Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 10th day of September, 1997, by
and among United Bankshares, Inc. ("United"), a West Virginia corporation (the
"Corporation"), United Bank, a Virginia state-chartered bank (the "Bank"), and
Xxxxxxx X. Xxxxxxxxx (the "Executive").
W I T N E S S E T H :
WHEREAS, the parties hereto desire to provide for the
Executive's employment by the Corporation and the Bank (collectively, the
"Employers") following the consummation of the transactions contemplated in the
Agreement and Plan of Merger by and between Xxxxxx Xxxxx Bankshares, Inc.
("Mason"), a Virginia corporation and the Corporation, dated as of September 10,
1997 (the "Merger Agreement"); and
WHEREAS, in consideration for the benefits provided under this
Agreement, the Executive has agreed to waive all rights to any benefits payable
under that certain employment agreement among Mason, The Xxxxxx Xxxxx Bank
("Xxxxx Bank"), and the Executive, dated as of August 3, 1995 (the "Prior
Agreement"), except for the right to a limited payment as described more fully
herein; and
WHEREAS, the Board of Directors of the Corporation (the
"Corporation Board") and the Bank (the "Bank Board") has authorized the
Corporation and the Bank to enter into this Agreement.
NOW THEREFORE, in consideration of the mutual covenants
contained herein, the Employers and the Executive agree as follows:
1. Employment. Subject to the consummation of the transactions
contemplated by the Merger Agreement, the Employers agree to employ the
Executive and the Executive agrees to continue in the employ of the Employers on
the terms and conditions hereinafter set forth.
2. Capacity. The Executive shall serve as President of the
Corporation and as Chairman and Chief Executive Officer of the Bank and shall
perform such services for the Corporation and the Bank as are consistent with
such positions.
3. Effective Date and Term; Prior Agreement. (a) The
commencement date (the "Commencement Date") of this Agreement shall be the
Effective Date, as defined in the Merger Agreement. Subject to the provisions of
Section 6, the term (the "Term") of the Executive's employment hereunder shall
be three years from the Commencement Date; and the Term shall be automatically
extended from day to day so that on any day the remaining Term shall be three
years; provided however, that in no event shall the Term extend beyond the
anniversary of the Commencement Date that occurs in the year 2004 and provided
further, that the Corporation Board and the Bank Board may by written notice
advice the Executive that the Term will not be extended beyond three years from
the date of such notice. The last day of such Term, as so extended from time to
time, is sometimes referred to herein as the "Expiration Date."
(b) The Executive hereby acknowledges and agrees that the
Prior Agreement shall terminate as of the Commencement Date and shall be of no
further force and effect, and the Executive hereby waives his rights to any and
all benefits that would have been provided under such Prior Agreement.
4. Compensation and Benefits. The regular compensation and
benefits payable to the Executive under this Agreement shall be as follows:
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(a) Base Salary and Bonus. For each year during the term, the
Employers shall pay the Executive a base salary of $285,000. The
Executive's base salary may be subject to increase from time to time in
accordance with the usual practice of the Employers with respect to the
review of compensation of their senior executives. The Executive's base
salary shall be payable in periodic installments in accordance with the
Employers' usual practice for their senior executives. In addition, the
Executive shall be eligible to receive an annual bonus under the bonus
incentive plan offered by the Employers; provided, however, that the
maximum amount payable to Executive for any year under any such bonus
incentive plan shall be an amount equal to 40% of Executive's then
current base salary.
(b) Initial Up-Front Payment. In consideration for entering
into this Agreement and waiving all rights to any benefits to which
Executive may have been entitled under the Prior Agreement, the
Employers shall pay to Executive in a lump sum within seven days
following the Effective Date (as defined in the Merger Agreement) an
amount equal to 2.99 times the Executive's "base amount" (as determined
under Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), assuming that the consummation of the transactions
contemplated by the Merger Agreement constitute a change described in
Code Section 280G(b)(2)(A)(i)) (the "Special Severance Payment");
provided, however, that the Special Severance Payment shall in no event
exceed $1,750,000.
(c) Regular Benefits. The Executive shall be entitled to
participate in any and all employee benefit plans, medical insurance
plans, retirement plans and other benefit plans from time to time in
effect for senior executives of the Bank to the extent commensurate
with his duties and responsibilities with the Employers. Such
participation shall be subject to (i) the terms of the applicable plan
documents and (ii) generally applied policies of the Employers. The
Executive shall receive credit under such employee benefit plans for
eligibility and vesting purposes in respect of Executive's prior
service with Xxxxx.
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(d) Business Expenses. The Employers shall reimburse the
Executive for all reasonable travel, entertainment and other business
expenses incurred by him in the performance of his duties and
responsibilities hereunder, subject to audit as necessary and to such
reasonable requirements with respect to substantiation and
documentation as may be specified by the Employers.
(e) Vacation. The Executive shall be entitled to four (4)
weeks of vacation per calendar year, to be taken at such times and
intervals as shall be determined by the Executive with the approval of
the Employers, which approval shall not be unreasonably withheld.
(f) Automobile. The Employers at their sole cost shall during
the Term provide the Executive with the use of an appropriate
automobile that shall be selected by the Executive with the approval of
the Employers, which shall not be unreasonably withheld.
5. Extent of Service. During his employment hereunder, the
Executive shall, subject to the direction and supervision of the Corporation
Board and the Bank Board, devote his full business time, best efforts and
business judgment, skill and knowledge to the advancement of the Employer's
interests and to the discharge of his duties and responsibilities hereunder. He
shall not engage in any other business activity, except as may be approved by
the Corporation Board and the Bank Board; provided, however, that nothing herein
shall be construed as preventing the Executive from:
(a) investing his assets in a manner not prohibited by Section
8, and in such form or manner as shall not require any material
services on his part in the operations or affairs of the companies or
other entities in which such investments are made;
(b) serving on the board of directors or governing board of
any entity subject to the prohibitions set forth in Section 8 and
provided that he shall not be required to render any material services
with respect to the operations or affairs or any such entity and
subject to disclosure and advance approval by the Corporation
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Board and the Bank Board, which approval will not be unreasonably
withheld, as well as annual notification to the Corporation Board and
the Bank Board of all boards on which the Executive serves; or
(c) engaging in religious, charitable or other community or
non-profit activities which do not impair his ability to fulfill his
duties and responsibilities under this Agreement.
6. Termination and Termination Benefits. Notwithstanding the
provisions of Section 3, the Executive's employment hereunder shall terminate
under the following circumstances:
(a) Death. In the event of the Executive's death while he is
actively employed by the Employers, the Executive's employment shall
terminate on the date of his death; all compensation and benefits
earned by the Executive but unpaid at the time of his death shall be
paid to the Executive's estate.
(b) Termination by the Employers for Cause. The Executive's
employment hereunder may be terminated for "Cause" by the Employers
(acting jointly and not severally), which shall mean termination
because of the Executive's breach of fiduciary duty involving personal
profit, willful violation of any law, rule or regulation (other than
traffic violations or similar offenses) or entry of a final
cease-and-desist order relating to either of the Employers, or acts or
omissions constituting gross negligence, dishonesty, or immoral or
disreputable conduct, or material breach of any provisions of this
Agreement, provided, however, that such determination of termination
for Cause shall require the affirmative vote of at least two thirds of
the members of the each of the Corporation Board and the Bank Board and
such votes shall not be made prior to the expiration of a thirty (30)
day period following the date on which the Corporation Board and Bank
Board shall, by written notice to the Executive, furnish to him a
statement of the grounds for his termination for Cause, during which
the Executive shall be afforded a reasonable opportunity to make oral
and written presentations to the Corporation
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Board and the Bank Board, and to be represented by his legal counsel at
such presentations, to refute the grounds for the termination.
Regardless of the circumstances surrounding the termination for
"Cause," the Executive shall continue to receive all compensation and
benefits otherwise payable under this Agreement and otherwise during
such thirty (30) day period. For purposes of this paragraph, no act or
failure to act on the Executive's part shall be considered "willful"
unless done, or omitted to be done, by the Executive not in good faith
and without reasonable belief that the Executive's action or omission
was in the best interests of the Employers.
In the event of termination for Cause, all obligations of the
Employers under this Agreement shall terminate as of the date the
Executive's employment is terminated, except that all compensation and
benefits earned by the Executive but unpaid at the time of his
termination will be paid to the Executive.
(c) Termination by the Employers Without Cause. The
Executive's employment with the Employers may be terminated, subject as
provided below, prior to the Expiration Date without Cause following
the provision of thirty (30) days' prior written notice to the
Executive. Termination without Cause is defined as termination for any
reason other than termination by Death, Disability, with Cause or by
Operation of Law, as defined in this Agreement. The Employers agree
that the Executive shall not be terminated without Cause during the
first eighteen months of the Term; provided, however, that the
Employers may during such period place the Executive on a leave of
absence, and the Executive shall continue to receive his base salary
while on such leave of absence. In the event of termination without
Cause, all obligations of the Employers under this Agreement shall
terminate as of the date the Executive's employment is terminated,
except that (I) the Employers shall continue to pay the Executive his
monthly base salary in effect as of the date of termination for the
lesser of (x) the number of months remaining in the Term, and (y) 18
months; provided, however, that the number of months as so determined
shall be reduced by the number of months during which
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the Executive was on a leave of absence, if any, and (II) the Employers
shall comply with the provisions of Section 6(g).
(d) Termination by Operation of Law. The Executive's
employment with the Employers shall terminate:
(i) if the Executive is removed and/or
permanently prohibited from participating in the conduct of
the affairs of the Bank by an order issued under Section
8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12
U.S.C. ss.1818(e)(3) or ss.(g)(1)) or Va. Code Xxx. Section
6.1-49 as of the effective date of the order; or
(ii) if the Executive is removed and/or permanently
prohibited from participating in the conduct of the affairs of
either of the Employers under, or such removal is required to
comply with, any final judicial decree or order.
In the event of termination by Operation of law, all obligations of the
Employers under this Agreement shall terminate as of the date
indicated, except that all compensation and benefits earned by the
Executive but unpaid at the time of his termination will be paid to
Executive.
(e) Termination by Disability. The Executive's employment may
be terminated in the event that he is unable to perform the essential
duties of his position due to any mental, physical or other disability.
The Executive may only be terminated under this provision if he remains
unable to perform the essential functions of his position following a
leave of absence because of disability for a period in excess of twelve
(12) weeks and each of the Corporation Board and the Bank Board
thereafter concludes, based upon medical and other evidence
satisfactory to them, that the Executive is disabled within the meaning
of this provision. The Executive may, and at the request of either of
the Employers will, submit to the Employers a certification of his
medical condition and prognosis, in reasonable detail by a physician or
physicians satisfactory to the Employers. All obligations of the
Employers under this Agreement shall terminate as of the date
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the Executive's employment is terminated under this provision, except
that (I) all compensation and benefits earned by the Executive but
unpaid at the time of this termination will be paid to Executive, and
(II) the Employers shall comply with the provisions of Section 6(g)..
(f) Limitation of Payments.
(i) If any payment received or to be received by the Executive
in connection with an event described in Section 280G(2)(A)(i) of the
Code (whether payable pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Employers (or their
affiliates), (together with the Special Severance Payment, the "Total
Payments")) would not be deductible by the Employers (or any
predecessor Employers of the Executive) in full as a result of Section
280G of the Code, the Special Severance Payment or other payments or
both shall be reduced until no portion of the Total Payments is not
deductible as a result of Section 280G of the Code, or the Special
Severance Payment is reduced to zero, whichever occurs first.
(ii) In the event a dispute develops between the Employers and
the Executive as to the manner of calculating the amount of the Special
Severance Payment payable to the Executive pursuant to this provision,
the Special Severance Payment shall be calculated by the Employers'
independent certified public accountants and if desired by the
Employers, outside legal counsel, whose determination shall be binding
on the parties hereto. Except as provided in Section 6(f) (iii), the
Employers shall have no liability for inaccurate calculation of the
benefits payable to the Executive pursuant to this Section 6 so long as
such calculation is made in good faith.
(iii) As a result of the possible uncertainty in the
application of Section 280(G) of the Code at the time of the initial
determination of any amount payable hereunder or as a result of the
uncertainties of this Agreement as they may be affected by other
compensation plans, programs, or agreements of the Employers, it is
possible that payments made under this Agreement will have been made by
the
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Employers which should not have been made (an "Overpayment") or that
additional payments could have been made which were not made (an
"Underpayment"). In the event that a payment or other benefit is due to
the Executive under this Agreement or any other plan, program or
agreement of the Employers and such payment or benefit results in an
Overpayment, as determined by the Employers' independent certified
public accountants or outside legal counsel, such Overpayment shall be
treated for all purposes as a loan to the Executive which he shall
repay to the Employers, together with interest at the applicable
federal rate provided for in Section 7872(f)(2) of the Code. In the
event that the Employers, based on the assertion of a deficiency by the
Internal Revenue Service against the Employers or the Executive which
the Employers' certified public accountants or outside legal counsel
believe has a high probability of success, determines that an
Overpayment has been made, such Overpayment shall be treated as a loan
to the Executive which he shall repay to the Employers, together with
interest at the applicable federal rate provided in Section 7872(f)(2)
of the Code; provided, however, that no amount shall be payable by the
Executive to the Employers if and to the extent that such payment would
not reduce both the amount which is subject to taxation under Section
4999 of the Code and the deduction denied under Section 280G of the
Code. In the event that the Employers' independent certified public
accountants or outside legal counsel determine that an Underpayment has
occurred, such Underpayment shall be paid promptly by the Employers to
or for the benefit of the Executive, together with interest at the
applicable federal rate provided for in Section 7872(f)(2) of the Code.
(g) Health Benefits upon Termination. In addition to the
benefits otherwise provided hereunder, in the event of termination of
Executive's employment other than (i) a termination by the Employers
for Cause or (ii) by Operation of Law, or (iii) by the Executive during
the first two years of the Term
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under circumstances other than those that would give rise to a
Constructive Termination under the SERP (as defined in Section 7), the
Employers agree to maintain coverage for Executive and his spouse, for
the lifetime of Executive and his spouse, under the health plans of the
Employers in which Executive participated (and his spouse was covered)
immediately prior to such termination, or any successor health plans
(or, if it is not possible under the terms of such plans to provide
such continued coverage, the Employers will otherwise provide
equivalent coverage outside of such plans). Such continued coverage (i)
will have the same deductibles and copayments currently applicable to
Executive and his spouse as of the date of Executive's termination of
employment, and (ii) shall not be secondary to Medicare. The provisions
of this paragraph will survive the termination of this Agreement and
the termination of the Executive's employment with the Employers.
7. SERP. The occurrence of either (i) the termination of
Executive's employment under this Agreement during the Term, or (ii) at the
expiration of the Term, the inability of the Executive and the Employers to
reach agreement on a new employment agreement on terms reasonably satisfactory
to both parties, shall be considered to be a Constructive Termination of the
Executive's employment for purposes of the Supplemental Retirement Benefits
Agreement, dated as of July 21, 1997, by and between Xxxxx, Xxxxx Bank and
Executive (the "SERP"); provided, however, that termination of Executive's
employment during the first two years of the Term (x) by the Employers for
Cause, or (y) by the Executive under circumstances other than those that would
give rise to a Constructive Termination under the SERP, will not be considered
to be a Constructive Termination for purposes of the SERP; provided, further,
that notwithstanding clause (y) of the previous proviso, termination of the
Executive's employment by the Executive in the event that the annual bonus
provided by the Employers under Section 4(a) is less than 40% of Executive's
then current base salary shall be considered to be a Constructive Termination
for purposes of the SERP.
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8. Noncompetition and Confidential Information.
(a) Noncompetition. During Executive's employment with
the Employers, and for a period of six months following the termination of his
employment under this Agreement for any reason, the Executive shall not,
directly or indirectly, whether as owner, partner, shareholder, consultant,
agent, employee, co-venturer or otherwise, or through any Person, compete in any
City or County where the Employers maintain offices or branches at the time of
the Executive's termination and at any time during the period this
Noncompetition provision is in effect, with the banking or any other business
conducted by the Employers during the period of his employment hereunder, nor
shall be attempt to hire any employee of the Employers, assist in such hiring by
any other Person, encourage any such employee to terminate his or her
relationship with the Employers or solicit or encourage any customer of the
Employers to terminate its relationship with the Employers or to conduct with
any other Person any business or activity which such customer conducts with the
Employers. Notwithstanding anything to the contrary contained herein, the
Executive shall be permitted to invest his assets in any corporation, firm or
entity which may be deemed to compete with the Employers within the meaning of
this Section 8(a), provided that the Executive does not acquire beneficial
ownership of more than 5% of the outstanding voting stock of any such
corporation, firm or entity.
(b) Confidential Information. The Executive will not at any
time disclose to any other Person (except as required by applicable law or in
connection with the performance of his duties and responsibilities hereunder),
or use for his own benefit or gain, any confidential information of the
Employers obtained by him incident to his employment with the Employers. The
term "confidential information" includes, without limitation, financial
information, business plans and opportunities (such as lending relationships,
financial product developments or possible acquisitions or dispositions of
businesses or facilities) which have been discussed or considered by the
management of the Employers but does not include any information which has
become part of the public domain by means other than the Executive's
nonobservance of his obligations hereunder.
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(c) Relief Interpretation. The Executive agrees that a breach
of this Section 8 will irreparably and continually damage the Employers and that
the Employers shall be entitled to injunctive relief for any breach by him of
the covenants contained in this Section 8, in addition to any other remedy
provided by law. Breach of this Section 8 by the Executive will result in the
cessation of any payments due to the Executive under Section 6 of this
Agreement, including the Special Severance Payment, and the Employers may elect
to suspend such payments in the event of breach, pending final determination of
the merits of the dispute by a court of competent jurisdiction. The parties
agree that the prevailing party will be entitled to recover the reasonable
attorneys' fees and court costs incurred by such party in the course of
prosecuting or defending any lawsuit brought under Section 8 of this Agreement.
(d) Executive Acknowledgment. This Section 8 is intended to
limit the Executive's right to compete only to the extent necessary to protect
the Employers from unfair competition and the Executive acknowledges that it is
reasonable in scope.
(e) Survival of Restrictions. The provisions of this Section 8
will survive the termination of this Agreement and the termination of the
Executive's employment with the Employers, regardless of the reasons for
termination.
9. Conflicting Agreements. The Executive hereby represents and
warrants that the execution of this Agreement and the performance of his
obligations hereunder will not breach or be in conflict with any other agreement
to which he is a party or is bound, and that he is not now subject to any
covenants against competition or similar covenants which would affect the
performance of his obligations hereunder.
10. Definition of "Person". For purposes of this Agreement,
the term "Person" shall mean an individual, a corporation, an association, a
partnership, an estate, a limited liability company, a trust and any other
entity or organization.
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11. Withholding. All payments made by the Employers under this
Agreement shall be net of any tax or other amounts required to be withheld by
the Employers under applicable law.
12. Assignment; Successors and Assigns, etc. Neither the
Employers nor the Executive 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 party hereto, and without such consent, any attempted
transfer or assignment shall be null and of no effect; provided, however, that
the Employers may assign its rights under this Agreement without consent of the
Executive in the event that the Employers shall hereafter effect a
reorganization, consolidate with or merge into any other Person, or transfer all
or substantially all of its properties or assets to any other Person and such
other Person assumes the obligations of the Employers under this Agreement. This
Agreement shall inure to the benefit of and be binding upon the Employers and
the Executive, their respective successors, executors, administrators, heirs and
permitted assigns. In the event of the Executive's death prior to the completion
by the Employers of all payments due him under this Agreement, the Employers
shall continue such payments to the Executive's beneficiary or to his estate, as
appropriate.
13. Exclusivity of Benefits. The specific arrangements
referred to herein are not intended to exclude any other benefits which may be
available to the Executive upon a termination of employment with the Employers
pursuant to employee benefit plans of the Employers or otherwise;
notwithstanding this provision, however, the parties agree that there will be no
duplication of benefits. Consequently, any compensation or benefits to which
Executive is entitled upon termination under any benefit plan, policy or
practice of the Employers will be offset against the compensation and benefits
payable under this Agreement; provided, that for the avoidance of doubt,
benefits received under the SERP or under the Employers' tax-qualified benefits
plans shall not be considered duplicative of any benefits provided under this
Agreement.
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14. Enforceability. If any portion or provision of this
Agreement shall to any extent be declared illegal or unenforceable by a court of
competent jurisdiction, then the remainder of this Agreement, or the application
of such portion or provision in circumstances other than those as to which it is
so declared illegal or enforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
15. Waiver. No waiver of any provision hereof shall be
effective unless made in writing and signed by the waiving party. The failure of
any party to require the performance of any term or obligation of this
Agreement, or the waiver by any party of any breach of this Agreement, shall not
prevent any subsequent enforcement of such term or obligation or be deemed a
waiver of any subsequent breach.
16. Notices. Any notices and other communications required by
this Agreement shall be sufficient if in writing and delivered in person, by
overnight delivery, or sent by registered or certified mail, postage prepaid, to
the Executive at the last address the Executive has filed in writing with the
Employers or, in the case of the Employers, at their respective main offices, to
the attention of the Chairman of the Corporation Board and the Chairman of the
Bank Board, or at such other address as either party may have furnished to the
other in writing in accordance herewith, except that notices of changes of
address shall be effective only upon receipt.
17. Payment of Legal Fees. The prevailing party in any dispute
or question of interpretation relating to this Agreement will be entitled to
reimbursement by the non-prevailing party of all reasonable legal fees and costs
incurred. For purposes of this Agreement, a prevailing party is defined as one
who has obtained a legal judgment or arbitration award in his or its favor on
the merits of the dispute.
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18. Indemnification. To the extent consistent with any general
liability or directors' and officers' insurance policies in effect during the
term of this Agreement, and as permitted by applicable law, the Employers shall
indemnify, hold harmless and defend the Executive for all acts or omissions
taken or not taken by him in good faith while performing services for the
Employers to no lesser extent than, and upon the same terms and conditions as,
other similarly situated officers of the Employers. If and to the extent that
the Employers maintain, at any time during the term of this Agreement, a
liability insurance policy covering the other officers and directors of the
Employers, the Employers shall use its best efforts to cause the Executive to be
covered under such policy upon the same terms and conditions as other similarly
situated officers and directors.
19. Regulatory Prohibition. Notwithstanding any other
provision of this Agreement to the contrary, any payments made to the Executive
pursuant to his Agreement, or otherwise, will not be made or shall be returned
promptly by the Executive, if required, if the Federal Deposit Insurance
Corporation (FDIC) or any other enforcement authority finds that the payments
violate Section 18(k) of the Federal Deposit Insurance Act, as amended (12
U.S.C. ss. 1828(k)) and any final rules and regulations promulgated thereunder.
20. Amendment. This Agreement may be amended or modified only
by a written instrument signed by the Executive and by the duly authorized
representatives of the Employers.
21. Governing Law. This Agreement shall be construed under and
be governed in all respects by the laws of the Commonwealth of Virginia, to the
extent not preempted by Federal law.
22. Other Severance Benefits. The Executive hereby agrees that
in consideration for the payments to be received under this Agreement, the
Executive waives
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any and all rights to any payments or benefits, in the nature of severance,
otherwise payable to Executive under any Xxxxx or Xxxxx Bank plans, programs,
contracts or arrangements that provide for the payment of severance benefits
(including, without limitation, the Prior Agreement) or under any other such
plans, programs, contracts or arrangements of the Employers or their affiliates
that provide for severance payments or benefits upon a termination of
employment.
23. Complete Agreement. On and after the Commencement Date,
this Agreement shall supersede any other agreement, written or oral, pertaining
to the subject matter of this Agreement.
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IN WITNESS WHEREOF, this Agreement has been executed by the
Employers, by their respective duly authorized officers, and by the Executive,
as of the date first above written:
UNITED BANKSHARES, INC.
/s/ Xxxxxxx X. Xxxxx
By: ________________________
Title: Chairman of the Board and Chief
Executive Officer
UNITED BANK
/s/ Xxxxxx X. Xxxxxxxx
By: ________________________
Title: President
EXECUTIVE
/s/ Xxxxxxx X. Xxxxxxxxx
_____________________________
Xxxxxxx X. Xxxxxxxxx
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