exhibit_10o.htm


     

    Exhibit
10(o)


    RETIREMENT
AGREEMENT

    


    This Retirement
Agreement (this “Agreement”) is made and entered into this 7th day of November,
2008 by and between Southside Bank (the “Bank”), Southside Bancshares, Inc. (the
“Company”), and B. G. Hartley (“Executive”).

    


    WHEREAS, Executive
currently serves as Chairman and Chief Executive Officer of the Company and the
Bank; and

    


    WHEREAS, Executive,
the Bank and the Company are party to that certain Post Retirement Agreement,
dated June 20, 2001, (the “Post Retirement Agreement”), pursuant to which
Executive would be entitled to receive certain payments and benefits upon his
retirement from the Company, including, among other things, continuing
employment with the Bank; and

    


    WHEREAS, the Bank,
the Company and Executive wish to provide that upon Executive’s retirement from
the Company, he similarly will retire from the Bank, and the parties wish to
provide for certain payments and benefits upon such retirement or other
separation from service; and

    


    WHEREAS, in order
to memorialize such payments and benefits, the Bank, the Company and Executive
desire to terminate the Post Retirement Agreement, dated June 20, 2001, on the
date first written above (the “Effective Date”) and to adopt this Agreement as
of such Effective Date;

    


    THEREFORE, in consideration of the mutual
covenants and agreements described below, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, Executive
and the Company agree as follows:

    


    1.           Termination of Post
Retirement Agreement.  Executive’s Post Retirement Agreement,
dated June 20, 2001, shall be terminated and shall have no further force or
effect as of the Effective Date.

    


    2.           Retirement. Upon the
effective time of Executive’s voluntary resignation as an employee and officer
of the Company (the “Retirement Date”), he similarly shall resign as an employee
and officer of the Bank.  It is expected that, following the
Retirement Date, Executive will remain on the board of directors of the Company
and/or the Bank.

    


    3.           Retirement
Benefits.  In consideration of Executive’s promises and
covenants contained in this agreement:

    


    (a)           Other
Benefits.  Executive shall be entitled to receive retirement
and other benefits under such plans, programs, practices and policies then
maintained by the Company relating to retirement or termination of employment,
if any, as are applicable to Executive on the Retirement Date, subject to the
terms and conditions of such plan, programs, practices and
policies.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)           Retirement Payments.
Upon Executive’s “separation from service,” as such term is defined under
Section 409A of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder (“Section 409A”), whether such separation is
by reason of Executive’s retirement, death or otherwise, the Company shall pay
to Executive (or to Executive’s estate or beneficiary, as applicable, if
Executive’s separation from service is due to death) a series of sixty payments
(the “Retirement Payments”), payable in equal monthly amounts following
Executive’s separation from service, pursuant to the following
schedule:

    


    
      	
              Period
      following separation from service

            	
              Amount
      of monthly payment

            	
              Aggregate
      annual payment

              (5%
      annual increase)

            
	
              Each of
      months 1-12

            	
              $20,833.33

            	
              $250,000

            
	
              Each of
      months 13-24

            	
              $21,875.00

            	
              $262,500

            
	
              Each of
      months 25-36

            	
              $22,969.00

            	
              $275,625

            
	
              Each of
      months 37-48

            	
              $24,117.00

            	
              $289,406

            
	
              Each of
      months 49-60

            	
              $25,323.00

            	
              $303,876

            


    

    


    In the event of
Executive’s death during such five-year payment period, the remaining Retirement
Payments shall be paid to Executive’s estate or beneficiary, as applicable, in
accordance with the normal payment schedule.

    


    (c)           Six-Month Delay if Specified
Employee.  Notwithstanding anything in this Agreement to the
contrary, in the event that Executive is a “Specified Employee” (as defined
below) at the time of his separation from service, then, subject to any
permissible acceleration of payment by the Company under Treas. Reg. Section
1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of
interest), or (j)(4)(vi) (payment of employment taxes), the Retirement Payments
that would otherwise be payable during the six-month period immediately
following Executive’s separation from service will be accumulated and
Executive’s right to receive payment or distribution of such accumulated amount
will be delayed until the earlier of Executive’s death or the first day of the
seventh month following Executive’s separation from service, whereupon the
accumulated amount will be paid or distributed to Executive and the normal
payment or distribution schedule for any remaining payments or distributions
will resume.   For purposes of this Agreement, the term
“Specified Employee” has the meaning given such term in Section 409A, provided, however, that, as
permitted in Section 409A, the Company’s Specified Employees and its application
of the six-month delay rule of Code Section 409A(a)(2)(B)(i) shall be determined
in accordance with rules adopted by the Board of Directors or the Compensation
Committee, which shall be applied consistently with respect to all nonqualified
deferred compensation arrangements of the Company, including this
Agreement.

    


    4.           Miscellaneous.

    


    (a)           Assignment and
Successors.  Neither the Executive, the Bank nor the Company
may make any assignment of this Agreement or any interest herein, by operation
of law or otherwise, without the prior written consent of the other parties;
provided that the Company and/or the Bank may assign its rights under this
Agreement without the consent of Executive in the event that the Company and/or
the Bank shall effect a reorganization, consolidate with or merge into any other
corporation, partnership, organization or other entity, or transfer all or
substantially all of its properties or assets to any other corporation,
partnership, organization or other entity.  This Agreement shall inure
to the benefit of and be binding upon the Executive, the Company, the Bank, and
their respective successors, executors, administrators, heirs and permitted
assigns.

    


    (b)           Waiver.  Failure
of either party to insist, in one or more instances, on performance by the other
in strict accordance with the terms and conditions of this Agreement shall not
be deemed a waiver or relinquishment of any right granted in this Agreement or
of the future performance of any such term or condition or of any other term or
condition of this Agreement, unless such waiver is contained in a writing signed
by the party making the waiver.

    


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (c)           Severability.  If
any provision or covenant, or any part thereof, of this Agreement should be held
by any court to be invalid, illegal or unenforceable, either in whole or in
part, such invalidity, illegality or unenforceability shall not affect the
validity, legality or enforceability of the remaining provisions or covenants,
or any part thereof, of this Agreement, all of which shall remain in full force
and effect.

    


    (d)           Entire
Agreement.  Except as provided herein, this Agreement contains
the entire agreement among the Company and Executive with respect to the subject
matter hereof and, from, and after the Effective Date, this Agreement shall
supersede any other agreement between the parties with respect to the subject
matter hereof, including, without limitation, the Post Retirement
Agreement.  Notwithstanding the foregoing, this Agreement shall not in
any way be deemed to modify or amend that certain Deferred Compensation
Agreement by and between Executive and the Bank, effective February 13,
1984, as amended June 28, 1990, December 15, 1994, November 20, 1995, December
21, 1999 and June 29, 2001 (the “Deferred Compensation Agreement”), or otherwise
impact the payments or benefits to which Executive may be entitled to under the
Deferred Compensation Agreement.

    


    (e)           Choice of Law; Forum
Selection.  The validity, interpretation and performance of
this Agreement shall be governed by and controlled in accordance with the laws
of the State of Texas, excluding said State’s choice of law
rules.  The parties hereto voluntarily submit themselves to the
jurisdiction of the state or federal district courts in the State of Texas which
shall have exclusive jurisdiction over any case or controversy arising under or
in connection with this Agreement, including with respect to an action to remedy
any breach of or otherwise to enforce the terms and conditions of this
Agreement.

    


    (f)           Notices.  All
notices, requests, demands and other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally or three days after mailing if mailed, first class,
certified mail (return receipt requested), postage prepaid:

    


    
      	
              To the
      Company:

            	 
    	
              Southside
      Bancshares, Inc.

            
	 
    	 
    	
              1201 S.
      Beckham

            
	 
    	 
    	
              Tyler, Texas
      75701

            
	 
    	 
    	 
    
	
              To
      Executive:

            	 
    	
              B. G.
      Hartley

            
	 
    	 
    	
              1929 McDonald
      Road

            
	 
    	 
    	
              Tyler,
      Texas  75701

            
	 
    	 
    	 
    


    

    


    Any party may
change the address to which notices, requests, demands and other communications
shall be delivered or mailed by giving notice thereof to the other party in the
same manner provided herein.

    


    (g)           Amendments and
Modifications.  This Agreement may be amended or modified only
by a writing signed by both parties hereto, which makes specific reference to
this Agreement.

    


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    (h)           Construction.  Each
party and his or its counsel have reviewed this Agreement and have been provided
the opportunity to revise this Agreement and accordingly, the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this
Agreement.  Instead, the language of all parts of this Agreement shall
be construed as a whole, and according to its fair meaning, and not strictly for
or against either party.

    


    


    IN WITNESS WHEREOF,
the parties hereto have duly executed and delivered this Retirement Agreement as
of the date first above written.

    


    
      	 
    	 
    	
              SOUTHSIDE
      BANCSHARES, INC.

            
	 
    	 
    	 
    
	 
    	
              By:

            	
              /s/  LEE
      R. GIBSON

            
	 
    	
              Title:

            	
              Executive
      Vice President and Chief Financial Officer

            
	 
    	 
    	 
    
	 
    	 
    	
              SOUTHSIDE
      BANK

            
	 
    	 
    	 
    
	 
    	
              By:

            	
              /s/  LEE
      R. GIBSON

            
	 
    	
              Title:

            	
              Executive
      Vice President and Chief Financial Officer

            
	 
    	 
    	 
    
	 
    	 
    	
              EXECUTIVE:

            
	 
    	 
    	 
    
	 
    	 
    	
              /s/  B.
      G. HARTLEY

            
	 
    	 
    	
              B. G.
      Hartley

            


    

    
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