EMPLOYMENT AGREEMENT
Exhibit 10.9
THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of this 24th day of April, 2018, is made by and between Xxxx Xxxxxxxx Bancorp, Inc. (the “Company”) and Xxxx Xxxxxxxx Bank (the “Bank”) (collectively, “Employer”) and Xxxxxxxxxxx X. Xxxxxxxxx (“Executive”) and is effective as of the first day of his employment, which shall be April 30, 2018 (the “Effective Date”).
WHEREAS, Employer wishes to employ Executive as a key executive of Employer and it is the desire of Employer to have the benefit of Executive’s continued loyalty and service; and
WHEREAS, Executive wishes to be in the employ of Employer; and
WHEREAS, the Employer and Executive desire to set forth in this Agreement the terms and conditions of Executive’s employment; and
WHEREAS, references in this Agreement to Internal Revenue Code section 409A include rules, regulations, and guidance of general application issued by the Department of the Treasury under section 409A (hereinafter collectively referred to as “Code Section 409A”); and
WHEREAS, as of the Effective Date, none of the conditions or events included in the definition of the term “golden parachute payment” that is set forth in section 18(k)(4)(A)(ii) of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12 C.F.R. 359.1(f)(1)(ii)] exists or, to the Employer’s best knowledge, is contemplated insofar as the Employer or any affiliates are concerned.
NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein the parties agree as follows:
1. Employment and Board Service.
(a) Executive shall be employed as Chief Executive Officer of the Company and President and Chief Executive Officer of the Bank (the “Position”) on the terms and subject to the conditions of this Agreement. Executive accepts such employment and agrees to perform the duties and responsibilities of the Position, as may be assigned to Executive by the Board of Directors of the Company (the “Company Board”) or the Board of Directors of the Bank (the “Bank Board”) (collectively, the “Boards”). Executive shall serve under the direction of the Boards and in accordance with Employer’s Articles of Incorporation and Bylaws, as each may be amended or restated from time to time. Executive shall report directly to the Boards.
(b) Executive shall devote Executive’s best efforts and full time to rendering services on behalf of Employer in furtherance of its best interests. Executive shall comply with all policies, standards and regulations of Employer now or hereafter promulgated, and shall perform all duties under this Agreement to the best of Executive’s abilities and in accordance with the ethics and standards of conduct applicable to employees in the banking industry.
(c) Executive will be appointed as a Director on the Boards. The Company Board will nominate Executive for reelection as a Director of the Company Board at such times as necessary so that Executive will, if elected by shareholders, remain a Director of the Company Board while he remains Chief Executive Officer of the Company. The Company Board will recommend to shareholders that they vote in favor of his election to the Company Board. Unless the parties otherwise agree or the applicable governing documents of the Boards require otherwise, Executive shall be deemed to have resigned as a Director effective immediately upon termination of Executive’s employment, regardless of whether Executive submits a formal, written resignation as Director. If the applicable governing documents of the Boards require formal, written resignation as Director, Executive agrees to comply with such requirements and execute the applicable documents at the time of his termination of employment. Executive shall not receive any board fees or additional compensation (other than the compensation provided in Section 2) for his service on the Boards.
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5. Indemnification and Insurance.
(a) Indemnification. Employer acknowledges that Executive entered into an Employment Agreement with United Bankshares, Inc., United Bank, and UBV Holding Company, LLC. (“collectively “United”) dated as of December 19, 2016 (the “United Employment Contract”). Executive represents that the “Term” of the United Employment Contract, as defined therein, ended Saturday, April 21, 2018. Executive represents that the restrictive covenants in Section 7(b) of the United Employment Contract do not apply to Executive. Provided the foregoing representations are accurate, in the event United sends Executive a cease and desist letter or claim or initiates any litigation or takes any other action against Executive based on allegations that Executive has breached Sections 7(b) or 8 of the United Employment Contract, Employer agrees to defend and reimburse Executive for attorneys’ fees and costs incurred by Executive as a result of such cease and desist letter, claim, litigation or action to the extent such fees and costs are incurred defending claims that Executive has breached Sections 7(b) or 8 of the United Employment Contract; provided, however, that (i) if a judgment or verdict is rendered against Executive based on violations of Sections 7(b) or 8 of the United Employment Contract, Executive must reimburse Employer upon demand for all attorney’s fees and costs expended on his behalf; or (ii) if Employer determines, in good faith and based on objective evidence, that Executive has violated Sections 7(b) or 8, Employer’s obligations under this Section 5(a) shall immediately cease, and Executive must reimburse Employer for all attorney’s fees and costs expended on his behalf.
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(i) Executive’s willful misconduct in connection with the performance of Executive’s duties;
(ii) Executive’s misappropriation or embezzlement of funds or material property of Employer or any affiliate;
(iii) Executive’s fraud or dishonesty with respect to Employer or any affiliate;
(iv) Executive’s failure to perform any of the material duties and responsibilities required by the Position (other than by reason of Incapacity), or Executive’s failure to follow reasonable instructions or policies of Employer, in either case after being advised in writing of such failure and being given a reasonable opportunity and period (as determined by Employer in its reasonable business judgment) to remedy such failure (if such breach or violation is capable of being remedied), which period shall be not less than thirty (30) days;
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(v) Executive’s conviction of or entering of a guilty plea or plea of no contest with respect to any felony, or any misdemeanor involving moral turpitude;
(vi) Executive’s breach of a material term of this Agreement, or violation in any material respect of any policy, code or standard of behavior or ethics generally applicable to officers of Employer, after being advised in writing of such breach or violation and being given a reasonable opportunity and period (as determined by Employer in its reasonable business judgment) to remedy such breach or violation (if such breach or violation is capable of being remedied), which period shall be not less than thirty (30) days;
(vii) Executive’s willful violation of any final cease and desist order; or
(viii) Executive’s breach of any fiduciary duty owed to Employer or its affiliates.
(i) The assignment of duties to Executive by Employer which result in Executive having materially less authority or responsibility than Executive has on the Effective Date, without Executive’s express written consent;
(ii) The relocation of Executive to any other primary place of employment that is located more than twenty-five (25) miles from Executive’s assigned place of employment as of the Effective Date, without Executive’s express written consent to such relocation, provided that such relocation of Executive is not as a result of, and at the same location as, the relocation of the headquarters of the Company; or
(iii) A material reduction of Executive’s base salary, without Executive’s express written consent; or
(iv) A material diminution in the authority, duties, or responsibilities of the supervisor to whom Executive is required to report, including a requirement that Executive report to a corporate officer or employee instead of reporting directly to the Boards; or
(v) Any action or inaction by Employer that constitutes a material breach of this Agreement.
As a condition to invoking “Good Reason”, Executive is required to provide written notice to Employer detailing the existence of a condition described above in this Section 6(c) within a sixty (60) day period after the initial existence of the condition, and Employer shall have thirty (30) days after notice to remedy the condition without liability. In addition to the foregoing requirements, to trigger payment under this Section 6(c), Executive must also terminate employment within one hundred twenty (120) days after the initial occurrence of the event constituting “Good Reason” and Employer must have been allowed the full opportunity to cure, as set forth above.
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Notwithstanding the above, “Good Reason” shall not include and shall not apply to any resignation by Executive where there exists objective evidence sufficient to justify a termination for Cause under Section 6(b), provided that the basis for such Cause is conduct by Executive that either (x) is unknown to Employer prior to the time written notice of Good Reason is provided by Executive or (y) occurred within the ninety (90) days preceding the date written notice of Good Reason is provided by Executive.
7. Obligations Upon Termination of Employment.
(i) The Accrued Obligations (as defined in Section 6(a)); and
(ii) Subject to Executive’s signing, delivering and not revoking the Release attached as Exhibit A, which Release must be signed, delivered and not revoked within the period set forth in the Release:
(A) A payment in a monthly amount equal to one-twelfth (1/12) of Executive’s annual base salary in effect immediately preceding such termination (but without applying, if applicable, any reduction of base salary that was the basis for Executive’s termination for Good Reason under Section 6(c)(iii)) for twelve (12) consecutive months, less all applicable withholdings, payable in accordance with Employer’s established payroll practices (but no less frequently than monthly), provided that the amounts Executive would otherwise have received during the sixty (60) days after Executive’s termination had the payments begun immediately after Executive’s termination of employment shall be paid in a lump sum on the sixtieth (60th) day after Executive’s termination of employment and provided further that, if applicable, subject to the delay provided for in Section 20 (the “Severance Benefit”); and
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(B) For a period of two (2) years from and after the date of Executive’s termination of employment, Employer shall pay Executive a cash amount on a monthly basis equal to the full monthly cost (including COBRA administrative fees, if applicable) of the medical and dental coverage for Executive (“Continued Health Coverage”) under the current or any successor health plan provided by Employer to its employees (the “Employer Plan”) (with Executive eligible to elect any health plan option for Executive and his family that is then available under the Employer Plan), with the full amount of such payment taxable to Executive; provided that the amounts Executive would otherwise have received during the sixty (60) days after Executive’s termination had the payments begun immediately after Executive’s termination of employment shall be paid in a lump sum on the sixtieth (60th) day after Executive’s termination of employment and provided further that, if applicable, subject to the delay provided for in Section 20. Employer shall not be required to continue actual coverage under the Employer Heath Plan to the extent it is not required by COBRA or in the event such coverage is not agreed upon by any insurer under the Employer Plan; provided, however, that in such event Employer shall continue to be obligated to make the payment required under this Section 7(a)(ii)(B) and the amount of such monthly payment will be based on the applicable premiums immediately prior to when coverage terminates. Notwithstanding the above, if Executive becomes eligible for qualifying health care coverage through a subsequent employer within twenty-four (24) months after his last day of employment, Employer’s obligations hereunder with respect to the foregoing payments provided in this Section 7(a)(ii)(B) shall immediately terminate.
Notwithstanding the foregoing, and in addition to Employer’s remedies set forth in Section 7(c)(iv), all such payments and benefits under Section 7(a)(ii) otherwise to be made after Executive’s termination of employment shall cease to be paid, and Employer shall have no further obligation with respect thereto, in the event Executive, without the consent of Employer, breaches or engages in any activity prohibited in Section 7(c) or any of its sub-parts or Section 10.
(i) Non-Competition. In consideration for Employer’s entering into this Agreement and in exchange for the benefits promised herein, and other valuable consideration, Executive agrees that Executive will not engage in “Competition” for a period of twelve (12) months after Executive’s employment with Employer ceases for any reason. For purposes hereof, “Competition” means Executive’s performing duties that are the same as or substantially similar to those duties performed by Executive for Employer or its affiliates during the last twelve (12) months of Executive’s employment, as an officer, a director, an employee, a partner or in any other capacity, within a twenty-five (25) mile radius of the headquarters of the Bank (or any Virginia, District of Columbia or Maryland headquarters of any successor of the Bank in the event of a merger consummated as of the last day of employment), as such location exists as of the date Executive’s employment ceases, if those duties are performed for a bank or other financial institution, that provides products or services that are the same as or substantially similar to, and competitive with, any of the products or services provided by the Bank at the time Executive’s employment ceases.
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8. Obligations Related to Change of Control.
(i) The Accrued Obligations (as defined in Section 6(a));
(ii) Subject to Executive’s signing, delivering and not revoking the Release attached as Exhibit A, which Release must be signed, delivered and not revoked within the period set forth in the Release for a period of two (2) years from and after the date of Executive’s termination of employment, Employer shall pay Executive a cash amount on a monthly basis equal to the full monthly cost (including COBRA administrative fees, if applicable) of the medical and dental coverage for Executive (“Continued Health Coverage”) under the current or any successor health plan provided by Employer to its employees (the “Employer Plan”) (with Executive eligible to elect any health plan option for Executive and his family that is then available under the Employer Plan), with the full amount of such payment taxable to Executive; provided that the amounts Executive would otherwise have received during the sixty (60) days after Executive’s termination had the payments begun immediately after Executive’s termination of employment shall be paid in a lump sum on the sixtieth (60th) day after Executive’s termination of employment and provided further that, if applicable, subject to the delay provided for in Section 20. Employer shall not be required to continue actual coverage under the Employer Heath Plan to the extent it is not required by COBRA or in the event such coverage is not agreed upon by any insurer under the Employer Plan; provided, however, that in such event Employer shall continue to be obligated to make the payment required under this Section 8(b)(ii) and the amount of such monthly payment will be based on the applicable premiums immediately prior to when coverage terminates. Notwithstanding the above, if Executive becomes eligible for qualifying health care coverage through a subsequent employer within twenty-four (24) months after his last day of employment, Employer’s obligations hereunder with respect to the foregoing payments provided in this Section 8(b)(ii) shall immediately terminate.
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Notwithstanding the foregoing, and in addition to Employer’s remedies set forth in Section 7(c)(iv), all such payments and benefits under Section 8(b) otherwise to be made after Executive’s termination of employment shall cease to be paid, and Employer shall have no further obligation with respect thereto, in the event Executive, without the consent of Employer, engages in any activity prohibited by Section 7(c) or any of its subparts or Section 10.
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10. Confidentiality. As an employee of Employer, Executive will have access to and may participate in the origination of non-public, proprietary and confidential information relating to Employer and/or its affiliates and Executive acknowledges a fiduciary duty owed to Employer and its affiliates not to disclose any such information. Confidential information may include, but is not limited to, trade secrets, customer lists and information, internal corporate planning, methods of marketing and operation, and other data or information of or concerning Employer and its affiliates or their customers that is not generally known to the public or generally in the banking industry. Executive agrees that for a period of three (3) years following the cessation of employment, Executive will not use or disclose to any third party any such confidential information, either directly or indirectly, except as may be authorized in writing specifically by Employer; provided, however that to the extent the information covered by this Section 10 is otherwise protected by the law, such as “trade secrets,” as defined by the Virginia Uniform Trade Secrets Act, or customer information protected by banking privacy laws, that information shall not be disclosed or used for however long the legal protections applicable to such information remain in effect. Nothing in this Agreement is intended to or will be used in any way to limit Executive’s rights to voluntarily communicate with, file a claim or report with, or to otherwise participate in an investigation with, any federal, state, or local government agency, as provided for, protected under or warranted by applicable law. Executive does not need prior approval before making any such communication, report, claim, disclosure or participation and is not required to notify Employer that such communication, report, claim, or participation has been made. Additionally, federal law provides certain protections to individuals who disclose a trade secret to their attorney, a court, or a government official in certain, confidential circumstances. Specifically, Executive may not be held criminally or civilly liable under any state or federal trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a state, federal or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding; or (c) in a lawsuit alleging retaliation by Employer against Executive for reporting a suspected violation of law, Executive discloses to Executive’s attorney and uses in the court proceeding, as long as any document containing the trade secret is filed under seal and Executive does not disclose the trade secret except pursuant to a court order.
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12. Suspension or Temporary Prohibition of Services; Permanent Prohibition of Services. If Executive is suspended and/or temporarily prohibited from participating in the conduct of Employer’s affairs by a notice served pursuant to the Federal Deposit Insurance Act, Employer’s obligations under this Agreement shall be suspended as of the date of service unless stayed by appropriate proceedings. If the charges in the notice are dismissed, Employer may in its discretion (a) pay Executive all or part of the compensation withheld while its contract obligations were suspended, and (b) reinstate (in whole or in part) any of its obligations which were suspended. If Executive is removed and/or permanently prohibited from participating in the conduct of Employer’s affairs by an order issued under the Federal Deposit Insurance Act or the Code of Virginia, all obligations of Employer under this Agreement shall terminate as of the effective date of the order, but vested rights of the parties shall not be affected.
15. Governing Law/Venue. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia. The parties further agree that venue in the event of a dispute shall be exclusively in the Circuit Court of Fairfax County, or the applicable federal court encompassing that jurisdiction, at the sole option of Employer, and Executive agrees not to object to venue.
| To Employer: | Chairman of the Board of Directors |
| Xxxx Xxxxxxxx Bancorp, Inc. | |
| 0000 Xxxxx Xxxxxx Xxxxxx | |
| Xxxxxx, Xxxxxxxx 00000 | |
| To Executive: | At Executive’s home address as shown on the records of Employer. |
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20. Code Section 409A Compliance.
(a) The intent of the parties is that payments and benefits under this Agreement comply with Code Section 409A or comply with an exemption from the application of Code Section 409A and, accordingly, all provisions of this Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under Code Section 409A.
(b) Neither Executive nor Employer shall take any action to accelerate or delay the payment of any monies and/or provision of any benefits in any matter which would not be in compliance with Code Section 409A.
(c) A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the form or timing of payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” (within the meaning of Code Section 409A) and, for purposes of any such provision of this Agreement under which (and to the extent) deferred compensation subject to Code Section 409A is paid, references to a “termination” or “termination of employment” or like references shall mean separation from service. A “separation from service” shall not occur under Code Section 409A unless such Executive has completely severed Executive’s relationship with Employer or Executive has permanently decreased Executive’s services to twenty percent (20%) or less of the average level of bona fide services over the immediately preceding thirty-six (36) month period (or the full period if Executive has been providing services for less than thirty-six (36) months). A leave of absence shall only trigger a termination of employment that constitutes a separation from service at the time required under Code Section 409A. If Executive is deemed on the date of separation from service with Employer to be a “specified employee”, within the meaning of that term under Code Section 409A(a)(2)(B) and using the identification methodology selected by Employer from time to time, or if none, the default methodology, then with regard to any payment or benefit that is required to be delayed for six (6) months in compliance with Code Section 409A(a)(2)(B), such payment or benefit shall be paid with interest on the earlier of (i) the first day of the seventh (7th) month measured from the date of Executive’s separation from service or (ii) the date of Executive’s death. The amount of interest to be paid shall be based on the prime rate of interest in effect on the first day of the month following Executive’s separation from service as reported in the Wall Street Journal. In the case of benefits required to be delayed under Code Section 409A, however, Executive may pay the cost of benefit coverage, and thereby obtain benefits, during such six (6) month delay period and then be reimbursed by Employer thereafter on the first day of the seventh (7th) month following the date of Executive’s separation from service or, if earlier, on the date of Executive’s death.
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(d) If under this Agreement, an amount is to be paid in two or more installments, for purposes of Code Section 409A, each installment shall be treated as a separate payment.
(e) When, if ever, a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within ten (10) days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of Employer. In the event any payment payable upon termination of employment would be exempt from Code Section 409A under Treasury Regulation § 1.409A-1(b)(9)(iii) but for the amount of such payment, the determination of the payments to Executive that are exempt under such provision shall be made by applying the exemption to payments based on chronological order beginning with the payments paid closest in time on or after such termination of employment.
(f) Notwithstanding any other provision of this Agreement, Executive shall be solely liable, and Employer shall not be liable in any way to Executive if any payment or benefit which is to be provided pursuant to this Agreement and which is considered deferred compensation subject to Code Section 409A otherwise fails to comply with, or be exempt from, the requirements of Code Section 409A.
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[Signature Block on Next Page]
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| Date: April 24, 2018 | /s/ Xxxxxxxxxxx X. Xxxxxxxxx | |
| Xxxxxxxxxxx X. Xxxxxxxxx | ||
| Date: April 23, 2018 | Xxxx Xxxxxxxx Bancorp, Inc. and | |
| Xxxx Xxxxxxxx Bank | ||
| By: | /s/ Xxxx X. Xxxxxxx | |
| Xxxx X. Xxxxxxx | ||
| CEO | ||
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EXHIBIT A
In consideration of the benefits promised in the Employment Agreement to which this Release is attached as Exhibit A (and further defined below), Xxxxxxxxxxx X. Xxxxxxxxx (“Executive”), hereby irrevocably and unconditionally releases, acquits, and forever discharges Xxxx Xxxxxxxx Bancorp, Inc. and Xxxx Xxxxxxxx Bank (collectively, the “Bank”), and each of its agents, directors, members, shareholders, affiliated entities, officers, employees, former employees, attorneys, and all persons acting by, through, under or in concert with any of them (collectively “Releasees”) from any and all charges, complaints, claims, liabilities, grievances, obligations, promises, agreements, controversies, damages, policies, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses of any nature whatsoever, known or unknown, suspected or unsuspected, including, but not limited to, any rights arising out of alleged violations or breaches of any contracts, express or implied, or any tort, or any legal restrictions on Releasees’ right to terminate employees, or any federal, state or other governmental statute, regulation, law or ordinance, including without limitation (1) Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991; (2) the Americans with Disabilities Act; (3) 42 U.S.C. § 1981; (4) the federal Age Discrimination in Employment Act (age discrimination); (5) the Older Workers Benefit Protection Act; (6) the Equal Pay Act; (7) the Family and Medical Leave Act; and (8) the Employee Retirement Income Security Act (“Claim” or “Claims”), which Executive now has, owns or holds, or claims to have, own or hold, or which Executive at any time heretofore had owned or held, or claimed to have owned or held, against each or any of the Releasees at any time up to and including the date of the execution of this Release; provided, however, that nothing herein shall preclude Executive from filing or participating in a charge of discrimination with the Equal Employment Opportunity Commission (“EEOC”), but Executive waives any right to monetary relief arising therefrom.
Executive hereby acknowledges and agrees that the execution of this Release [and the cessation of Executive’s employment] and all actions taken in connection therewith are in compliance with the federal Age Discrimination in Employment Act and the Older Workers Benefit Protection Act and that the releases set forth above shall be applicable, without limitation, to any claims brought under these Acts. Executive further acknowledges and agrees that:
a. This Release given by Executive is given solely in exchange for the benefits set forth in the Employment Agreement dated as of April 30, 2018 between the Bank and Executive (the “Employment Agreement”) to which this Release was initially attached and such consideration is in addition to anything of value which Executive was entitled to receive prior to entering into this Release;
b. By entering into this Release, Executive does not waive rights or claims that may arise after the date this Release is executed;
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c. Executive has been advised to consult an attorney prior to entering into this Release, and this provision of this Release satisfies the requirements of the Older Workers Benefit Protection Act that Executive be so advised in writing;
d. Executive has been offered twenty-one (21) days [or forty-five (45) days if applicable] from receipt of this Release within which to consider whether to sign this Release; and
e. For a period of seven (7) days following Executive’s execution of this Release, Executive may revoke this Release by delivering the revocation to the Chief Human Resources Officer of Xxxx Xxxxxxxx Bank, and it shall not become effective or enforceable until such seven (7) day period has expired.
This Release shall be binding upon the heirs and personal representatives of Executive and shall inure to the benefit of the successors and assigns of the Bank.
| Date | Xxxxxxxxxxx X. Xxxxxxxxx |
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