STORY, hereinafter called EXECUTIVE. This Agreement amends and restates
the Agreement executed as of June 30, 1994 by Jeryl Story, EXECUTIVE, and B. G.
Hartley for the BANK.
W I T N E S S E T H:
I.
The Board of Directors of BANK have determined that the service of
EXECUTIVE to BANK since employment of EXECUTIVE has been of exceptional merit
and has constituted an invaluable contribution to the general welfare of BANK.
The Board of Directors has further determined that the continued service of
EXECUTIVE on behalf of BANK is essential to the future growth and profit of
BANK and it is in the best interest of BANK to arrange for financial incentives
for EXECUTIVE to remain in the employment of BANK for the balance of his work
lifetime.
II.
BANK agrees to employ EXECUTIVE in such capacity as BANK may from time
to time determine. EXECUTIVE will continue in the employment of BANK in such
capacity and with such duties and responsibilities as may from time to time be
assigned to such EXECUTIVE. BANK shall have sole discretion over compensation
to be paid to EXECUTIVE for the performance of such services. EXECUTIVE agrees
to well and truly perform his duties and obligations as an employee of BANK and
will use his best efforts to furnish faithful and satisfactory services to
BANK. Nothing in this Agreement shall be construed as any limitation of the
BANK's right and privilege to discontinue the employment of the EXECUTIVE at
any time, subject to the deferred compensation provisions set forth in this
Agreement.
III.
It is specifically agreed that if EXECUTIVE remains in the employment
of BANK until his total and permanent disability, death, or retirement,
whichever occurs first, BANK agrees to pay the sum of FOUR HUNDRED THOUSAND AND
NO/100 DOLLARS ($400,000.00) to EXECUTIVE or his surviving spouse or designated
beneficiaries as hereinafter provided. Such deferred compensation shall be
payable commencing on the 1st day of the month following the first of the
following events to occur:
A. The total and permanent disability of EXECUTIVE. (For the
purposes of this Agreement, total and permanent disability shall be defined as
a physical or mental impairment, non-self-induced, as diagnosed by a medical
doctor selected by BANK, that so incapacitates or disables EXECUTIVE such that
EXECUTIVE is no longer able to perform the essential functions of his position
with reasonable accommodation and that in the opinion of such medical doctor,
such condition is permanent);
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B. The retirement of EXECUTIVE. (For the purposes of this
Agreement, retirement of EXECUTIVE shall be defined as EXECUTIVE's termination
of employment with the BANK at or after attainment of age sixty-five (65)); or
C. The death of EXECUTIVE.
Deferred compensation, when it commences, shall be payable in 120
equal consecutive monthly installments of THREE THOUSAND THREE HUNDRED
THIRTY-THREE AND 33/100 DOLLARS ($3,333.33) each.
IV.
EXECUTIVE shall have the right to name a beneficiary other than his
spouse, provided, such designation of beneficiary be in writing and signed by
EXECUTIVE and EXECUTIVE's spouse, and delivered to BANK. Such designation of
beneficiary may provide for alternative beneficiaries if the designated
beneficiary fails to survive EXECUTIVE or fails to survive the term of payout,
as provided above. Failure to designate a beneficiary in accordance with the
terms hereof shall be deemed an election by EXECUTIVE that such benefit as
provided herein shall go to the surviving spouse or, should the EXECUTIVE'S
spouse die simultaneously or predecease him or die during the term of the
payment of benefits, to his then surviving children in equal portions.
V.
If EXECUTIVE should die prior to retirement and such death is the
result of a suicide, the death benefits provided in this Agreement shall not be
payable unless such suicide occurs after the lapsing of any anti-suicide
provisions contained in any insurance policy purchased by BANK upon the life of
EXECUTIVE, should BANK so elect to purchase such insurance for its own benefit.
If there is no policy, no death benefit shall be payable if death is the result
of a suicide.
VI.
If for any reason other than good cause, EXECUTIVE'S employment is
involuntarily terminated by BANK, such termination shall not terminate this
Agreement and such involuntary termination other than for good cause shall be
deemed the same as retirement for the purposes of this Agreement. For the
purposes of this Agreement, "good cause" shall be defined as action or inaction
equivalent to habitual dereliction of duty, gross insubordination, willful
misconduct, criminal conduct, gross negligence, or willful or malicious
violation of federal or state banking statutes with the intent by the EXECUTIVE
to derive personal financial benefit or to do financial harm to the Bank.
VII.
If, prior to a Change in Control, EXECUTIVE terminates employment (as
contrasted with termination initiated by BANK) prior to attainment of age 65
for any reason other than death or disability, no amounts shall be due
EXECUTIVE under this Agreement. If, after a Change in Control,
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17
the EXECUTIVE terminates employment (as contrasted with termination initiated
by BANK) prior to attainment of age 65 for any reason other than death,
disability, or good reason, no amounts shall be due EXECUTIVE under this
Agreement. After a Change in Control, a termination for good reason shall be
deemed the same as retirement for the purposes of this Agreement. For purposes
of this Agreement "good reason" shall mean that the EXECUTIVE resigns from his
position(s) with the BANK after the occurrence of any of the following as
determined by the EXECUTIVE in good faith:
(i) Without his express written consent, the assignment
to the EXECUTIVE of any duties that are clearly inconsistent with his
positions, duties, responsibilities and status with the BANK as in
effect immediately before the execution of this Agreement or a
detrimental change in his titles or offices as in effect immediately
before execution of this Agreement, or any removal of the EXECUTIVE
from or any failures to re-elect the EXECUTIVE to any of such
positions, except in connection with the termination of his employment
for good cause or as a result of his disability or death;
(ii) A reduction of the EXECUTIVE'S base salary or overall
compensation (other than as a result of year to year variations in
bonuses consistent with past practices or consistent with the similar
reductions applied to the BANK's entire workforce) without the prior
written consent of the EXECUTIVE;
(iii) The BANK shall relocate its principal executive
offices or require EXECUTIVE to have as his principal location of work
any location which is in excess of thirty (30) miles from the current
location of the BANK or to travel away from his office in the course
of discharging his responsibilities or duties hereunder more than
thirty (30) consecutive calendar days or an aggregate of more than
ninety (90) calendar days in any consecutive three hundred sixty-five
(365) calendar-day period without in either case his prior consent; or
(v) Failure by the BANK to 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 BANK,
by agreement in form and substance satisfactory to the EXECUTIVE,
expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the BANK would be required to
perform it if no such succession had taken place.
(vi) As a result of a Change in Control of the BANK or of
Southside Bancshares, Inc. ("BHC") and a change in circumstances
thereafter significantly affecting his position, the EXECUTIVE is
rendered substantially unable to carry out, or has been substantially
hindered in the performance of, any of the authorities, powers,
functions, responsibilities or duties attached to his position
immediately prior to the Change in Control of the BANK, which
situation is not remedied within thirty (30) calendar days after
receipt by the BANK of written notice from the EXECUTIVE of such
determination. For purposes of this section, a "Change in Control"
shall be deemed to have occurred in the event of any of the following:
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18
(1) a change in the ownership of the capital
stock of the BANK where a corporation, person or group acting
in concert (a "Person") as described in Section 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), holds or acquires, directly or indirectly, beneficial
ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of a number of shares of capital stock of
the BANK or of BHC which constitutes 50% or more of the
combined voting power of the BANK's (or BHC's) then
outstanding capital stock then entitled to vote generally in
the election of directors; or
(2) the persons who were members of the Board of
Directors of the BANK or BHC immediately prior to a tender
offer, exchange offer, contested election or any combination
of the foregoing, cease to constitute a majority of the Board
of Directors; or
(3) the adoption by the Board of Directors of the
BANK or of the BHC of a merger, consolidation or
reorganization plan involving the BANK in which the BANK or
BHC is not the surviving entity, or a sale of all or
substantially all of the assets of the BANK or BHC. For
purposes of this Agreement, a sale of all or substantially all
of the assets of the BANK or BHC shall be deemed to occur if
any Person acquires (or during the 12-month period ending on
the date of the most recent acquisition by such Person, has
acquired) gross assets of the BANK or BHC that have an
aggregate fair market value equal to 50% of the fair market
value of all of the gross assets of the BANK or BHC
immediately prior to such acquisition or acquisitions; or
(4) a tender offer or exchange offer is made by
any Person which, if successfully completed, would result in
such Person beneficially owning (within the meaning of Rule
13d-3 promulgated under the Exchange Act) either 50% or more
of the BANK's or BHC's outstanding shares of Common Stock or
shares of capital stock having 50% or more of the combined
voting power of the BANK's or BHC's then outstanding capital
stock (other than an offer made by the BANK or BHC), and
sufficient shares are acquired under the offer to cause such
person to own 50% or more of the voting power; or
(5) any other transactions or series of related
transactions occurring which have substantially the same
effect as the transactions specified in any of the preceding
clauses of this subsection (vi).
(vii) The BANK's failure to perform any material provision
of this Agreement.
(viii) Any requirement by the BANK or the Board of Directors
of the BANK that the EXECUTIVE perform, assist, abet or approve any
act which is or could be construed to be illegal under any federal,
state or local law.
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19
VII.
Neither EXECUTIVE nor any beneficiary designated by EXECUTIVE shall
have any power or right to transfer, assign, anticipate, mortgage, commute or
otherwise encumber in advance any of the benefits payable hereunder, nor shall
such benefits be subject to seizure for payment of any debts or judgments of
EXECUTIVE or beneficiaries, nor shall such benefits be transferable by
operation of law in the event of bankruptcy, insolvency or otherwise.
VIII.
The BANK shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Agreement. The
EXECUTIVE, his Beneficiary or any successor-in-interest to him shall be and
remain simply a general creditor of the BANK in the same manner as any other
creditor having a general unsecured claim.
For purposes of the Internal Revenue Code, the BANK intends this
Agreement to be an unfunded, unsecured promise to pay on the part of the BANK.
For purposes of ERISA, the BANK intends that this Agreement be an unfunded
arrangement for the benefit of a select member of management, who is a highly
compensated employee of the BANK for the purpose of qualifying this Agreement
for the "top hat" plan exception under sections 201(2), 301(a)(3) and 401(a)(1)
of ERISA. "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
Should the BANK elect to satisfy its obligations under this Agreement,
in whole or in part, through the purchase of life insurance, mutual funds,
disability policies or annuities, the BANK reserves the absolute right, in its
sole discretion, to terminate such at any time, in whole or in part. Any such
funding shall in no event affect EXECUTIVE'S rights and it is not intended that
any BANK asset be segregated or considered a plan asset. At no time shall the
EXECUTIVE have or be deemed to have any lien nor right, title or interest in or
to any specific investment or to any assets of the BANK; rather the EXECUTIVE
shall remain a general unsecured creditor of the BANK.
If the BANK elects to invest in a life insurance, disability or
annuity policy upon the life of EXECUTIVE, the EXECUTIVE shall assist the BANK
by freely submitting to a physical exam and supplying such additional
information necessary to obtain such insurance or annuities.
IX.
The Board of Directors of the BANK shall have the exclusive power and
authority to interpret and construe the Agreement. The Board of Directors of
the BANK may engage agents to assist it and may engage legal counsel, who may
be counsel to the BANK. The Agreement may be amended, suspended or terminated,
in whole or in part, only by a written instrument signed by a duly authorized
officer of the BANK and by EXECUTIVE.
5
20
X.
Whenever in this Agreement words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine, feminine or
neuter gender, whenever they should so apply.
Nothing contained in this Agreement shall affect the right of the
EXECUTIVE to participate in or be covered by any qualified or non-qualified
pension, profit sharing, group, bonus or other supplemental compensation or
fringe benefit plan constituting a part of the BANK's existing or future
compensation structure.
The validity and interpretation of this Agreement shall be governed by
the laws of the State of Texas or Federal laws, where applicable.
No provision of this Agreement shall be deemed or construed to create
specific employment rights to the EXECUTIVE nor limit the right of the BANK to
discharge the EXECUTIVE at any time with or without cause. In a similar
fashion, no provision shall limit the EXECUTIVE'S rights to voluntarily sever
his employment at any time.
The BANK shall deduct from the amount of any payment made pursuant to
this Agreement any amounts required to be paid or withheld by the BANK with
respect to federal or state taxes. By executing this Agreement, the EXECUTIVE
agrees to all such deductions.
In case any one or more of the provisions contained in this Agreement
shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions in this Agreement shall
not in any way be affected or impaired.
XI.
In the event of any claim or controversy arising out of or relating to
this Agreement or the breach of this Agreement, the parties agree that all such
claims or controversies shall be resolved by final and binding arbitration in
Smith County, Texas, in accordance with the Commercial Arbitration Rules of the
American Arbitration Association in effect on the date when the claim or
controversy first arises. Either party must communicate its request for
arbitration under this section in writing ("Arbitration Notice") to the other
party within one hundred twenty (120) days from the date the claim or
controversy first arises. Failure to communicate Arbitration Notice within one
hundred twenty (120) days shall constitute a waiver of any such claim or
controversy.
All claims or controversies subject to arbitration under this section
shall be submitted to an arbitration hearing within thirty (30) days from the
date Arbitration Notice is communicated by either party. All claims or
controversies submitted to arbitration under this section shall be resolved by
a panel of three (3) arbitrators who are licensed to practice law in the State
of Texas and who are experienced in the arbitration of employment disputes.
These arbitrators shall be selected in accordance with the applicable
Commercial Arbitration Rules or by agreement of the parties. Either party may
request that the arbitration proceeding be stenographically recorded by a
Certified Shorthand Reporter. The arbitrators shall issue a decision on any
claim or controversy within thirty (30) days from the date the arbitration
hearing is completed. The parties shall have the right to be
6
21
represented by legal counsel at any arbitration hearing. The costs of any
arbitration hearing, including the attorneys' fees incurred by both parties
(including any costs, expenses or attorneys' fees incurred in filing any
lawsuit to compel arbitration under this section, if applicable), shall be paid
by the losing party or parties.
The arbitration provisions in this section are subject to the Federal
Arbitration Act, 9 U.S.C. Sections 1 et seq. (West 1994) (or any successor
provisions) and may be specifically enforced by any party, and submission to
arbitration proceedings compelled, by any Court of competent jurisdiction. The
decision of the arbitrators may be specifically enforced by any party in any
court of competent jurisdiction.
XII.
This Agreement shall be binding upon and inure to the benefit of
EXECUTIVE, his heirs and personal representative, and BANK and its successors
and assigns and supersedes all prior agreements between EXECUTIVE and BANK
regarding deferred compensation. It is specifically agreed that this is not a
contract of employment between the parties hereto and nothing herein shall
restrict the right of BANK to discharge EXECUTIVE, with or without cause, or
restrict the right of EXECUTIVE to terminate his employment. However,
termination of employment by EXECUTIVE prior to retirement for any reason not
specifically entitling EXECUTIVE to compensation under the preceding terms of
this Agreement shall terminate all obligations of BANK hereunder.
EXECUTED this ______ day of _______________________, 1997.
----------------------------------------
JERYL STORY, EXECUTIVE
SOUTHSIDE BANK
By:
------------------------------------
B. G. HARTLEY, CHAIRMAN OF THE BOARD
ATTEST:
- -----------------------------------
VICE CHAIRMAN OF THE BOARD
7
22
DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT is entered into, effective as of the date executed, by
and between SOUTHSIDE BANK of Tyler, Texas, a corporation organized and
existing under the laws of the State of Texas, hereinafter called BANK, and
LONNY UZZELL, hereinafter called EXECUTIVE. This Agreement executed as of
October 15, 1997 by Lonny Uzzell, EXECUTIVE, and B. G. Hartley for the BANK.
W I T N E S S E T H:
I.
The Board of Directors of BANK have determined that the service of
EXECUTIVE to BANK since employment of EXECUTIVE has been of exceptional merit
and has constituted an invaluable contribution to the general welfare of BANK.
The Board of Directors has further determined that the continued service of
EXECUTIVE on behalf of BANK is essential to the future growth and profit of
BANK and it is in the best interest of BANK to arrange for financial incentives
for EXECUTIVE to remain in the employment of BANK for the balance of his work
lifetime.
II.
BANK agrees to employ EXECUTIVE in such capacity as BANK may from time
to time determine. EXECUTIVE will continue in the employment of BANK in such
capacity and with such duties and responsibilities as may from time to time be
assigned to such EXECUTIVE. BANK shall have sole discretion over compensation
to be paid to EXECUTIVE for the performance of such services. EXECUTIVE agrees
to well and truly perform his duties and obligations as an employee of BANK and
will use his best efforts to furnish faithful and satisfactory services to
BANK. Nothing in this Agreement shall be construed as any limitation of the
BANK's right and privilege to discontinue the employment of the EXECUTIVE at
any time, subject to the deferred compensation provisions set forth in this
Agreement.
III.
It is specifically agreed that if EXECUTIVE remains in the employment
of BANK until his total and permanent disability, death, or retirement,
whichever occurs first, BANK agrees to pay the sum of THREE HUNDRED THOUSAND
AND NO/100 DOLLARS ($300,000.00) to EXECUTIVE or his surviving spouse or
designated beneficiaries as hereinafter provided. Such deferred compensation
shall be payable commencing on the 1st day of the month following the first of
the following events to occur:
A. The total and permanent disability of EXECUTIVE. (For the
purposes of this Agreement, total and permanent disability shall be defined as
a physical or mental impairment, non-self-induced, as diagnosed by a medical
doctor selected by BANK, that so incapacitates or disables EXECUTIVE such that
EXECUTIVE is no longer able to perform the essential functions of his position
with reasonable accommodation and that in the opinion of such medical doctor,
such condition is permanent);
1
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B. The retirement of EXECUTIVE. (For the purposes of this
Agreement, retirement of EXECUTIVE shall be defined as EXECUTIVE's termination
of employment with the BANK at or after attainment of age sixty-five (65)); or
C. The death of EXECUTIVE.
Deferred compensation, when it commences, shall be payable in 120
equal consecutive monthly installments of TWO THOUSAND FIVE HUNDRED AND NO/100
DOLLARS ($2,500,00) each.
IV.
EXECUTIVE shall have the right to name a beneficiary other than his
spouse, provided, such designation of beneficiary be in writing and signed by
EXECUTIVE and EXECUTIVE's spouse, and delivered to BANK. Such designation of
beneficiary may provide for alternative beneficiaries if the designated
beneficiary fails to survive EXECUTIVE or fails to survive the term of payout,
as provided above. Failure to designate a beneficiary in accordance with the
terms hereof shall be deemed an election by EXECUTIVE that such benefit as
provided herein shall go to the surviving spouse or, should the EXECUTIVE'S
spouse die simultaneously or predecease him or die during the term of the
payment of benefits, to his then surviving children in equal portions.
V.
If EXECUTIVE should die prior to retirement and such death is the
result of a suicide, the death benefits provided in this Agreement shall not be
payable unless such suicide occurs after the lapsing of any anti-suicide
provisions contained in any insurance policy purchased by BANK upon the life of
EXECUTIVE, should BANK so elect to purchase such insurance for its own benefit.
If there is no policy, no death benefit shall be payable if death is the result
of a suicide.
VI.
If for any reason other than good cause, EXECUTIVE'S employment is
involuntarily terminated by BANK, such termination shall not terminate this
Agreement and such involuntary termination other than for good cause shall be
deemed the same as retirement for the purposes of this Agreement. For the
purposes of this Agreement, "good cause" shall be defined as action or inaction
equivalent to habitual dereliction of duty, gross insubordination, willful
misconduct, criminal conduct, gross negligence, or willful or malicious
violation of federal or state banking statutes with the intent by the EXECUTIVE
to derive personal financial benefit or to do financial harm to the Bank.
VII.
If, prior to a Change in Control, EXECUTIVE terminates employment (as
contrasted with termination initiated by BANK) prior to attainment of age 65
for any reason other than death or disability, no amounts shall be due
EXECUTIVE under this Agreement. If, after a Change in Control, the EXECUTIVE
terminates employment (as contrasted with termination initiated by BANK) prior
to
2
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attainment of age 65 for any reason other than death, disability, or good
reason, no amounts shall be due EXECUTIVE under this Agreement. After a Change
in Control, a termination for good reason shall be deemed the same as
retirement for the purposes of this Agreement. For purposes of this Agreement
"good reason" shall mean that the EXECUTIVE resigns from his position(s) with
the BANK after the occurrence of any of the following as determined by the
EXECUTIVE in good faith:
(i) Without his express written consent, the assignment
to the EXECUTIVE of any duties that are clearly inconsistent with his
positions, duties, responsibilities and status with the BANK as in
effect immediately before the execution of this Agreement or a
detrimental change in his titles or offices as in effect immediately
before execution of this Agreement, or any removal of the EXECUTIVE
from or any failures to re-elect the EXECUTIVE to any of such
positions, except in connection with the termination of his employment
for good cause or as a result of his disability or death;
(ii) A reduction of the EXECUTIVE'S base salary or overall
compensation (other than as a result of year to year variations in
bonuses consistent with past practices or consistent with the similar
reductions applied to the BANK's entire workforce) without the prior
written consent of the EXECUTIVE;
(iii) The BANK shall relocate its principal executive
offices or require EXECUTIVE to have as his principal location of work
any location which is in excess of thirty (30) miles from the current
location of the BANK or to travel away from his office in the course
of discharging his responsibilities or duties hereunder more than
thirty (30) consecutive calendar days or an aggregate of more than
ninety (90) calendar days in any consecutive three hundred sixty-five
(365) calendar-day period without in either case his prior consent; or
(v) Failure by the BANK to 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 BANK,
by agreement in form and substance satisfactory to the EXECUTIVE,
expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the BANK would be required to
perform it if no such succession had taken place.
(vi) As a result of a Change in Control of the BANK or of
Southside Bancshares, Inc. ("BHC") and a change in circumstances
thereafter significantly affecting his position, the EXECUTIVE is
rendered substantially unable to carry out, or has been substantially
hindered in the performance of, any of the authorities, powers,
functions, responsibilities or duties attached to his position
immediately prior to the Change in Control of the BANK, which
situation is not remedied within thirty (30) calendar days after
receipt by the BANK of written notice from the EXECUTIVE of such
determination. For purposes of this section, a "Change in Control"
shall be deemed to have occurred in the event of any of the following:
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25
(1) a change in the ownership of the capital
stock of the BANK where a corporation, person or group acting
in concert (a "Person") as described in Section 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), holds or acquires, directly or indirectly, beneficial
ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of a number of shares of capital stock of
the BANK or of BHC which constitutes 50% or more of the
combined voting power of the BANK's (or BHC's) then
outstanding capital stock then entitled to vote generally in
the election of directors; or
(2) the persons who were members of the Board of
Directors of the BANK or BHC immediately prior to a tender
offer, exchange offer, contested election or any combination
of the foregoing, cease to constitute a majority of the Board
of Directors; or
(3) the adoption by the Board of Directors of the
BANK or of the BHC of a merger, consolidation or
reorganization plan involving the BANK in which the BANK or
BHC is not the surviving entity, or a sale of all or
substantially all of the assets of the BANK or BHC. For
purposes of this Agreement, a sale of all or substantially all
of the assets of the BANK or BHC shall be deemed to occur if
any Person acquires (or during the 12-month period ending on
the date of the most recent acquisition by such Person, has
acquired) gross assets of the BANK or BHC that have an
aggregate fair market value equal to 50% of the fair market
value of all of the gross assets of the BANK or BHC
immediately prior to such acquisition or acquisitions; or
(4) a tender offer or exchange offer is made by
any Person which, if successfully completed, would result in
such Person beneficially owning (within the meaning of Rule
13d-3 promulgated under the Exchange Act) either 50% or more
of the BANK's or BHC's outstanding shares of Common Stock or
shares of capital stock having 50% or more of the combined
voting power of the BANK's or BHC's then outstanding capital
stock (other than an offer made by the BANK or BHC), and
sufficient shares are acquired under the offer to cause such
person to own 50% or more of the voting power; or
(5) any other transactions or series of related
transactions occurring which have substantially the same
effect as the transactions specified in any of the preceding
clauses of this subsection (vi).
(vii) The BANK's failure to perform any material provision
of this Agreement.
(viii) Any requirement by the BANK or the Board of Directors
of the BANK that the EXECUTIVE perform, assist, abet or approve any
act which is or could be construed to be illegal under any federal,
state or local law.
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VII.
Neither EXECUTIVE nor any beneficiary designated by EXECUTIVE shall
have any power or right to transfer, assign, anticipate, mortgage, commute or
otherwise encumber in advance any of the benefits payable hereunder, nor shall
such benefits be subject to seizure for payment of any debts or judgments of
EXECUTIVE or beneficiaries, nor shall such benefits be transferable by
operation of law in the event of bankruptcy, insolvency or otherwise.
VIII.
The BANK shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Agreement. The
EXECUTIVE, his Beneficiary or any successor-in-interest to him shall be and
remain simply a general creditor of the BANK in the same manner as any other
creditor having a general unsecured claim.
For purposes of the Internal Revenue Code, the BANK intends this
Agreement to be an unfunded, unsecured promise to pay on the part of the BANK.
For purposes of ERISA, the BANK intends that this Agreement be an unfunded
arrangement for the benefit of a select member of management, who is a highly
compensated employee of the BANK for the purpose of qualifying this Agreement
for the "top hat" plan exception under sections 201(2), 301(a)(3) and 401(a)(1)
of ERISA. "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
Should the BANK elect to satisfy its obligations under this Agreement,
in whole or in part, through the purchase of life insurance, mutual funds,
disability policies or annuities, the BANK reserves the absolute right, in its
sole discretion, to terminate such at any time, in whole or in part. Any such
funding shall in no event affect EXECUTIVE'S rights and it is not intended that
any BANK asset be segregated or considered a plan asset. At no time shall the
EXECUTIVE have or be deemed to have any lien nor right, title or interest in or
to any specific investment or to any assets of the BANK; rather the EXECUTIVE
shall remain a general unsecured creditor of the BANK.
If the BANK elects to invest in a life insurance, disability or
annuity policy upon the life of EXECUTIVE, the EXECUTIVE shall assist the BANK
by freely submitting to a physical exam and supplying such additional
information necessary to obtain such insurance or annuities.
IX.
The Board of Directors of the BANK shall have the exclusive power and
authority to interpret and construe the Agreement. The Board of Directors of
the BANK may engage agents to assist it and may engage legal counsel, who may
be counsel to the BANK. The Agreement may be amended, suspended or terminated,
in whole or in part, only by a written instrument signed by a duly authorized
officer of the BANK and by EXECUTIVE.
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X.
Whenever in this Agreement words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine, feminine or
neuter gender, whenever they should so apply.
Nothing contained in this Agreement shall affect the right of the
EXECUTIVE to participate in or be covered by any qualified or non-qualified
pension, profit sharing, group, bonus or other supplemental compensation or
fringe benefit plan constituting a part of the BANK's existing or future
compensation structure.
The validity and interpretation of this Agreement shall be governed by
the laws of the State of Texas or Federal laws, where applicable.
No provision of this Agreement shall be deemed or construed to create
specific employment rights to the EXECUTIVE nor limit the right of the BANK to
discharge the EXECUTIVE at any time with or without cause. In a similar
fashion, no provision shall limit the EXECUTIVE'S rights to voluntarily sever
his employment at any time.
The BANK shall deduct from the amount of any payment made pursuant to
this Agreement any amounts required to be paid or withheld by the BANK with
respect to federal or state taxes. By executing this Agreement, the EXECUTIVE
agrees to all such deductions.
In case any one or more of the provisions contained in this Agreement
shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions in this Agreement shall
not in any way be affected or impaired.
XI.
In the event of any claim or controversy arising out of or relating to
this Agreement or the breach of this Agreement, the parties agree that all such
claims or controversies shall be resolved by final and binding arbitration in
Smith County, Texas, in accordance with the Commercial Arbitration Rules of the
American Arbitration Association in effect on the date when the claim or
controversy first arises. Either party must communicate its request for
arbitration under this section in writing ("Arbitration Notice") to the other
party within one hundred twenty (120) days from the date the claim or
controversy first arises. Failure to communicate Arbitration Notice within one
hundred twenty (120) days shall constitute a waiver of any such claim or
controversy.
All claims or controversies subject to arbitration under this section
shall be submitted to an arbitration hearing within thirty (30) days from the
date Arbitration Notice is communicated by either party. All claims or
controversies submitted to arbitration under this section shall be resolved by
a panel of three (3) arbitrators who are licensed to practice law in the State
of Texas and who are experienced in the arbitration of employment disputes.
These arbitrators shall be selected in accordance with the applicable
Commercial Arbitration Rules or by agreement of the parties. Either party may
request that the arbitration proceeding be stenographically recorded by a
Certified Shorthand Reporter. The arbitrators shall issue a decision on any
claim or controversy within thirty (30) days from the date the arbitration
hearing is completed. The parties shall have the right to be represented by
legal counsel at any arbitration
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hearing. The costs of any arbitration hearing, including the attorneys' fees
incurred by both parties (including any costs, expenses or attorneys' fees
incurred in filing any lawsuit to compel arbitration under this section, if
applicable), shall be paid by the losing party or parties.
The arbitration provisions in this section are subject to the Federal
Arbitration Act, 9 U.S.C. Sections 1 et seq. (West 1994) (or any successor
provisions) and may be specifically enforced by any party, and submission to
arbitration proceedings compelled, by any Court of competent jurisdiction. The
decision of the arbitrators may be specifically enforced by any party in any
court of competent jurisdiction.
XII.
This Agreement shall be binding upon and inure to the benefit of
EXECUTIVE, his heirs and personal representative, and BANK and its successors
and assigns and supersedes all prior agreements between EXECUTIVE and BANK
regarding deferred compensation. It is specifically agreed that this is not a
contract of employment between the parties hereto and nothing herein shall
restrict the right of BANK to discharge EXECUTIVE, with or without cause, or
restrict the right of EXECUTIVE to terminate his employment. However,
termination of employment by EXECUTIVE prior to retirement for any reason not
specifically entitling EXECUTIVE to compensation under the preceding terms of
this Agreement shall terminate all obligations of BANK hereunder.
EXECUTED this ______ day of _______________________, 1997.
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LONNY UZZELL, EXECUTIVE
SOUTHSIDE BANK
By:
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B. G. HARTLEY, CHAIRMAN OF THE BOARD
ATTEST:
- ----------------------------------
VICE CHAIRMAN OF THE BOARD
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