EMPLOYMENT AGREEMENT
EXHIBIT 10.1
This Employment Agreement (this “Agreement”) is made and effective this 15th day of July, 2005
(the “Effective Date”) by and between MetroCorp Bancshares, Inc. (hereinafter called the “Employer”
or “MetroCorp”) and Xxxxxxxx X. Xxxxxxxx (hereinafter called the “Executive”), an individual who
resides in Upland, California.
WHEREAS, the Board of Directors of the Employer (the “Board”) has proposed the acquisition of
First United Bank (“First United”) by Employer, whereby following the transaction, First United
would be a wholly owned subsidiary of Employer (the “Merger”); and
WHEREAS, the Board believes it is in the best interest of the Employer and its shareholders to
enter into this Agreement with respect to the management of Employer; and
WHEREAS, the parties desire to enter into this Agreement setting forth the terms and
conditions of the employment relationship between the Employer and the Executive as set forth
herein;
NOW, THEREFORE, the parties, intending to be legally bound, for the consideration set forth in
this Agreement and for other good and valuable consideration, agree as follows:
1. Employment. Employer agrees to employ the Executive as Executive Vice President of
Employer for the Term set forth in Paragraph 3 hereof beginning on the Effective Date. The
Executive shall have the responsibilities, duties and authority customarily accorded to and
expected of an executive holding such positions. The Executive agrees to devote full time,
attention and efforts to promote and further the business of the Employer. The Executive shall
report to the Board and shall perform his duties under this Agreement in accordance with such
reasonable standards established from time to time by the Board.
2. Compensation and Benefits. For all services rendered by the Executive to the
Employer and its subsidiaries, the Employer shall compensate the Executive as follows:
(a) Base Salary. Commencing on the Effective Date of this Agreement, the Employer
agrees to pay the Executive a base salary of $180,000.00 per annum, less applicable
statutory deductions (the “Base Salary”), payable on a regular basis in accordance with the
Employer’s standard payroll procedures, but not less frequently than monthly. The amount of
Base Salary shall be reviewed by the Board no less often than annually and may be adjusted
from time to time by such amounts as the Board in its discretion may decide.
(b) Stock Options. On the Effective Date of this Agreement, Employer shall deliver to
Executive an incentive stock option agreement issued pursuant to the MetroCorp Bancshares,
Inc. 1998 Stock Option Plan (“1998 Plan”) granting to Executive options to purchase 25,000
shares of common stock of Employer pursuant to the 1998 Plan. The stock option agreement
shall provide that the options shall vest 30%, 30% and
40% each year beginning on the first anniversary of the grant date, shall have a term
of ten (10) years and shall otherwise be subject to the terms and conditions of the 1998
Plan.
(c) Starting Bonus. Executive shall be paid a bonus of $75,000 on Executive’s first
day of employment as Executive Vice President of Employer under this Agreement.
(d) Bonus. Executive shall be eligible to receive an annual performance bonus under
Employer’s bonus program applicable to Executive Vice Presidents, which shall be no greater
than 50% of Executive’s Base Salary for the applicable year; provided, however, that any
bonus paid to Executive for the 2005 calendar year will be pro rated based on the number of
days in such year Executive was employed by Employer.
(e) One-Time Performance Bonus. Executive shall receive a one-time bonus of $25,000.00
to be paid at the end of one complete quarter following the Effective Time of the Merger;
provided that the financial condition and operating results of First United for such
calendar quarter are in line with the financial condition and operating results of First
United for the two calendar quarters immediately preceding the Effective Time.
(f) Benefits. Executive shall be entitled to coverage, subject to contributions
required of executives of the Employer generally, for the Executive and dependent family
members under health, hospitalization, disability, dental, life and other insurance plans
that the Employer may have in effect from time to time for the benefit of similarly situated
employees of the Employer.
(g) Reasonable Expenses. The Executive shall be eligible to participate in any fringe
benefit plan or program which may be or become applicable to the Employer’s executive
employees, which shall include an automobile allowance of $750.00 per month, a reasonable
expense account, and any other benefits which are commensurate with the fringe benefits
provided to similarly situated executive employees of Employer. The Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by him (in
accordance with the policies and practices of the Employer or as may be established by the
Board for its senior executives) in performing services under this Agreement, provided that
the Executive properly accounts for such expenses in accordance with the Employer’s
policies.
(h) Vacation. The Executive shall be entitled to four weeks of paid vacation time
annually determined in accordance with the Employer’s standard practices.
3. Term of the Agreement. The term of this Agreement shall begin on the Effective
Date and continue for three (3) years (the “Term”) unless terminated sooner as herein provided.
The parties shall meet to discuss any renewal of this Agreement following the second anniversary of
the Effective Date.
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4. Termination and Rights upon Certain Terminations. This Agreement and the
Executive’s employment may be terminated in any one of the following ways:
(a) Termination as a Result of the Executive’s Death. The death of the Executive shall
immediately terminate this Agreement, and the Executive’s estate shall be entitled to a lump
sum cash amount representing all compensation and benefits earned by the Executive and
unpaid as of the date of termination, less applicable statutory deductions, and any other
benefits under insurance programs and other employee plans in accordance with the terms of
such arrangements.
(b) Termination on Account of Disability. If, as a result of incapacity due to
physical or mental illness or injury, the Executive shall have been absent from his
full-time duties hereunder for three (3) consecutive months, the Employer may terminate the
Executive’s employment provided Executive is unable to resume his full-time duties with
reasonable accommodation, and the Executive shall be entitled to a lump sum cash amount
representing all compensation and benefits earned by the Executive and unpaid as of the date
of termination, less applicable statutory deductions, and any other benefits under insurance
programs and other employee plans in accordance with the terms of such arrangements.
(c) Termination by the Employer for Cause. The Employer may terminate this Agreement
for “Cause,” which shall mean: (i) the Executive’s acts of dishonesty in connection with
the performance of his duties for Employer or in their contexts; (ii) the Executive’s acts
of willful misconduct in violation of the lawful directives or policies of the Employer,
Employer’s Board of Directors or Executive’s direct or indirect supervisors; (iii) the
Executive’s acts that breach his fiduciary duties to the Employer (or any subsidiary); or
(iv) the Executive’s acts which materially breach his obligations pursuant to this
Agreement. Prior to termination for Cause, the Employer shall provide the Executive with
written notice describing in detail the actions taken by the Executive and the reasons why
Employer believes that such actions constitute Cause, giving Executive fifteen (15) days to
cure the basis for the Employer’s determination that Cause exists. If the basis for the
Employer’s determination that Cause exists has not been cured within such fifteen (15) day
period, or if not practicable to be cured within fifteen (15) days, the Executive has not
made reasonable efforts to cure, then Employer may terminate this Agreement for Cause by
giving written notice of termination to the Executive, specifically stating the grounds upon
which the termination is based. In the event the Executive’s employment is terminated by
the Employer for Cause, the Executive shall be entitled to a lump sum cash amount
representing all compensation and benefits earned by the Executive and unpaid as of the date
of termination, less applicable statutory deductions, to be paid within six (6) days of
termination.
(d) Termination Without Cause. Either the Executive or the Employer may, voluntarily
or without Cause, respectively, terminate this Agreement and the Executive’s employment,
effective thirty (30) days after written notice is provided to the other. Upon the
Executive’s voluntary resignation without Good Reason (as defined in Paragraph 6), the
Executive shall be entitled to a lump sum cash amount representing all compensation
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and benefits earned by the Executive and unpaid as of the date of termination, less
applicable statutory deductions, to be paid within fourteen (14) days of termination. Upon
termination by the Employer without Cause or by Executive for Good Reason upon or within one
(1) year following a Change of Control, the provisions of Paragraph 7 shall apply to
Executive’s post-employment entitlements. Upon termination by the Employer without Cause or
by Executive for Good Reason unrelated to a Change of Control, the provisions of Paragraph 8
shall apply to Executive’s post-employment entitlements.
5. Change in Control Defined. A Change in Control shall not occur by reason of any
transaction in which the Executive, or a group of individuals or entities including the Executive,
participates as an Acquiring Person, or owns, directly or indirectly, a majority of a corporation
described in this paragraph. For purposes of this Agreement, “Change in Control” shall mean:
(a) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), an “Acquiring Person”) becomes the
“beneficial owner” (as such term is defined in Rule 13d-3 promulgated under the Exchange
Act, a “Beneficial Owner”), directly or indirectly, of securities of the Employer
representing 50% or more of the combined voting power of the Employer’s then outstanding
securities;
(b) the Employer’s shareholders approve an agreement to merge or consolidate the
Employer with another corporation (other than a corporation 50% or more of which is
controlled by, or is under common control with, the Employer) in which the Employer is not
the surviving entity;
(c) the Employer sells 80% or more of its assets to an Acquiring Person; or
(d) the persons who were members of the Board of Directors of the Employer 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.
6. Good Reason Defined. For purposes of this Agreement, the Executive shall have
“Good Reason” to terminate this Agreement and his employment hereunder if, without the Executive’s
prior written consent, (i) the Executive is demoted by means of a reduction in authority,
responsibilities, duties or title to a position of materially less stature or importance within the
Employer than as described in Paragraph 1 hereof; (ii) the Employer breaches this Agreement in any
material respect and fails to cure such breach within fifteen (15) days after the Executive
delivers written notice and a written description of such breach to the Employer, which notice
shall specifically refer to this paragraph of this Agreement; (iii) the Employer reduces the
Executive’s Base Salary or materially reduces his benefits; or (iv) the non-renewal of this
Agreement as described in Section 3 hereof; provided, however, that if at the time of non-renewal
of this Agreement, the employment or related agreements of similarly situated executives of
Employer have not been renewed or Employer has notified such executives of the non-renewal of their
employment or related agreements, and such non-renewal is the result of a change in Employer’s
policies with respect to employment or related agreements, then clause (iv)
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of this Section 6 shall have no effect and the definition of Good Reason shall not include the
non-renewal of this Agreement.
7. Termination upon Change in Control or Resignation with Good Reason following Change in
Control. In the event the Executive’s employment is terminated within one (1) year following a
Change in Control, by either the Employer without Cause, or by the Executive for Good Reason, as
defined in Paragraph 6 hereof, the Executive shall be entitled to the following:
(i) A lump sum cash amount representing all compensation and benefits earned by
the Executive and unpaid as of the date of termination, less applicable statutory
deductions, to be paid within thirty (30) days of termination;
(ii) A lump sum cash amount equal to the greater of (a) eighteen (18) months of
the Executive’s monthly base salary at the highest rate earned by him at any time
during the twelve (12) months immediately preceding the date of termination or (b)
the remainder of the Base Salary, less applicable statutory deductions, due to
Executive from the date of termination through the Term of this Agreement; provided,
however, that such payment shall be limited to an amount that, when added to all
other amounts to be received by the Executive from the Employer that could
constitute “parachute payments” (as defined in Section 280G(b)(2) of the Internal
Revenue Code of 1986, as amended (the “Code”)), shall not exceed one dollar ($1.00)
less than three (3) times the Executive’s “base amount” (as defined in Section 280G
of the Code), so that no portion of such amounts shall constitute a non-deductible
payment under Section 280G of the Code.
8. Termination Without Cause or Executive Termination for Good Reason. If, at any
time during the Term other than the one (1) year period following a Change in Control, the
Executive is terminated by the Employer without Cause or the Executive terminates this Agreement
for Good Reason, the Executive shall be entitled to the greater of (i) a lump sum cash amount equal
to eighteen (18) months of the Executive’s monthly base salary at the highest rate earned by him at
any time during the twelve (12) months immediately preceding the date of termination or (b)
continuation of the Base Salary (or a lump sum payment, at Employer’s option), less applicable
statutory deductions, from the date of termination through the Term of this Agreement.
9. Non-Disclosure, Non-Competition and Non-Solicitation Covenants
(a) Confidential Information Defined. Upon the Effective Date, Employer shall provide
Executive immediate access to Confidential Information of Employer that is a valuable,
special and unique asset used by Employer in its business. The Executive acknowledges that
Employer’s business is highly competitive, and that protection of such Confidential
Information against unauthorized disclosure and use is of critical importance to Employer
which will assist Executive to perform his job for Employer. Executive also will have
immediate access to, or knowledge of, Confidential Information of third parties, such as,
among others, actual or potential customers, suppliers, partners, joint ventures,
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investors and financing sources of Employer. “Confidential Information” of Employer
(or any subsidiary) means and includes confidential or proprietary information or trade
secrets that have been or will be developed or used and that cannot be obtained readily by
third parties from outside sources. Confidential Information includes, but is not limited
to, the following: information regarding customers, employees, contractors and the industry
not generally known to the public; strategies, methods, books, records and documents;
technical information concerning products, equipment, services and processes; procurement
procedures, pricing and pricing techniques; information concerning past, current and
prospective customers, investors and business affiliates (such as contact name, service
provided, pricing, type and amount of services used, financial data and/or other such
information); pricing strategies and price curves; positions; plans or strategies for
expansion or acquisitions; budgets; research; financial and sales data; trading
methodologies and terms; communications information; evaluations, opinions and
interpretations of information and data; marketing and merchandising techniques; electronic
databases; models; specifications; computer programs; contracts; bids or proposals;
technologies and methods; training methods and processes; organizational structure;
personnel information; payments or rates paid to consultants or other service providers; and
other such confidential or proprietary information.
(b) Non-Disclosure Obligations. The Executive agrees that he will not, at any time
during or after his employment with Employer, make any unauthorized disclosure, directly or
indirectly, of any Confidential Information of Employer, its subsidiary, or of any third
parties that the Executive received in connection with his employment with Employer, or make
any use thereof, directly or indirectly, except in working for Employer. The Executive also
agrees that he shall deliver promptly to Employer at the termination of employment or at any
other time at Employer’s request, without retaining any copies, all documents and other
material in the Executive’s possession relating, directly or indirectly, to any Confidential
Information or other information of Employer, or Confidential Information or other
information regarding third parties, learned as an employee at Employer.
(c) Non-Competition Obligations. In order to protect the Confidential Information and
in order to enforce Executive’s agreement not to disclose Confidential Information, Employer
and Executive agree that, during the term of Executive’s employment with Employer, which may
exceed the term of this Agreement, and for a period of one (1) year following termination of
Executive’s employment with Employer (“Non-Competition Period”), the Executive will not,
except as an employee of Employer, in any capacity for the Executive or others, directly or
indirectly:
(i) compete or engage, anywhere in the geographic areas comprised of the
Greater San Diego Metropolitan Area and the Alahambra, Monterey Park and San Xxxxxxx
regions of Los Angeles, California, as those areas are commonly defined (the “Market
Area”), in a business similar to that of Employer, or compete or engage in that type
of business which Employer has plans to engage in, or any business which Employer
has engaged in during the preceding twelve (12) month
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period if within the twelve (12) months before the termination of the
Executive’s employment, the Executive had access to or knowledge regarding the
proposed plans or the business in which Employer engaged; or
(ii) take any action to invest in, own, manage, operate, control, participate
in, be employed or engaged by or be connected in any manner with any partnership,
corporation or other business or entity engaging in a business similar to that of
Employer anywhere within the Market Area; except that the Executive is permitted to
own, directly or indirectly, up to five percent (5%) of the issued and outstanding
securities of any publicly traded financial institution conducting business in the
Market Area.
(d) Non-Solicitation Obligations. In order to protect the Confidential Information and
in order to enforce Executive’s agreement not to disclose Confidential Information, Employer
and Executive agree that, during the term of Executive’s employment with Employer, which may
exceed the Term, and for the Non-Competition Period (“Non-Solicitation Period”), the
Executive will not, except as an employee of Employer, in any capacity for the Executive or
others, directly or indirectly:
(i) call on, service or solicit competing business from customers or
prospective customers of Employer if, within the twelve (12) months before the
termination of the Executive’s employment, the Executive had or made contact with
the customer, or had access to information and files about the customer; or
(ii) call on, solicit or induce any employee of Employer whom the Executive had
contact with, knowledge of, or association with in the course of employment with
Employer to terminate employment from Employer, and will not assist any other person
or entity in such activities.
(e) Injunctive Relief. Employer and the Executive acknowledge and agree that breach of
any of the covenants made by the Executive in this Paragraph 9 would cause irreparable
injury to Employer, which could not sufficiently be remedied by monetary damages; and,
therefore, that Employer shall be entitled to obtain such equitable relief as declaratory
judgments; temporary, preliminary and permanent injunctions; and order of specific
performance to enforce those covenants or to prohibit any act or omission that constitutes a
breach thereof. If a party must bring suit to enforce this Agreement or to defend any such
action, the prevailing party shall be entitled to recover its attorneys’ fees and costs
related thereto.
10. Return of Employer Property. All records, designs, patents, business plans,
financial statements, manuals, memoranda, lists, contracts and other property delivered to or
compiled by the Executive by or on behalf of the Employer or their representatives, vendors or
customers which pertain to the business of the Employer (including any subsidiary) shall be and
remain the property of the Employer and subject at all times to its discretion and control.
Likewise, all correspondence, reports, records, charts, advertising materials and other similar
data pertaining to the business, activities or future plans of the Employer which is collected by
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Executive during the course of his employment with the Employer shall be delivered promptly to
the Employer without request by it upon termination of Executive’s employment.
11. Inventions. Executive shall disclose promptly to the Employer any and all
significant conceptions and ideas for inventions, improvements and valuable discoveries, whether
patentable or not, which are conceived or made by the Executive, solely or jointly with another,
during the period of employment or within one (1) year thereafter, and which are directly related
to the business or activities of the Employer and which the Executive conceives as a result of his
employment hereunder. The Executive hereby assigns and agrees to assign all his interests therein
to the Employer or its nominee. Whenever requested to do so by the Employer, the Executive shall
execute any and all applications, assignments or other instruments that the Employer shall deem
necessary to apply for and obtain Letters Patent of the United States or any foreign country or to
otherwise protect the Employer’s interest therein.
12. Trade Secrets. The Executive agrees not to, during or after the term of this
Agreement, directly or indirectly, disclose (or use for the benefit of any person other than the
Employer) the specific terms of the Employer’s (including any subsidiary) relationships or
agreements with their respective significant vendors or customers or any other trade secret or
other confidential business information of the Employer (including any subsidiary), whether in
existence or proposed, to any person, firm, partnership, corporation or business for any reason or
purpose whatsoever, except and only to the extent (i) such information is or becomes known to the
public generally through no fault of the Executive or (ii) required by law or legal process
following notice to the Employer.
13. Arbitration. Any unresolved dispute or controversy arising under or in connection
with this Agreement, other than enforcement of the confidentiality covenants of Paragraph 9, shall
be settled exclusively by arbitration, conducted in the state in which the Employer’s main office
is located, in accordance with the Employment Dispute Resolution Rules of the American Arbitration
Association (“AAA”) then in effect, provided that the Executive and the Employer shall comply with
the Employer’s grievance procedures in an effort to resolve such dispute or controversy before
resorting to arbitration, and provided further that the parties may agree to use an arbitrator
other than those provided by the AAA. The arbitrator shall not have the authority to add to,
detract from, or modify any provision hereof nor to award punitive damages to any injured party. A
decision of the arbitration panel shall be final and binding. Judgment may be entered on the
arbitrator’s award in any court having jurisdiction. The direct expense of any arbitration
proceeding shall be apportioned by the arbitration award.
14. Successor; Binding Agreement. The Employer shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, liquidation or otherwise) to all or
substantially all of the business and/or assets of the Employer to agree to assume and to assume
all of the obligations of the Employer under this Agreement upon or prior to such succession taking
place. A copy of such assumption and agreement shall be delivered to Executive promptly after its
execution by the successor. However, this Agreement is personal to the Executive and the Executive
may not assign or transfer any part of his rights or duties hereunder, or any compensation due to
him hereunder, to any other person, except that this Agreement shall
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inure to the benefit of and be enforceable by the Executive’s personal or legal
representatives, executors, administrators, heirs, distributees, devisees or beneficiaries.
15. Modification; Waiver. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing signed by the
Executive and by such director of the Employer as may be specifically designated by the Board.
Waiver by any party of any breach of or failure to comply with any provision of this Agreement by
the other party shall not be construed as, or constitute waiver of such provision, or a waiver of
any other breach of, or failure to comply with, any other provision of this Agreement.
16. Notice. All notices, requests, demands and other communications required or
permitted to be given by either party shall be in writing, deemed to have been given when delivered
personally or received by certified or registered mail, return receipt requested, postage prepaid,
at the address of the other party as follows:
| If to the Employer to: | ||||
| MetroCorp Bancshares, Inc. | ||||
| 0000 Xxxxxxxx Xxxxxxxxx., Xxxxx 000 | ||||
| Xxxxxxx, Xxxxx 00000 | ||||
| Attn: Xxxxxx X. Xxx | ||||
| If to Executive to: | ||||
| Xxxxxxxx X. Xxxxxxxx | ||||
| 0000 Xxxxxxxxxxx Xxxxxx | ||||
| Xxxxxx, Xxxxxxxxxx 00000 |
Either party hereto may change its address for purposes of this Paragraph 16 by giving fifteen (15)
days prior notice to the other party hereto.
17. Governing Law. This Agreement has been executed and delivered in the State of
Texas, and its validity, interpretation, performance and enforcement shall be governed exclusively
by the laws of that State. Jurisdiction and venue for any enforcement action or dispute related to
this Agreement shall be exclusively in Xxxxxx County, Texas, and Executive submits to the exclusive
jurisdiction of Xxxxxx County, Texas for all purposes related to this Agreement.
18. Complete Agreement. This Agreement sets forth the entire agreement of the parties
relating to the subject matter hereof, and supersedes any other employment agreements or
understandings, written or oral, between the Employer, its predecessors and the Executive. The
Executive has no oral representations, understandings or agreements with the Employer or any of its
officers, directors or representatives covering the same subject matter as this Agreement. This
Agreement is the final, complete and exclusive statement and expression of the agreement between
the Employer and the Executive and of all the terms of this Agreement, and it cannot be
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varied, contradicted or supplemented by evidence of any prior or contemporaneous oral or
written agreements.
19. Severability. If any portion of this Agreement is held invalid or inoperative,
the other portions of this Agreement shall be deemed valid and operative and, so far as is
reasonable and possible, effect shall be given to the intent manifested by the portion held invalid
or inoperative.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first written above.
| EMPLOYER: | ||||
| MetroCorp Bancshares, Inc. | ||||
| 0000 Xxxxxxxx Xxxx., Xxxxx 000 | ||||
| Xxxxxxx, Xxxxx 00000 | ||||
| By: | /s/ Xxxxxx X. Xxx | |||
| Xxxxxx X. Xxx | ||||
| President and Chief Executive Officer | ||||
| EXECUTIVE: | ||||
| /s/ Xxxxxxxx X. Xxxxxxxx | ||||
| Xxxxxxxx X. Xxxxxxxx | ||||
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