9
CITIZENS SOUTH BANKING CORPORATION
AMENDED AND RESTATED SEVERANCE AGREEMENT
This
AMENDED AND RESTATED
SEVERANCE AGREEMENT
(this "Agreement") is
made
and entered into as of November 17, 2008 by and between
Citizens South Banking
Corporation, a
Delaware corporation (the "Corporation"), and _________________
(the "Executive").
WHEREAS, the
Executive entered into a severance agreement with the
Corporation on ____________ (the "Original Agreement");
WHEREAS, the
Corporation
desires to amend and restate the Original
Agreement in order to
make changes to comply
with Section 409A of the Internal
Revenue Code of 1986, as amended (the "Code"), as well as certain
other changes;
WHEREAS, the
Corporation
desires to assure itself of the Executive's
services and desires to establish minimum severance benefits for the Executive
in the event of a change in control;
WHEREAS, the
Corporation
wishes to ensure that the Executive is not
distracted from
discharging
his duties if a change
in control is proposed
or
occurs; and
WHEREAS, none of the conditions or events included in the
definition of the
term "golden parachute payment" that is set forth in section
18(k)(4)(A)(ii) of
the Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal
Deposit Insurance
Corporation Rule
359.1(f)(1)(ii)
[12 CFR 359.1(f)(1)(ii)]
exists or, to the best knowledge of the Corporation, is contemplated insofar as
either of the Corporation or any of its subsidiaries is
concerned.
NOW
THEREFORE,
in consideration of these premises and other good and
valuable
consideration, the
receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows.
1. CHANGE IN
CONTROL AND TERMINATION OF EMPLOYMENT
(a)
Termination of Executive Anytime After a Change in Control. If a
Change
in Control
occurs during the term of this Agreement and if either of the
following occurs,
the Executive shall be entitled to severance benefits
specified in Section 2 of this Agreement -
(1) Termination
by the Corporation or a Subsidiary (as defined
herein): if the
Executive's
employment with the
Corporation or
its Subsidiary
is involuntarily terminated at anytime after a
Change in Control,
except for a termination of employment under
Section 3 of this Agreement, or
(2) Voluntary
Termination by the Executive: the Executive voluntarily
<PAGE>
terminates his employment for any reason with the Corporation or
Subsidiary at anytime after a Change in Control.
If
the Executive
is removed from office
or if his employment
terminates
after discussions with a third party regarding a Change in Control
commence, and
if those discussions
ultimately
conclude with a Change in Control,
then for
purposes of this
Agreement the removal of the Executive or termination of
employment shall be
deemed to have
occurred after the
Change in Control.
For
purposes of
this Agreement, "Subsidiary" means an entity in which the
Corporation directly
or indirectly beneficially owns 50% or more of the
outstanding voting securities
(b)
Definition
of Change in
Control. For purposes of this Agreement,
"Change in Control" means any of the following events occur -
(1) Merger:
the Corporation merges
into or consolidates with another
corporation, or merges
another corporation into the Corporation,
and as a result less than 50% of the combined voting power of
the
resulting
corporation
immediately
after the
merger
or
consolidation is held
by persons
who were the
holders of the
Corporation's voting securities immediately before the merger
or
consolidation. For
purposes of this Agreement, the term "person"
means an
individual,
corporation, partnership,
trust,
association, joint venture, pool, syndicate, sole
proprietorship,
unincorporated organization or other entity, or
(2) Acquisition
of Significant Share Ownership: a report on Schedule
13D, Schedule
TO, or another form or schedule (other than
Schedule 13G), is filed or is required to be filed under
Sections
13(d) or 14(d) of the
Securities Exchange
Act of 1934,
if the
schedule discloses
that the filing person
or persons acting
in
concert has or have become the beneficial owner of 25% or more
of
a class of the
Corporation's voting
securities (but this clause
(2) shall not apply to beneficial ownership of voting shares
held
by a Subsidiary in a fiduciary capacity), or
(3) Change in
Board Composition: during any period of two consecutive
years, individuals
who constitute the Corporation's board of
directors at the
beginning of the two-year period cease for any
reason to constitute at least a majority thereof; provided,
however, that - for
purposes of this clause (3) - each director
who is first elected
by the board (or
first nominated by the
board for election by stockholders) by a vote of at least
two-thirds (2/3)
of the directors who were directors at the
beginning of the
period shall be deemed
to have been a director
at the beginning of the two-year period, or
(4) Sale
of Assets: The Corporation sells to a third party
substantially all of
the Corporation's
assets. For purposes
of
this Agreement, sale
of substantially all
of the
Corporation's
assets includes sale of Citizens South Bank alone.
<PAGE>
(c)
Definition of Separation from Service. For purposes of this
Agreement,
termination of the
Executive's employment
as used herein shall be construed to
require a "Separation
from Service" as defined in Code
Section 409A and the
Treasury Regulations
promulgated
thereunder,
provided,
however, that the
Corporation and the Executive reasonably anticipate that the level of bona
fide
services the
Executive would perform after termination would permanently
decrease to a level
that is less
than 50% of the
average level of bona fide
services performed
(whether as an
employee or an independent contractor) over
the immediately preceding 36-month period.
2. SEVERANCE
BENEFITS
(a)
Severance Benefits.
The severance
benefits to which the
Executive is
entitled under Section 1 are as follows -
(1) Lump Sum
Payment: The
Corporation shall make or cause to be made
a lump sum payment to the Executive in an amount in cash equal
to
1.5 times the Executive's annual compensation. For purposes of
this Agreement,
annual compensation means (a) the Executive's
annual base
salary on the date of
the Change in Control
or the
Executive's
termination of
employment,
whichever
amount is
greater, plus (b) any cash bonuses or cash incentive
compensation
earned for the calendar year immediately before the year in
which
the Change in Control occurred or immediately before the year in
which termination of
employment occurred,
whichever amount is
greater, regardless of
when the bonus or incentive compensation
is or was paid. The
Corporation
recognizes
that the bonus and
incentive compensation
earned by the
Executive for a particular
year's service might
be paid in the year after the calendar year
in which the bonus or
incentive compensation is earned. The
amount payable to the Executive hereunder shall not be reduced
to
account for the time
value of money or
discounted
to present
value. The payment required under this Section 2(a)(1) is
payable
no later than 5
business days after the date the Executive's
employment terminates,
or in the event the Executive is a
Specified Employee
(within the meaning of
Treasury
Regulations
ss.1.409A-1(i)),
and to the extent
necessary to avoid
penalties
under Code Section
409A, payment shall be
made to the Executive
on the first day of
the seventh
month following the date the
Executive's employment terminates.
(2) Retirement
Benefit
Plans: The Corporation shall cause the
Executive to
become fully vested in any qualified and
non-qualified plans,
programs or arrangements in which the
Executive participated
if the plan, program, or arrangement does
not address the effect of a change in control. The Corporation
also shall contribute
or cause a Subsidiary to contribute to any
account of the Executive under a 401(k) plan, retirement plan,
or
profit-sharing plan the matching and voluntary contributions,
if
any, that would have been made had the Executive's employment
not
terminated before
the end of the plan
year. In the event
<PAGE>
the Corporation
is unable to fully vest the Executive in a
qualified plan that
does not address
the effect of a change
in
control due to operation of law, the Executive will be paid in a
single cash lump sum
distribution the
present value of the cash
equivalent of the
amount of benefits the
Executive would have
received if he were fully vested in such plan, with such payment
made at the same time the cash severance is payable pursuant to
Section 2(a)(1) of this Agreement.
(3) Other
Benefit Plans: The Corporation shall cause to be continued
life insurance
and non-taxable medical and dental coverage
substantially
identical to
the coverage maintained by the
Corporation for
the Executive prior to his severance. Such
coverage
and payments shall
cease after 18 months,
or sooner if
the Executive becomes employed elsewhere.
(b)
Mitigation Is Not Required. The Corporation hereby acknowledges
that it
will be difficult
and could be impossible (1) for the Executive to find
reasonably comparable
employment after his
employment terminates,
and (2) to
measure the amount of damages the Executive suffer
