HERITAGE BANCSHARES, INC. AND SUBSIDIARY
EXHIBIT 10.1
CHANGE OF CONTROL AGREEMENT
CHANGE OF CONTROL AGREEMENT, dated this 30th day of October, 2003, between
Heritage Bancshares, Inc., a Delaware corporation (the "Corporation"), Heritage
Bank, SSB, a Texas chartered and a wholly owned subsidiary of the Corporation
(the "Bank"), and ▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Executive").
WITNESSETH
WHEREAS, the Executive is presently an officer of the Corporation and the
Bank (together the "Employers");
WHEREAS, the Employers desire to be ensured of the Executive's continued
active participation in the business of the Employers; and
WHEREAS, in order to induce the Executive to remain in the employ of the
Corporation and Bank (the "Employers") and in consideration of the Executive's
agreeing to remain in the employ of the Employers, the parties desire to specify
the severance benefits which shall be due the Executive in the event that his
employment with the Employers is terminated under specified circumstances;
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereby agree as follows:
1. Definitions. The following words and terms shall have the meanings set
forth below for the purposes of this Agreement:
(a) Base Salary. "Base Salary" shall have the meaning set forth in Section
3 hereof.
(b) Change in Control of the Corporation. "Change in Control of the
Corporation " shall mean the occurrence of any of the following: (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the "beneficial owner" (as defined in Rule 13d- under
the Exchange Act), directly or indirectly, of securities of the
Corporation representing 25% or more of the combined voting power of the
Corporation's then outstanding securities; or (ii) a merger,
consolidation, share exchange, division or other reorganization or
transaction involving the Corporation is consummated and the voting
securities of the Corporation outstanding immediately prior thereto do not
continue to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 50% of
the combined voting power of the surviving entity immediately after such
transaction.
(c) Code. "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) Date of Termination. "Date of Termination" shall mean the later of (i)
the date on which a Notice of Termination is given or (ii) the date
specified in such Notice.
HERITAGE BANCSHARES, INC. AND SUBSIDIARY
(e) Good Reason. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive
within two years following a Change in Control of the Corporation where:
(i) Without the Executive's express written consent, the failure
to elect or to re- elect or to appoint or to re-appoint the
Executive to the office of President and Chief Executive
Officer of the Employers or a material adverse change made by
the Employers in the Executive's functions, duties or
responsibilities as President and Chief Executive Officer of
the Employers;
(ii) Without the Executive's express written consent, a reduction
by either of the Employers in the Executive's Base Salary as
the same may be increased from time to time;
(iii) Relocation of the principal executive office of either of the
Employers more than 50 statute miles outside of the city
limits of Terrell, Texas or, without the Executive's express
written consent, either of the Employers requiring the
Executive to be based anywhere other than an area in which the
Employers' principal executive office is located, except for
required travel on business of the Employers to an extent
substantially consistent with the Executive's present business
travel obligations;
(iv) Any purported termination of the Executive's employment which
is not effected pursuant to a Notice of Termination satisfying
the requirements of paragraph (g) below; or
(v) The failure by the Employers to obtain the assumption of and
agreement to perform this Agreement by any successor as
contemplated in Section 8 hereof.
(f) IRS. IRS shall mean the Internal Revenue Service.
(g) Notice of Termination. Any purported termination of the Executive's
employment by the Employers for any reason shall be communicated by
written "Notice of Termination" to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" shall mean a dated notice which
(i) indicates the specific termination provision in this Agreement relied
upon, (ii) specifies a Date of Termination, and (iii) is given in the
manner specified in Section 9 hereof.
2. Term of Agreement.
This Agreement shall terminate two years after a Change in Control of the
Corporation shall have occurred.
HERITAGE BANCSHARES, INC. AND SUBSIDIARY
3. Compensation.
The Employers shall compensate and pay the Executive for his services
during the term of this Agreement at a minimum base salary of $95,000 per
year, which may be increased from time to time in such amounts as may be
determined by the Boards of Directors of the Employers ("Base Salary") and
may not be decreased without the Executive's express written consent.
4. Termination.
(a) The Employers shall have the right, at any time upon prior Notice of
Termination, to terminate the Executive's employment for any reason.
(b) In the event that:
(i) a Change in Control of the Corporation, as defined in Section
I (b) of this Agreement, shall occur, the Employers shall,
subject to the provisions of Section 5 hereof if applicable,
pay to the Executive a cash amount equal to $300,000, less the
Executive's balance, as determined on the date of the Change
in Control, in the Executive's Participant's Account (as such
term is defined in Section 1.39 of the Heritage Bancshares,
Inc., Employee Stock Ownership Plan), but in no event less
than zero, such payment to be made in either twenty-four (24)
equal monthly installments beginning with the first business
day of the month following the Change in Control of the
Corporation or in a lump sum within five business days of the
Change in Control of the Corporation and
(ii) within two years following a Change in Control of the
Corporation, as defined in Section 1 (b) of this Agreement,
the Executive's employment is terminated either (A) by the
Employers, or either of them, or (B) by the Executive for Good
Reason, then in either such case, and in addition to the
payment provided by Section 4(b)(i) above, the Employers
shall, subject to the provisions of Section 5 hereof, if
applicable, pay to the Executive, in either twenty-four (24)
equal monthly installments beginning with the first business
day of the month following the Date of Termination or in a
lump sum within five business days of the Date of Termination
(at the Executive's election), a cash severance amount equal
to twice the Executive's Base Salary paid by the Employers.
5. Limitation of Benefits under Certain Circumstances. If the payments and
benefits pursuant to Section 4 hereof, either alone or together with other
payments and benefits which the Executive has the right to receive from
the Employers, would constitute a "parachute payment" under Section 280G
of the Code, the payments and benefits payable by the Employers pursuant
to Section 4(b) hereof shall be reduced, in the manner determined by the
Executive, by the amount, if any, which is the minimum necessary to result
in no portion of the payments and benefits under Section 4(b) being
non-deductible
HERITAGE BANCSHARES, INC. AND SUBSIDIARY
to either of the Employers pursuant to Section 280G of the Code and
subject to the excise tax imposed under Section 4999 of the Code. The
determination of any reduction in the payments and benefits to be made
pursuant to Section 4(b) shall be based upon the opinion of independent
tax counsel selected by the Employers and paid by the Employers. Such
counsel shall be reasonably acceptable to the Employers and the Executive;
shall promptly prepare the foregoing opinion, but in no event later than
thirty (30) days from the Date of Termination; and may use such actuaries
as such counsel deems necessary or advisable for the purpose. Nothing
contained herein shall result in a reduction of any payments or benefits
to which the Executive may be entitled upon termination of employment
under any circumstances other than as specified in this Section 5, or a
reduction in the payments and benefits specified in Section 4 below zero.
6. Mitigation; Exclusivity of Benefits.
(a) The Executive shall not be required to mitigate the amount of any
benefits hereunder by seeking other employment or otherwise, nor shall the
amount of any such benefits be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination or otherwise.
(b) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employers pursuant to employee benefit
plans of the Employers or otherwise.
7. Withholding. All payments required to be made by the Employers
hereunder to the Executive shall be subject to the withholding of such
amounts, if any, relating to tax and other payroll deductions as the
Employers may reasonably determine should be withheld pursuant to any
applicable law or regulation.
8. Assignability. The Employers may assign this Agreement and their rights
and obligations hereunder in whole, but not in part, to any corporation,
bank or other entity with or into which the Employers may hereafter merge
or consolidate or to which the Employers may transfer all or substantially
all of their assets, if in any such case said corporation, bank or other
entity shall by operation of law or expressly in writing assume all
obligations of the Employers hereunder as fully as if it had been
originally made a party hereto, but may not otherwise assign this
Agreement or its rights and obligations hereunder. The Executive may not
assign or transfer this Agreement or any rights or obligations hereunder.
9. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth below:
HERITAGE BANCSHARES, INC. AND SUBSIDIARY
To the Employers: Board of Directors
Heritage Bancshares, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Board of Directors
Heritage Bank, SSB
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
To the Executive: ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
10. Amendment; Waiver. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer or
officers as may be specifically designated by the Boards of Directors of
the Employers to sign on their behalf. No waiver by any party hereto at
any time of any breach by any 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.
11. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United
States where applicable and otherwise by the substantive laws of the State
of Texas.
12. Nature of Obligations. Nothing contained herein shall create or
require the Employers to create a trust of any kind to fund any benefits
which may be payable hereunder, and to the extent that the Executive
acquires a right to receive benefits from the Employers hereunder, such
right shall be no greater than the right of any unsecured general creditor
of the Employers.
13. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
15. 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.
HERITAGE BANCSHARES, INC. AND SUBSIDIARY
16. Regulatory Prohibition. Notwithstanding any other provision of this
Agreement to the contrary, any payments made to the Executive pursuant to
this Agreement, or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the FDIA (12 V.S.C. ss.1828(k)) and the
regulations promulgated thereunder, including 12 C.F.R. Part 359.
17. Payment of Costs and Legal Fees and Reinstatement of Benefits. In the
event any dispute or controversy arising under or in connection with the
Executive's termination is resolved in favor of the Executive, whether by
judgment, arbitration or settlement, the Executive shall be entitled to
the payment of (a) all legal fees incurred by the Executive in resolving
such dispute or controversy, and (2) any back-pay, including Base Salary.
18. Entire Agreement. This Agreement embodies the entire agreement between
the Employers and the Executive with respect to the matters agreed to
herein. All prior agreements between the Employers and the Executive with
respect to the matters agreed to herein are hereby superseded and shall
have no force or effect.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
Attest: HERITAGE BANCSHARES, INC.
/s/ ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ J. ▇▇▇ ▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇ J. ▇▇▇ ▇▇▇▇▇
Assistant Secretary Chairman
Attest: HERITAGE BANK, SSB
/s/ ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ J. ▇▇▇ ▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇ J. ▇▇▇ ▇▇▇▇▇
Assistant Secretary Chairman
EXECUTIVE
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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