1
EXHIBIT 10(b)
EXECUTIVE SEVERANCE AGREEMENT
BETWEEN
FIRST UNITED BANCSHARES, INC.
AND
XXX X. XXXXXXX
2
EXHIBIT 10(b)
EXECUTIVE SEVERANCE AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT (the "Agreement"), made and entered
into on the 27th day of July , 1998, by and between First United Bancshares,
Inc. (the "Company"), a corporation organized and existing under the laws of the
State of Arkansas, and Xxx X. Xxxxxxx , (the "Executive").
R E C I T A L S:
The Company acknowledges that Executive's contributions to the past and
future growth and success of the Company have been and will continue to be
substantial. As a publicly held corporation, the Company recognizes that there
exists a possibility of a Change in Control of the Company. The Board of
Directors of the Company (the "Board") also recognizes that the possibility of
such a Change in Control may contribute to uncertainty on the part of senior
management and may result in the departure of senior management or distraction
of senior management from their operating responsibilities.
Outstanding management of the Company is always essential to advancing
the best interests of the Company and its shareholders. In the event of a threat
or occurrence of a bid to acquire or change control of the Company or to effect
a business combination, it is particularly important that the Company's business
be continued with a minimum of disruption. The Company believes that the
objective of securing and retaining outstanding management will be achieved if
the Company's key management employees are given assurances of employment
security so they will not be distracted by personal uncertainties and risks
created by such circumstances.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations herein and the compensation the Company agrees herein to pay the
Executive, and of other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Executive agree
as follows:
ARTICLE 1
TERM OF AGREEMENT
1.1 Term. This Agreement shall become effective as of the date on which
it is executed by the Company (the "Effective Date"). The Agreement shall be
effective for twenty-four (24) months and will automatically be extended for
twelve (12) months as of each anniversary date of the Effective Date (the
"Agreement Term") unless the Agreement Term is terminated by the Company upon
written notification to the Executive, within thirty days before an anniversary
date of the Effective Date, that the Agreement will terminate as of last day of
the Agreement Term as in effect immediately prior to such anniversary date.
Unless the Company has effectively terminated this Agreement as
prescribed above in this Section 1.1, in the event of a Change in Control, the
Agreement Term shall be extended for an additional 12 months and shall then
expire at the end of such additional 12 month period.
1.2 Change in Control, means if: (i) after the date of the Agreement,
any person, including a "group" as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, becomes the owner or beneficial owner of Company
securities having 20% or more of the combined voting power of the then
outstanding Company securities that may be cast for the election of the
Company's directors (other than as a result of an issuance of securities
initiated by the Company, or open market purchases approved by the Board, as
long as the majority of the Board approving the purchases are directors at the
time the purchases are made); or (ii) as the direct or indirect result of, or in
connection with, a cash tender or exchange offer, a merger or other business
combination, a sale of assets, a contested election of directors, or any
combination of these transactions, the persons who were directors of the Company
before such transactions cease to constitute a majority of the Board, or any
successor's board, within two years of the last of such transactions.
1.3 Control Change Date, means the date on which an event described in
Section 1.2 occurs. If a Change in Control occurs on account of a series of
transactions, the Control Change Date is the date of the last of such
transactions.
3
ARTICLE 2
TERMINATION OF EMPLOYMENT
2.1 General. Executive is entitled to receive Termination Compensation,
as defined in Section 2.4, according to the remaining provisions of this section
if Executive's employment with the Company terminates because of an event
described in Sections 2.2 or 2.3 which occurs during an Agreement Term and (i)
on or after a Control Change Date, or (ii) within the 180 days immediately
preceding a Control Change Date. If Executive's employment terminates during an
Agreement Term and if an event described in Sections 2.2 or 2.3 has not
occurred, this Agreement terminates.
2.2 Termination by the Company. Executive is entitled to receive
Termination Compensation (as described in Section 2.4) if Executive's employment
is terminated by the Company without Cause. Cause, means, for purposes of this
Agreement, (i) willful and continued failure by the Executive to perform his
duties as established by the Board of Directors of the Company; (ii) a material
breach by the Executive of his fiduciary duties of loyalty or care to the
Company; (iii) conviction of a felony; or (iv) willful, flagrant, deliberate and
repeated infractions of material published policies and regulations of the
Company of which the Executive has actual knowledge (the "Cause Exception"). If
the Company desires to discharge the Executive under the Cause Exception, it
shall give notice to the Executive as provided in Section 2.6 and the Executive
shall have thirty (30) days after notice has been given to him in which to cure
the reason for the Company's exercise of the Cause Exception. If the reason for
the Company's exercise of the Cause Exception is timely cured by the Executive
(as determined by a committee appointed by the Board of Directors), the
Company's notice shall become null and void.
2.3 Voluntary Termination. Executive is entitled to receive Termination
Compensation if Executive voluntarily terminates employment with Good Reason.
Good Reason means, for purposes of this Agreement, the Executive's resignation
from the Company's employment within six (6) months following the occurrence of
any one of the following events:
(a) the failure by the Board to reelect the Executive to
a responsible executive position in the Company ;
(b) a material modification by the Board of the duties,
functions and responsibilities of the Executive
without his consent;
(c) the failure of the Company to permit the Executive to
exercise such responsibilities as are consistent with
the Executive's position and are of such a nature as
are usually associated with such office of a
corporation engaged in substantially the same
business as the Company;
(d) the Company requires the Executive to relocate his
employment more than fifty (50) miles from his place
of employment, without the consent of the Executive,
excluding reasonably required business travel or
temporary assignments for a reasonable period of
time;
(e) a reduction in Executive's compensation or benefits;
or
(f) the Company shall fail to make a payment when due to
the Executive.
2.4 Termination Compensation. Termination Compensation equal to 2.00
times Executive's Base Period Income shall be paid in a single sum payment in
cash or in common stock of the Company, at the election of the Executive.
Payment of Termination Compensation to Executive shall be made on the later of
the thirtieth business day after Executive's employment termination or the first
day of the month following his employment termination.
2.5 Base Period Income. Executive's Base Period Income equals his
annual base salary as of Executive's termination date, plus the greater of the
average of any incentive bonus payable to Executive for the Company's last two
completed fiscal years or the Executive's target bonus opportunity under the
Company's annual incentive plan.
2.6 Notice of Termination. Any termination by the Company under the
Cause Exception or by the Executive for Good Reason shall be communicated by
Notice of Termination to the other party hereto. For purposes of Sections 2.2
and 2.3, a "Notice of Termination" means a written notice which (i) indicates
the specific termination provision in this
4
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) if the termination date is
other than the date of receipt of such notice, specifies the effective date of
termination.
ARTICLE 3
GROSS UP OF PAYMENTS
In the event that any amount required to be paid or distributed to the
Executive pursuant to this Agreement shall constitute a parachute payment within
the meaning of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), or any successor statutory provision ("Excess Parachute Payments")
and the aggregate of such parachute payments and any other amounts otherwise
required to be paid or distributed to the Executive by the Company would cause
the Executive to be subject to the excise tax on excess parachute payments under
Section 4999 of the Code (the "Excise Tax"), or any successor or similar
provision thereof, the Company shall pay to the Executive such additional
amounts as are necessary so that, after taking into account any tax imposed by
such Section 4999 or any successor statutory provision, only on any Net Excess
Parachute Payments, as well as on payments made pursuant to this sentence, and
any federal or state income taxes payable as a result of any payments due to the
Executive pursuant to this sentence, the Executive is in the same after-tax
position the Executive would have been in if such Section 4999 or any successor
statutory provision did not apply and no payments were made pursuant to this
sentence.
ARTICLE 4
ATTORNEY'S FEES
In the event that the Executive incurs any attorney's fees in
protecting or enforcing his rights under this Agreement, the Company shall
reimburse the Executive for such reasonable attorneys' fees and for any other
reasonable expenses related thereto. Such reimbursement shall be made within
thirty (30) days following final resolution of the dispute or occurrence giving
rise to such fees and expenses.
ARTICLE 5
WELFARE BENEFIT PLAN EQUIVALENTS
If the Executive is entitled to receive Termination Compensation under
this Agreement the Company, at its sole expense, shall maintain in full force
and effect for the continued benefit of Executive and his eligible dependents,
for a period of twenty-four (24) months following the date of termination, each
Welfare Benefit Plan in which the Executive was entitled to participate
immediately prior to the date of termination, at the benefit levels then in
effect; provided, however, in the event that the Executive's continued
participation in any such plan is not permitted thereunder, then the Company, at
its sole expense, shall provide the Executive and his eligible dependents a
benefit substantially similar to and no less favorable than the benefit provided
under such plan immediately prior to such termination of coverage; provided
further, however, at the termination of any period of coverage provided above,
the Executive shall have the option to have assigned to him, at no cost and no
apportionment of prepaid premiums, any assignable insurance owned by the Company
and relating specifically to the Executive. In lieu of being provided with the
benefits as described in the preceding sentence, the Executive may, at the
Executive's election and sole discretion, require the Company to include in the
Executive's Termination Compensation a lump sum amount equal to the value of the
benefits described in described in the preceding sentence. The term Welfare
Benefit Plan as used in this Article 5 refers to any plan, fund or program as
defined under Section 3 (1) of the Employee Retirement Income Security Act
(ERISA), which has been established and is maintained by the Company for the
purpose of providing its employees or their beneficiaries, through the purchase
of insurance or otherwise, medical, surgical, hospital care or benefits, or
benefits in the event of sickness, accident, disability or death.
ARTICLE 6
MITIGATION OF PAYMENT
The Company and the Executive agree that, following the termination of
employment by the Executive with Company, the Executive has no obligation to
take any steps whatsoever to secure other employment and such failure by the
Executive to search for or to find other employment upon termination from
Company shall in no way impact the Executive's right to receive payment under
any of the provisions of this Agreement.
5
ARTICLE 7
DECISIONS BY COMPANY; FACILITY OF PAYMENT
Any powers granted to the Board hereunder may be exercised by a
committee, appointed by the Board, and such committee, if appointed, shall have
general responsibility for the administration and interpretation of this
Agreement. If the Board or the committee shall find that any person to whom any
amount is or was payable hereunder is unable to care for his affairs because of
illness or accident, or has died, then the Board or the committee, if it so
elects, may direct that any payment due him or his estate (unless a prior claim
therefore has been made by a duly appointed legal representative) or any part
thereof be paid or applied for the benefit of such person or to or for the
benefit of his spouse, children or other dependents, an institution maintaining
or having custody of such person, any other person deemed by the Board or
committee to be a proper recipient on behalf of such person otherwise entitled
to payment, or any of them, in such manner and proportion as the Board or
committee may deem proper. Any such payment shall be in complete discharge of
the liability of the Company therefore.
ARTICLE 8
INDEMNIFICATION
The Company shall indemnify the Executive during his employment and
thereafter to the maximum extent permitted by applicable law for any and all
liability of the Executive arising out of, or in connection with, his employment
by the Company or membership on the Board; provided, that in no event shall such
indemnity of the Executive at any time during the period of his employment by
the Company be less than the maximum indemnity provided by the Company at any
time during such period to any other officer or director under an
indemnification insurance policy or the bylaws or charter of the Company or by
agreement.
ARTICLE 9
SOURCE OF PAYMENTS; NO TRUST
The obligations of the Company to make payments hereunder shall
constitute a liability of the Company to the Executive. Such payments shall be
from the general funds of the Company, and the Company shall not be required to
establish or maintain any special or separate fund, or otherwise to segregate
assets to assure that such payments shall be made, and neither the Executive nor
his designated beneficiary shall have any interest in any particular asset of
the Company by reason of its obligations hereunder. Nothing contained in this
Agreement shall create or be construed as creating a trust of any kind or any
other fiduciary relationship between the Company and the Executive or any other
person. To the extent that any person acquires a right to receive payments from
the Company hereunder, such right shall be no greater than the right of an
unsecured creditor of the Company.
ARTICLE 10
SEVERABILITY
All agreements and covenants contained herein are severable, and in the
event any of them shall be held to be invalid by any competent court, this
Agreement shall be interpreted as if such invalid agreements or covenants were
not contained herein.
ARTICLE 11
ASSIGNMENT PROHIBITED
This Agreement is personal to each of the parties hereto, and neither
party may assign nor delegate any of his or its rights or obligations hereunder.
ARTICLE 12
NO ATTACHMENT
Except as otherwise provided in this Agreement or required by
applicable law, no right to receive payments under this Agreement shall be
subject to anticipation, commutation, alienation, sale, assignment, encumbrance,
charge, pledge or hypothecation or to execution, attachment, levy, or similar
process or assignment by operation of law and any attempt, voluntary or
involuntary, to effect any such action shall be null, void and of no effect.
6
ARTICLE 13
HEADINGS
The headings of articles, paragraphs and sections herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
ARTICLE 14
GOVERNING LAW
The parties intend that this Agreement and the performance hereunder
and all suits and special proceedings hereunder shall be construed in accordance
with and under and pursuant to the laws of the State of Arkansas, and that in
any action, special proceeding or other proceeding that may be brought arising
out of, in connection with, or by reason of this Agreement, the laws of the
State of Arkansas, shall be applicable and shall govern to the exclusion of the
law of any other forum, without regard to the jurisdiction in which any action
or special proceeding may be instituted.
ARTICLE 15
BINDING EFFECT
This Agreement shall be binding upon, and inure to the benefit of, the
Executive and his heirs, executors, administrators and legal representatives and
the Company and its permitted successors and assigns.
ARTICLE 16
MERGER OR CONSOLIDATION
The Company will not consolidate or merge into or with another
corporation, or transfer all or substantially all of its assets to another
corporation (the "Successor Corporation") unless the Successor Corporation shall
assume this Agreement, and upon such assumption, the Executive and the Successor
Corporation shall become obligated to perform the terms and conditions of this
Agreement.
ARTICLE 17
COUNTERPARTS
This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
ARTICLE 18
ENTIRE AGREEMENT
This Agreement expresses the whole and entire agreement between the
parties with referenced to the employment of the Executive and, as of the
effective date hereof, supersedes and replaces any prior employment agreement,
understanding or arrangement (whether written or oral) between the Company and
the Executive. Each of the parties hereto has relied on his or its own judgment
in entering into this Agreement.
ARTICLE 19
NOTICES
All notices, requests and other communications to any party under this
Agreement shall be in writing and shall be given to such party at its address
set forth below or such other address as such party may hereafter specify for
the purpose by notice to the other party:
(a) If to the Executive:
Xxx X. Xxxxxxx
0000 Xxxx
Xxxx Xxxxx, XX 00000
7
(b) If to the Company:
First United Bancshares, Inc.
Main and Xxxxxxxxxx Xxxxxxx
Xx Xxxxxx, Xxxxxxxx 00000
ATTN.:
Each such notice, request or other communication shall be effective (i)
if given by mail, 72 hours after such communication is deposited in the mails
with first class postage prepaid, addressed as aforesaid or (ii) if given by any
other means, when delivered at the address specified in this ARTICLE 19.
ARTICLE 20
MODIFICATION OF AGREEMENT
No waiver or modification of this Agreement or of any covenant,
condition, or limitation herein contained shall be valid unless in writing and
duly executed by the party to be charged therewith. No evidence of any waiver of
modification shall be offered or received in evidence at any proceeding,
arbitration, or litigation between the parties hereto arising out of or
affecting this Agreement, or the rights or obligations of the parties hereunder,
unless such waiver or modification is in writing, duly executed as aforesaid.
The parties further agree that the provisions of this ARTICLE 20 may not be
waived except as herein set forth.
ARTICLE 21
TAXES
To the extent required by applicable law, the Company shall deduct and
withhold all necessary Social Security taxes and all necessary federal and state
withholding taxes and any other similar sums required by laws to be withheld
from any payments made pursuant to the terms of this Agreement.
ARTICLE 22
RECITALS
The Recitals to this Agreement are incorporated herein and shall
constitute an integral part of this Agreement
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
EXECUTIVE:
/s/ Xxx X. Xxxxxxx
-------------------------------
FIRST UNITED BANCHSARES, INC.:
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Name: Xxxxx X. Xxxxxx
--------------------------
Title: Chairman and President
-------------------------
