EXHIBIT 10.1
LSB CORPORATION
SPECIAL SEPARATION PLAN
1. Purpose.
The purpose of this LSB Corporation Special Separation Plan is to provide
eligible employees with certain severance benefits if they are terminated from
employment with LSB Corporation (the "Company") and its wholly-owned subsidiary,
River Bank (the "Bank") in connection with a Change in Control (as defined
below).
2. Eligible Employees.
The following classes of regular employees of the Company and the Bank
(collectively, the "Employers") are eligible to receive a benefit under this
Plan if they are terminated from employment under qualifying circumstances
described in Section 4:
GROUP DESCRIPTION
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Group 1 Each officer employee classified at or above the Senior
Vice President level
Group 2 Each officer employee classified as a Vice President
Group 3 Each employee classified as a Manager or Assistant Vice
President
Group 4 Each full-time employee not described in Groups 1, 2 or 3
Group 5 Each part-time employee
Employees engaged on a project, intermittent, fixed term of less than one
year, or other temporary basis are not regarded as regular employees for
purposes of the Plan and are ineligible to participate in the Plan. An
employee's classification will be determined as of the Employers' last business
day prior to the employee's termination (the "Determination Date"). Each regular
employee who is typically scheduled to work less than 37.5 hours per week for at
least six months during the twelve month period ending on the Determination Date
(or, in the case of regular employees hired less than six months before the
Determination Date, for the duration of their employment) will be deemed to be
employed on a part-time basis for purposes of this Plan.
3. Change in Control.
For purposes of this Plan, a "Change in Control" shall be deemed to have
occurred upon the occurrence of any of the following events:
(i) any circumstance that the Company or the Bank would be required to
report as a change in control under Item 5.01 of the Current Report on
Form 8-K as prescribed by applicable regulations promulgated under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), or any
successor provision; or
(ii) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of
the 1934 Act) becomes a "beneficial owner" (as such term is defined in
Rule 13d-3 promulgated under the 1934 Act), directly or indirectly, of
securities of the Company or the Bank representing twenty-five percent
(25%) or more of the total number of votes that may be cast for the
election of directors of the Company or the Bank (other than in the
case of the Bank, for the Company's ownership of the capital stock of
the Bank), and the Board of Directors of the Company or the Bank, as
the case may be, has not consented to such event by a two-thirds (2/3)
vote of all of the members of the Board of Directors adopted either
prior to such event or within sixty (60) days thereafter, provided
that if at the time such a consent vote is adopted after such event,
the persons who were directors of the Company or the Bank, as the case
may be, immediately prior to such event do not constitute a majority
of the Board of Directors of the Company or the Bank, respectively, or
of any successor institution, such vote shall not be deemed to
constitute consent for the purposes of this provision; or
(iii) any tender or exchange offer for the ordinary voting stock of the
Company or the Bank, or any merger, consolidation, or other business
combination involving the Company or the Bank, or any sale or other
disposition of assets of the Company or the Bank constituting all or
substantially all of the Company's assets (considered a consolidated
basis), or any combination of the foregoing transactions has occurred,
and as the result of, or in connection with, such transaction(s) (A)
the individuals who were directors of the Company or the Bank
immediately before the commencement of such transaction(s) cease to
constitute a majority of the Board of Directors of the Company or the
Bank, respectively, or of any successor institution or (B) persons,
who, immediately prior to the commencement of such transaction(s),
were the beneficial owners of ordinary voting stock of the Company or
the Bank, beneficially own (within the meaning of Rule 13d-3),
directly or indirectly, less than forty percent (40%) of the then
outstanding shares of ordinary voting stock of the entity resulting
from such transaction(s), including, without limitation, an entity
which as a result of such transaction(s) owns the Company or the Bank
or all or substantially all of the assets of the Company or the Bank
either directly or through one or more subsidiaries; or
(iv) during any period of two consecutive years, individuals who constitute
the Board of Directors of the Company at the beginning of the two-year
period cease for any reason to constitute at least a majority of the
Company's directors; provided, however, that for purposes of this
clause, an individual shall be deemed to have also been a director at
the beginning of such period if such individual was elected by the
Company's Board of Directors (or nominated by the Company's Board of
Directors of the Company for election by the stockholders) by a vote
of at least
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two-thirds (2/3) of the directors who either were directors at the
beginning of the two-year period or who were so elected or nominated
by such directors.
4. Special Separation Benefits.
Each eligible employee who, within one (1) year after a Change in Control,
is terminated by the Company and/or Bank from all employment with the Employers
for reasons other than Cause shall be entitled to receive the special separation
payment described in Section 4(a) and the special benefit continuation rights
described in Section 4(b). Without limiting the foregoing, employees who
separate from service in connection with a voluntarily resignation, retirement
or death are ineligible for benefits under the Plan.
(a) Subject to subsection (c), (d) and (e) of this Section 4, the special
separation payment is a gross amount, subject to applicable
withholding, equal to two weeks' Compensation for each complete Year
of Service credited to the employee as of the Determination Date. The
special separation payment is to be distributed to eligible employees
in a lump sum within thirty (30) days after the Determination Date.
For purposes of the Plan, "Compensation" means an employee's regular,
base weekly compensation from the Employers subject to tax withholding
(but including any elective deferrals excluded from such employee's
compensation subject to withholding based on Section 125, 129, 132(f)
and/or 401(k) of the Internal Revenue Code of 1986, as amended
("IRC")), determined as of the Determination Date; provided, however
that with respect to each non-salaried employee, such employee's
regular, base weekly compensation shall be determined by dividing his
or her aggregate regular, base weekly compensation earned during the
six month period ending on the Determination Date by twenty-six (or,
in the case of an individual employed for less than six months as of
the Determination Date, his or her aggregate regular, base weekly
compensation earned in all weeks (including partial weeks) of
employment divided the number of such weeks (including partial weeks).
For purposes of the Plan, "Year of Service" means each twelve month
period commencing on an employee's effective date of employment (or
any anniversary thereof) during which the employee is employed
throughout the year. An eligible employee will be credited with a
complete Year of Service for the year in which the Determination Date
occurs if the Determination Date is at least nine months later than
the employee's most recent employment anniversary.
(b) Each eligible employee entitled to receive a special separation
payment under Section 4(a) may elect to continue for the maximum
extension period (defined below) their coverage (and that of their
spouse and eligible dependents) under each group medical,
hospitalization, vision and dental care plan maintained by the
Employers in which the employee participates as of the Determination
Date; provided, however, that such continuation is permitted under the
terms of such
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plans, excluding coverage continuation rights required by IRC Section
4980B ("COBRA").
Employees who elect the special benefit continuation rights set forth
in this Section 4(b) shall be required to pay the same portion of the
applicable premium for such coverage paid by active employees for
similar coverage. At the election of the Employers, eligible employees
who continue coverage pursuant to this Section 4(b) may be allowed to
apply a portion of the special separation payment to which they are
entitled under Section 4(a) to pay their premium amounts on a pre-tax
basis under an IRC Section 125 cafeteria plan, subject to terms of
such plan.
The maximum extension period is the period ending on the earlier of
(i) the first anniversary of the Determination Date, and (ii) the date
on which the employee becomes eligible to participate, as an employee
or otherwise, in another group health plan provided such plan does not
contain a pre-existing condition exclusion or limitation that affects
the employee. To the extent permitted under the terms of the
applicable plans and COBRA, an employee's maximum coverage period
under COBRA shall be measured from the date of coverage loss due to
the expiration of the special benefit continuation provided under this
Section 4(b), rather than from the date of employment loss.
(c) Minimum Special Separation Payment. Subject to Section 4(e), in no
event shall the gross amount to which an eligible employee is entitled
under this Plan due to a qualifying termination be less than the
amount specified in the following table:
GROUP MINIMUM SPECIAL SEPARATION PAYMENT
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Group 5 Eight (8) weeks' Compensation
Group 4 Eight (8) weeks' Compensation
Group 3 Twelve (12) weeks' Compensation
Group 2 Twenty-six (26) weeks' Compensation
Group 1 Thirty-nine (39) weeks' Compensation
(d) Maximum Special Separation Payment. Notwithstanding Section 4(a), in
no event shall an employee be eligible to receive a special separation
payment in excess of sixty (60) weeks' Compensation.
(e) Special Separation Payment Offsets. The amount of the special
separation payment to which an eligible employee is otherwise entitled
shall be reduced by: (i) any payments to which such employee is
entitled under the federal Worker Adjustment and Retraining
Notification Act or similar federal, state or local law; (ii)
separation benefits payable to the employee under any written
employment
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agreement with the Company or the Bank or any successor(s) in interest
thereto; and (iii) the amount, if any, by which the special
termination payment exceeds the amount that may be deducted by the
payor based on IRC Section 162(m) or 280G.
(f) Cause means that (i) the conviction of any crime involving moral
turpitude, or a plea of nolo contendere to such an offense; or (ii)
gross negligence in the performance of, or a willful refusal to
perform, any duty or responsibility as an employee of the Company
and/or Bank after written notice is delivered to the employee with at
least fifteen days to cure the subject activity; and provided that
such activity does not result from sickness, accident, disability or
similar cause beyond the control of the employee.
5. Amendment and Termination.
The Board of Directors of LSB Corporation reserves the right, in its sole
and absolute discretion, (i) at any time and from time to time, to modify or
amend the Plan in whole or in part; and (ii) to terminate the Plan in whole or
in part at any time; provided however that in no event may the Plan be amended
or terminated during the twelve month period commencing on the occurrence of a
Change of Control without the written consent of all employees affected by such
amendment or termination. In the event of the termination of the Plan, no
Participant will be deemed to have any vested benefit or non-forfeitable right
to receive any benefit under the Plan. This Plan shall be binding upon the
Company and the Bank and each of their respective successors and assigns.
6. Administration.
The Plan shall be administered by the Board of Directors of LSB
Corporation, or its designee. The administrator has complete authority, in its
sole and absolute discretion, to construe the terms of this Plan, including
determining the eligibility for, and amount of, severance benefits due under
this Plan. Except as otherwise provided herein, all decisions of the
administrator shall be final and binding on all parties affected thereby. It is
intended that the Plan will be administered in accordance with the applicable
requirements of IRC Section 409A.
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7. Plan Not a Contract of Employment.
Nothing contained in this Plan shall be held or construed to create any
liability upon the Employers' to retain any employee in its service. All
employees shall remain subject to discharge or discipline to the same extent as
if the Plan had not been put into effect.
8. Source of Funds.
All benefit payments required under this Plan shall be paid from the
Employer's general assets. The Plan is intended to be unfunded for purposes of
the IRC and the Employee Retirement Income Security Act, to the extent
applicable.
Approved: LSB Corporation Board of Directors: 8/10/06
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