1
EXHIBIT 10(c)
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 Xxxxx X. Xxxxxx (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 thirty-six months (36) 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.
1
2
ARTICLE 2
TERMINATION OF EMPLOYMENT
2.1 General. The Executive shall have the right during an Agreement
Term to receive Termination Compensation without regard to the event or reason
for his termination of employment, provided he elects in writing in a manner
prescribed by the Company to receive such Termination Compensation within a 30
day period commencing as of the anniversary date of a Control Change Date.
2.2 Termination Compensation. Termination Compensation equal to 3.00
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.
2.3 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.
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 thirty-six (36) 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 the preceding
2
3
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.
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.
3
4
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.
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.
4
5
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:
Xxxxx X. Xxxxxx
--------------------------------
--------------------------------
(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.
5
6
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/ Xxxxx X. Xxxxxx
------------------------------------------
FIRST UNITED BANCSHARES, INC.:
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxx
------------------------------------
Title: Chairman, Compensation Committee
-----------------------------------
6
