Document:

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[APSERVICES LLC LOGO]                            Detroit New York Chicago Dallas

                                                                    Exhibit 10.2

July 20, 2005

Todd Herrick
Chairman, President & CEO
Tecumseh Products Company
100 E. Patterson Street
Tecumseh, MI 49286

Re: Interim Management Services

Dear Todd:

This letter, together with the attached Schedule(s), Exhibit and General Terms
and Conditions, sets forth the agreement ("Agreement") between AP Services, LLC,
a Michigan limited liability company ("APS"), and Tecumseh Products Company (the
"Company"), for the engagement of APS to provide certain temporary employees to
the Company to assist it in its restructuring as described below.

All defined terms shall have the meanings ascribed to them in this letter and in
the attached Schedule(s), Exhibit and General Terms and Conditions.

The engagement of APS, including any APS employees who serve in management
positions, shall be under the direction and control of the Board of Directors of
the Company and the direct supervision of its Chief Executive Officer.

                               OBJECTIVE AND TASKS

Jim Bonsall will be designated "President of the Engine & Power Train Group,"
reporting to the Company's Chief Executive Officer. In addition, Bob Busch will
be designated as "VP, Finance - Engine & Power Train Group," reporting to Mr.
Bonsall. APS may provide additional resources including a President of the
Brazil Engine & Power Train Group and a Plant Manager of New Holstein, if
mutually agreeable with the Company. No such APS personnel, regardless of
designation or title, will be or become or be deemed to be employees or officers
of the Company.

Working collaboratively with the senior management team, the Board of Directors
and other Company professionals, Mr. Bonsall will assist the Company in
evaluating and implementing strategic and tactical options for performance
improvement. In addition, the Temporary Staff (as defined below) roles will
include working with the Company and its team to do the following:

2000 Town Center | Suite 2400 | Southfield, MI | 48075 | 248.358.4420 |
248.358.1969 fax | www.alixpartners.com

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[APSERVICES LLC LOGO]

Todd Herrick
July 20, 2005
Page 2

-     Assist in overseeing and driving financial performance in such a manner as
      to maximize value for the Company's stakeholders.

-     Assist management with the development of the Company's business plans,
      and such other related forecasts as may be required.

-     Assist in communication and/or negotiation with outside constituents
      including the customers, suppliers, governmental units and others as
      appropriate.

-     Assist with such other matters as may be requested that fall within APS'
      expertise and that are mutually agreeable.

                                    STAFFING

APS will provide the Company with the individuals set forth on Exhibit A
("Temporary Staff"), subject to the terms and conditions of this Agreement, with
the titles, pay rates and other descriptions set forth therein.

With prior notice to, and approval of, the Company, the Temporary Staff may be
assisted by or replaced by other professionals at various levels, as required,
who shall also become Temporary Staff. APS will keep the Company informed as to
APS' staffing and will not add additional Temporary Staff to the assignment
without first consulting with the Company to obtain Company concurrence that
such additional resources are required and do not duplicate the activities of
other employees or professionals.

                            TIMING, FEES AND RETAINER

APS will commence this engagement immediately upon receipt of a copy of the
Agreement executed by the Company accompanied by the Retainer, as set forth in
Schedule 1.

APS shall be compensated for its services, and reimbursed for expenses, under
this Agreement as set forth on Schedule 1.

                                      * * *

The terms and conditions set out in the attached Schedule(s), Exhibit and the
General Terms and Conditions form part of this Agreement and are incorporated by
reference herein.

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[APSERVICES LLC LOGO]

Todd Herrick
July 20, 2005
Page 3

If these terms meet with your approval, please sign and return the enclosed copy
of this Agreement and wire transfer the amount to establish the Retainer.

We look forward to working with you.

Sincerely yours,

AP SERVICES, LLC

/s/ TED STENGER

Ted Stenger
Managing Director

Acknowledged and Agreed to:

TECUMSEH PRODUCTS COMPANY

By: /s/ TODD W. HERRICK

Its: President and Chief Executive Officer

Dated: July 20, 2005

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[APSERVICES LLC LOGO]

                                AP SERVICES, LLC
             INTERIM MANAGEMENT SERVICES - TECUMSEH PRODUCTS COMPANY

                                    EXHIBIT A

                               TEMPORARY EMPLOYEES
                      INDIVIDUALS WITH MANAGEMENT POSITIONS

<TABLE>
<CAPTION>
                                                         COMMITMENT
    NAME            DESCRIPTION         DAILY RATE  FULL(1) OR PART TIME
------------  ------------------------  ----------  --------------------
<S>           <C>                       <C>         <C>
Jim Bonsall   President - Engine &        $7,150          Full Time
              Power Train Group

Robert Busch  V.P., Finance - Engine &    $5,830          Full-Time
              Power Train Group
</TABLE>

                         ADDITIONAL TEMPORARY EMPLOYEES

<TABLE>
<CAPTION>
                                      COMMITMENT
NAME  DESCRIPTION  DAILY RATE  FULL(1) OR PART(2) TIME
----  -----------  ----------  -----------------------
<S>   <C>          <C>         <C>
TBD       TBD          TBD              TBD
</TABLE>

The parties agree that Exhibit A can be amended by APS from time to time, with
the prior consent of the Company, to add or delete staff.

(1)   Full time is defined as substantially full time.

(2)   Part time is defined as approximately 2-3 days per week, with some weeks
      more or less depending on the needs and issues facing the Company at that
      time.

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[APSERVICES LLC LOGO]                            Detroit New York Chicago Dallas

                                   SCHEDULE 1

                                FEES AND EXPENSES

1.    FEES: APS' fees will be based on APS' daily rates, which are:

<TABLE>
<S>                    <C>
Managing Directors     $6,270 - $7,590
Directors              $4,730 - $5,830
Vice Presidents        $3,520 - $4,510
Associates             $2,750 - $3,080
Analysts               $1,980 - $2,420
Paraprofessionals          $1,650
</TABLE>

      APS will review and revise its daily rates effective each January 1, but
      increases will be limited to a maximum of 4%.

2.    CONTINGENT SUCCESS FEE: APS does not seek a Contingent Success Fee in this
      engagement.

3.    EXPENSES: In addition to the fees set forth herein, the Company shall pay
      directly, or reimburse APS upon receipt of periodic billings, for all
      reasonable out-of-pocket expenses incurred in connection with this
      assignment, such as travel, lodging, postage, telephone and facsimile
      charges. Expenses will be capped at 15% of Fees.

4.    BREAK FEE: APS does not seek a Break Fee in this engagement.

5.    RETAINER: The Company shall pay APS a retainer of $250,000 to be applied
      against Fees and Expenses as set forth in this Schedule and in accordance
      with Section 2 of the attached General Terms and Conditions.

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[APSERVICES LLC LOGO]

                                   SCHEDULE 2

                                   DISCLOSURES

We know of no fact or situation that would represent a conflict of interest for
us with regard to the Company. However, we wish to disclose the following:

-     Questor Partners Fund, L.P. ("QPF") and an affiliated side-by-side fund
      and Questor Partners Fund II, L.P. ("QPF II") and affiliated side-by-side
      funds, $300 million and $865 million funds, respectively, are private
      equity funds that invest in special situations and under-performing
      companies. Neither QPF nor QPF II will make an investment in the Debtors
      for at least three years after the date that AlixPartners' engagement
      terminates.

-     Mr. Jay Alix, a managing director in AlixPartners, is also the President
      and CEO of Questor Management Company, LLC ("Questor"), the entity that
      manages QPF and QPF II.

-     Questor and AlixPartners are separate companies. AlixPartners, pursuant to
      contract, performs certain accounting and other administrative services
      for Questor. From time to time, Questor hires AlixPartners as a contractor
      to advise it regarding a potential acquisition, and occasionally investee
      companies of QPF and QPF II hire AlixPartners. From time to time,
      employees of AlixPartners are elected to the boards of directors of
      investee companies of QPF and QPF II, but no such board members are
      involved in this engagement.

-     Mr. Alix and Mr. Robert Shields own interests in Questor General Partner,
      LP ("QGP") and Questor General Partner II, LP ("QGP II"), the general
      partners of QPF and QPF II. Substantially all of the AlixPartners managing
      directors are limited partners in QGP II and, as such, are passive
      participants in the general partner with no voice in authorizing QPF II's
      investments. Mr. Alix, Mr. Albert A. Koch, and Mr. Michael Grindfors are
      also managing directors of Questor and, along with Mr. Shields, members of
      its Investment Committee. The Investment Committee makes investment
      decisions for Questor.

-     Substantially all of the managing directors of AlixPartners own limited
      partnership interests in one or more of the following entities: Questor
      Side-by-Side Partners, L.P. ("SBS"), Questor Side-by-Side Partners II,
      L.P. ("SBS II") and Questor Side-by-Side Partners II 3(c)(1), L.P. ("SBS
      II 3c1"). Limited partners, except for Mr. Alix, Mr. Koch and Mr.
      Grindfors are passive investors and have no voice in approving the
      entities' investments.

-     Some of the limited partners of QPF and/or QPF II are affiliates of
      financial institutions that are also lenders to companies that may have
      retained AlixPartners.

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[APSERVICES LLC LOGO]

      The affiliates of such financial institutions are passive investors in QPF
      and QPF II and have no voice in approving Questor's investments. Where
      such situations occur, the lending relationship and investment in QPF
      and/or QPF II is detailed in AlixPartners' disclosures.

-     QPF, QPF II, SBS, SBS II, SBS II 3c1 and Questor are all related entities.
      The Side-by-Side funds contain, in the aggregate, 6.3% of the total
      Questor funds, which are in excess of $1.17 billion.

-     Albert A. Koch, a director of Tecumseh Products Company, is, occasionally,
      an employee of AP Services, LLC, and

            Mr. Koch has advised the other directors that:

                  (a) he is, occasionally, an employee of AP Services, LLC;

                  (b) he does not perform policy making functions for AP
            Services, LLC similar to those performed for a corporation by its
            president, a vice president in charge of a principal business unit,
            division, or function (such as sales, administration, or finance),
            or other officer who performs policy making functions;

                  (c) he is not a director of AP Services, LLC or a person who
            performs functions for AP Services, LLC similar to those performed
            by a director of a corporation;

                  (d) he does not own any portion of the equity interest in AP
            Services, LLC;

                  (e) he receives no compensation from AP Services, LLC; and

                  (f) he anticipates that the fees to be paid to AP Services,
            LLC for the consulting services under the AP Agreement will
            constitute less than 5% of the total consolidated revenues of AP
            Services, LLC and its subsidiaries, if any, for its current fiscal
            year.

This Schedule 2 may be updated by APS from time to time to disclose additional
connections or relationships between APS and the interested parties.

<PAGE>

                                AP SERVICES, LLC
                          GENERAL TERMS AND CONDITIONS

These General Terms and Conditions ("Terms") are incorporated into the letter
agreement ("Agreement") between the Company and APS to which these Terms are
attached.

SECTION 1. COMPANY RESPONSIBILITIES

The Company will undertake responsibilities as set forth below:

1.    Provide reliable and accurate detailed information, materials,
      documentation and

2.    Make decisions and take future actions, as the Company determines in its
      sole discretion, on any recommendations made by APS in connection with the
      tasks or work product under this Agreement.

APS' delivery of the services and the fees charged are dependent on (i) the
Company's timely and effective completion of its responsibilities; and (ii)
timely decisions and approvals made by the Company's management. The Company
shall be responsible for any delays, additional costs or other deficiencies
caused by not completing its responsibilities.

SECTION 2. RETAINER AND PAYMENTS.

RETAINER. APS will submit monthly invoices for services rendered and expenses
incurred and will offset such invoices against the Retainer. Any unearned
portion of the Retainer will be returned to the Company at the termination of
the engagement.

PAYMENTS. All payments to be made by the Company to APS shall be payable upon
receipt of invoice via wire transfer to APS' bank account, as follows:

      Receiving Bank: Comerica Bank
                      ABA #072000096

      Receiving Account: AP Services, LLC
                         A/C #1851-765410

SECTION 3. RELATIONSHIP OF THE PARTIES.

The parties intend that an independent contractor relationship will be created
by the Agreement. As an independent contractor, APS will have complete and
exclusive charge of the management and operation of its business, including
hiring and paying the wages and other compensation of all its employees and
agents, and paying all bills, expenses and other charges incurred or payable
with respect to the operation of its business. Of course, neither the Temporary
Staff nor APS will be entitled to receive from the Company any vacation pay,
sick leave, retirement, pension or social security benefits, workers'
compensation, disability, unemployment insurance benefits or any other employee
benefits. APS will be responsible for all employment, withholding, income and
other taxes incurred in connection with the operation and conduct of its
business.

The Company shall not solicit, recruit or hire any employees or agents of APS
for a period of two years subsequent to the completion and/or termination of the
Agreement.

SECTION 4. CONFIDENTIALITY.

APS shall keep confidential all non-public, confidential or proprietary
information obtained from the Company during the performance of its services
hereunder (the "Information"), and neither APS nor the Temporary Staff will
disclose any Information to any other person or entity. "Information" includes
non-public, confidential and proprietary data, plans, reports, schedules,
drawings, accounts, records, calculations, specifications, flow sheets, computer
programs, source or object codes, results, models or any work product relating
to the business of the Company, its subsidiaries, distributors, affiliates,
vendors, customers, employees, contractors and consultants.

The foregoing is not intended to prohibit, nor shall it be construed as
prohibiting, APS or the Temporary Staff from disclosure pursuant to a valid
subpoena or court order, but neither APS nor the Temporary Staff shall
encourage, suggest, invite or request, or assist in securing, any such subpoena
or court order; and the Temporary Staff shall promptly give notice of any such
subpoena or court order by fax transmission to the Company. APS and the
Temporary Staff may make reasonable disclosures of Information to third parties
in connection with the performance of APS' obligations and assignments
hereunder. In addition, APS will have the right to disclose to others in the
normal course of business its involvement with the Company.

The Company acknowledges that all information (written or oral), including Work
Product (as defined in Section 5), generated by APS and the Temporary Staff in
connection with this engagement is intended solely for the benefit and use of
the Company (limited to its management and its Board of Directors) in connection
with the transactions to which it relates. The Company agrees that no such
information shall be used for any other purpose or reproduced, disseminated,
quoted or referred to with attribution to APS at any time in any manner or for
any purpose without APS' prior approval except as required by law.

SECTION 5. INTELLECTUAL PROPERTY.

All methodologies, processes, techniques, ideas, concepts, know-how, procedures,
software, tools, writings and other intellectual property that APS has created,
acquired or developed prior to the date of this Agreement are, and shall remain,
the sole and exclusive property of APS, and the Company shall not acquire any
interest therein. APS shall be free to use all methodologies, processes,
techniques, ideas, concepts, know-how, procedures, software, tools, writings and
other intellectual property that APS may create or develop in connection with
this engagement, subject to its duty of confidentiality to the extent that the
same contain information or materials furnished to APS by the Company that
constitute Information referred to in Section 4 above. Except as provided above,
all information, reports, materials, software and other work product that APS
creates or develops specifically for the Company as part of this engagement
(collectively known as "Work Product") shall be owned by the Company and shall
constitute Information referred to in Section 4 above. APS may retain copies of
the Work Product subject to its obligations under Section 4 above.

SECTION 6. FRAMEWORK OF THE ENGAGEMENT.

The Company acknowledges that it is retaining APS to provide the Temporary Staff
solely to assist the Company and its Board of Directors in the management and
restructuring of the Company. This engagement shall not constitute an audit,
review or compilation, or any other type of financial statement reporting or
consulting engagement that is subject to the rules of the AICPA, the SSCS or
other such state and national professional bodies.

SECTION 7. INDEMNIFICATION AND OTHER MATTERS.

The Company shall indemnify, hold harmless and defend APS and APS' directors,
officers, employees, Temporary Staff and agents from and against all claims,
liabilities, losses, expenses and damages arising from services performed by APS
personnel in accordance with this Agreement. With respect to any matter for
which indemnification is provided herein, the Company shall pay costs as
incurred, including reasonable legal fees and disbursements of counsel in any
legal proceeding in which APS or other indemnitees may be required or agree to
participate but in which they are not a party. APS and its directors, officers,
employees, Temporary Staff and agents will engage a single firm of separate
counsel acceptable to the Company,

<PAGE>

                                AP SERVICES, LLC
                          GENERAL TERMS AND CONDITIONS

the approval for which shall not be unreasonably withheld, in connection with
any of the matters to which this indemnification agreement relates.

APS is not responsible for any third-party products or services. The Company's
sole and exclusive rights and remedies with respect to any third party products
or services are against the third-party vendor and not against APS, whether or
not APS is instrumental in procuring the third-party product or service.

APS shall not be liable to the Company except for actual damages resulting from
bad faith, self-dealing or gross negligence.

SECTION 8. GOVERNING LAW

The Agreement is governed by and shall be construed in accordance with the laws
of the State of Michigan with respect to contracts made and to be performed
entirely therein and without regard to choice of law or principles thereof.

Any controversy or claim arising out of or relating to the Agreement, or the
breach thereof, shall be settled by arbitration. Each party shall appoint one
non-neutral arbitrator. The two party arbitrators shall select a third
arbitrator. If within 30 days after their appointment the two party arbitrators
do not select a third arbitrator, the third arbitrator shall be selected by the
American Arbitration Association (AAA). The arbitration shall be conducted in
Southfield, Michigan under the AAA's Commercial Arbitration Rules, and the
arbitrators shall issue a reasoned award. The arbitrators may award costs and
attorneys' fees to the prevailing party. Judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. However, in
the event the Company is under the protection of the Bankruptcy Code, the
arbitration provisions shall apply only to the extent that the Bankruptcy Court,
or the U.S. District Court if the reference is withdrawn, does not retain
jurisdiction over a controversy or claim.

SECTION 9. TERMINATION AND SURVIVAL.

The Agreement may be terminated at any time by written notice by one party to
the other; provided, however, that notwithstanding such termination APS will be
entitled to any fees and expenses due under the provisions of the Agreement,
including Contingent Success Fee and Break Fee in accordance with Schedule 1.
The Break Fee is due and payable at the time of termination of the Agreement.
Such payment obligation shall inure to the benefit of any successor or assignee
of APS.

Additionally, unless the Agreement is terminated by the Company for Cause (as
defined below) or due to circumstances described in the Contingent Success Fee
provision in the Agreement, APS shall remain entitled to the Contingent Success
Fee(s) that otherwise would be payable for the greater of 12 months from the
date of termination or the period of time that that has elapsed from the date of
this Agreement to the date of termination. Cause shall mean:

(a) a Temporary Staff member acting on behalf of the Company is convicted of a
felony, or

(b) it is determined in good faith by the Board of Directors of the Company
that, after 30 days notice and opportunity to cure, either (i) a Temporary Staff
member is engaging in misconduct injurious to the Company, or (ii) a Temporary
Staff member breaches any of his or her material obligations under this
Agreement; or (iii) a Temporary Staff member willfully disobeys a lawful
direction of the Board of Directors or senior management of the Company.

Sections 2, 4, 5, 7, 8, 9 and 10 of these Terms shall survive the expiration or
termination of the Agreement.

SECTION 10. GENERAL.

SEVERABILITY. If any portion of the Agreement shall be determined to be invalid
or unenforceable, the remainder shall be valid and enforceable to the maximum
extent possible.

ENTIRE AGREEMENT. These Terms, the letter agreement into which they are
incorporated and the Schedule(s) and Exhibit to such letter agreement contain
the entire understanding of the parties relating to the services to be rendered
by APS and the Temporary Staff and may not be amended or modified in any respect
except in a writing signed by the parties. APS is not responsible for performing
any services not specifically described herein or in a subsequent writing signed
by the parties. If there is a conflict between these Terms and the balance of
the Agreement, these Terms shall govern.

NOTICES. All notices required or permitted to be delivered under the Agreement
shall be sent, if to APS, to:

            AP Services, LLC
            2000 Town Center, Suite 2400
            Southfield, MI 48075
            Attention: Mr. Melvin R. Christiansen

and if to the Company, to the address set forth in the Agreement, to the
attention of the Company's General Counsel, or to such other name or address as
may be given in writing to the other party. All notices under the Agreement
shall be sufficient if delivered by facsimile or overnight mail. Any notice
shall be deemed to be given only upon actual receipt.

SECTION 11. DISCLOSURES.

APS is not aware of any fact or situation, other than those disclosed in
Schedule 2, which would represent a conflict of interest for APS with regard to
the Company. However, APS has not completed a thorough check of the parties in
interest with regard to the Company. Upon receiving additional information from
the Company with respect to the parties in interest, APS will promptly complete
a search of its relationships and will notify the Company of any connections APS
may have with such parties in interest. While APS is not aware of any
relationships, other than those disclosed in Schedule 2, that connect APS to any
party in interest, because APS is a consulting firm that serves clients on a
international basis in numerous cases, it is possible that APS may have rendered
services to or have business associations with other entities which had or have
relationships with the Company. APS has not and will not represent the interests
of any of the entities disclosed on Schedule 2 in this case.exv10w1

 

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

     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 Mitchell W. Kitayama (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.

-2-

 

     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

-3-

 

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 Gabriel
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

-8-

 

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.
	 

	 	 	 	9600 Bellaire Boulevard., Suite 252
	 

	 	 	 	Houston, Texas 77034
	 

	 	 	 	Attn: George M. Lee
	 
	 	 	 	 
	 

	 	If to Executive to:	 	 
	 
	 	 	 	 
	 

	 	 	 	Mitchell W. Kitayama
	 

	 	 	 	2120 Morningside Avenue
	 

	 	 	 	Upland, California 91784

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 Harris County, Texas, and Executive submits to the exclusive
jurisdiction of Harris 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.
	 	 	9600 Bellaire Blvd., Suite 252
	 	 	Houston, Texas 77034
	 
	 	 	 	 
	 

	 	By:	 	/s/ George M. Lee
	 

	 	 	 	 
	 

	 	 	 	George M. Lee
	 

	 	 	 	President and Chief Executive Officer
	 
	 	 	 	 
	 	 	EXECUTIVE:
	 
	 	 	 	 
	 	 	/s/ Mitchell W. Kitayama
	 
	 	Mitchell W. Kitayama

-11-

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