EMPLOYMENT AGREEMENT
Exhibit 10.6
THIS
EMPLOYMENT AGREEMENT (“AGREEMENT”), is made as of May 27, 2008, by and between TransCommunity
Financial Corp. (“Corporation”) and Xxxxx X. Xxxxx (“Executive”).
WHEREAS, it is the desire of the Corporation to have the benefit of Executive’s loyalty,
service and counsel; and
WHEREAS, the Executive wishes to remain an employee of the Corporation; and
WHEREAS, the Corporation desires to protect its confidential information and guard against
unfair competition; and
WHEREAS, Executive possesses certain valuable knowledge, professional skills and expertise
which will contribute to the continued success of the business of the Corporation and its
affiliates; and
WHEREAS, the Corporation has entered into an Agreement and Plan of Merger, dated September 5,
2007, with Community Banker’s Acquisition Corp. (the “Merger Agreement”) pursuant to which the
Corporation would merge with and into Community Banker’s Acquisition Corp. (the “Merger”); and
WHEREAS, Community Banker’s Acquisition Corp. also has agreed to merge with BOE Financial
Services of Virginia, Inc. (the “BOE Merger”); and
WHEREAS, the Corporation and Executive desire to set forth, in writing, the terms and
conditions of their agreements and understandings.
NOW, THEREFORE, in consideration of the mutual promises herein contained, and of other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending legally to be bound, agree as follows:
Section 1
.. Employment.
(a) The Corporation and Executive agree that Executive shall be employed as the Chief
Executive Officer of the Corporation and shall perform such services for the Corporation as
may be assigned to Executive by the Corporation from time to time upon the terms and conditions
herein provided.
(b) References in this Agreement to services rendered for the Corporation and
compensation and benefits payable or provided by the Corporation shall include services
rendered for, and compensation and benefits payable or provided by, any Affiliate. References in this
Agreement to the “Corporation” also shall mean and refer to each Affiliate for which Executive
performs services. After the Merger is effective, “Corporation” shall mean and refer to
Community
Banker’s Acquisition Corp. and to each of its Affiliates for which Executive performs services.
References in this Agreement to “Affiliate” shall mean any business entity that, directly or
indirectly, through one or more intermediaries, is controlled by the Corporation.
(c) The
Executive shall devote his full time and attention to the discharge of the duties
undertaken by him hereunder. Executive shall comply with all policies, standards and
regulations of the Corporation now or hereafter promulgated, and shall perform his duties under this
Agreement to the best of his abilities and in accordance with general
business standards of conduct.
(d) Executive acknowledges that he is entering into this Agreement of his own free will
and that he has had the opportunity to obtain the advice of independent counsel of his own
choice.
Section 2.
Term of Employment.
The term of this Agreement shall be deemed to commence on the date hereof and shall end on
the third anniversary of the date hereof, unless the BOE Merger is
consummated. If the BOE Merger
is consummated, the term of this Agreement shall end on
December 31, 2009.
Section 3. Compensation.
(a) As compensation for the services to be rendered by the Executive under this
Agreement, the Executive shall receive a base annual salary equal to the rate in effect on the
date of this Agreement. Upon the consummation of the Merger, Executive’s annual base salary shall
increase to Two Hundred Five Thousand Dollars ($205,000.00). The Executive may receive base
salary increases and incentive, bonus compensation or other compensation in the amounts
determined by the Board of Directors of the Corporation.
(b) The Corporation shall withhold state and federal income taxes, social security taxes
and such other payroll deductions as may from time to time be required by law. The Corporation
shall also withhold and remit to the proper party any amounts agreed to in writing by the
Corporation and the Executive for participation in any corporate sponsored benefit plans for which a
contribution is required.
(c) Except as otherwise expressly set forth herein, including without limitation, as set
forth in Section 7(d)(l), no compensation shall be paid pursuant to this Agreement subsequent
to any termination of Executive’s employment with the Corporation; provided, however, that
Executive’s right to exercise stock options following a termination of employment shall be governed by the
terms of the Corporation’s stock option plans and any stock option agreements between the
Corporation and the Executive; and, provided further, Executive’s rights to severance pay if his
employment terminates following a “Change in Control” of the Corporation, shall be governed by the Change
in Control Agreement between the Executive and the Corporation of even date herewith. The term,
“Change in Control”, as used in the preceding sentence, shall have the meaning given to that
term in the Change in Control Agreement between the Executive and the Corporation of even date
herewith.
2
Section 4. Additional Benefits.
Executive shall be entitled to participate in the Corporation’s employee benefit plans and
programs for which he is or will become eligible according to the terms of said plans or
programs. It is understood that the Board of Directors may, in its sole discretion, establish,
modify or terminate such plans or benefits.
Section 5.
Expense Reimbursement.
The Corporation shall reimburse Executive for reasonable and customary business expenses
incurred in the conduct of the Corporation’s business in accordance with the Corporation’s policy.
Executive agrees to timely submit records and receipts of reimbursable items and agrees that the
Corporation can adopt reasonable rules and policies regarding such reimbursement. The Corporation
agrees to make prompt payment to the Executive following receipt and verification of such reports.
Section 6. Paid Time Off.
Executive shall be entitled to the same weeks of paid time off leave each year that are
provided to similarly-situated executives of the Corporation pursuant to the Company’s paid time
off leave policy, which shall be taken at such time or times as may be approved by the Corporation
and during which Executive’s compensation hereunder shall continue to be paid.
Section 7. Termination and Survival of Obligations.
(a) Notwithstanding the termination of this Agreement or the termination of Executive’s
employment for any reason, the parties shall be required to carry out any provisions of this
Agreement which contemplate performance by them subsequent to such termination. In addition,
no termination of this Agreement shall affect any liability or other obligation of either party
which shall have accrued prior to such termination, including, but not limited to, any liability, loss or
damage on account of breach. No termination of employment shall terminate the obligation of the
Corporation to make payments of any vested benefits provided hereunder or the obligations of Executive
under Sections 8, 9 and 10 of this Agreement (except as otherwise provided in those Sections).
(b) Executive’s employment hereunder may be terminated by Executive upon thirty (30)
days written notice to the Corporation or at any time by mutual agreement in writing.
(c) This
Agreement shall terminate upon death of Executive; provided, however,
that in
such event the Corporation shall pay to the estate of Executive the salary which otherwise
would be payable to Executive through the end of the month in which his death occurs.
(d)(l) The Corporation may terminate Executive’s employment other than for “Cause”, as
defined in Section 7(e), at any time upon written notice to Executive, which termination shall be
effective immediately. Executive may resign thirty (30) days after notice to the Corporation for
“Good Reason”, as hereafter defined. Provided the Executive signs a release and waiver of claims
reasonably satisfactory to the Corporation, in the event (A) the Executive’s employment terminates
pursuant to this Section 7(d)(l) or (B) if the BOE Merger is consummated and this Agreement
3
terminates on December 31, 2009 (provided Executive is employed by the Corporation on such date),
Executive shall receive:
| (i) | His salary earned through the date of termination (or December 31, 2009, if payment is required under subsection 7(d)(l)(B), above (the “2009 Agreement Termination Date”)); and | ||
| (ii) | An amount equal to two times the sum of (A) his rate of base salary in effect immediately preceding such termination or immediately preceding the 2009 Agreement Termination Date, as applicable; and (B) the amount of the bonus, if any, paid to Employee during the calendar year preceding the calendar year in which his employment terminates or preceding the calendar year of the 2009 Agreement Termination Date, as applicable; and | ||
| (iii) | Any bonus or other short term incentive compensation earned, but not yet paid, for a year prior to the year in which his employment terminates, or the year prior to the 2009 Agreement Termination Date, as applicable; and | ||
| (iv) | If Executive timely elects COBRA coverage, his current benefits under group health and dental plans will continue at the rates paid by active participants and for one year the Corporation will continue to pay its portion of the premiums during this period, but in no event shall such benefits continue beyond the period permitted by COBRA and periods of coverage under this Agreement shall offset Executive’s period of coverage under COBRA. |
Any amount due under Section 7(d)(l)(i) shall be paid at the end of the payroll period (i)
that follows the payroll period in which his employment terminates or (ii) in which occurs the
2009 Agreement Termination Date, as applicable.
Twenty-nine percent (29%) of any amount due under Section 7(d)(l)(ii) shall be paid on the
first day of the seventh month following the date his employment terminates and the balance shall
be paid in equal monthly installments on the first day of the seventeen (17) succeeding months.
The preceding sentence shall apply to the extent required by Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”). If payment is required under Section 7(d)(l)(B), above, and
if permitted by Code Section 409A because payment is considered made on a specified date rather
than a separation from service for purposes of Code Section 409A, the full amount due under
Section 7(d)(l)(ii) shall be paid in twenty-four (24) equal monthly installments beginning on
February 1, 2010.
Any amount due under Section 7(d)(iii) shall be paid on the later of (A) the end of the
payroll period (i) that follows the payroll period in which his employment terminates or (ii) in
which occurs the 2009 Agreement Termination Date, as applicable, or (B) the date that bonus
payments are made to other executives of the Corporation for the prior years.
4
(d)(2) Notwithstanding anything in this Agreement to the contrary, if Executive breaches
Section 8 or 9 of this Agreement, Executive will not thereafter be entitled to receive any further
compensation or benefits pursuant to Section 7(d)(l) or any further consideration payable for
compliance with this Agreement’s covenant not to compete pursuant to Section 9(i).
(d)(3) The Corporation shall not be required to make payment of, or provide any benefit
under, Section 7(d)(l) to the extent such payment is prohibited by the terms of the regulations
presently found at 12 C.F.R. part 359 or to the extent that any other governmental approval of the
payment required by law is not received.
(d)(4) For purposes of this Agreement, Good Reason shall mean:
| (i) | The assignment of duties to the Executive by the Corporation which result in the Executive having significantly less authority or responsibility than he has on the date hereof without his express written consent; | ||
| (ii) | Requiring the Executive to maintain his principal office or offices outside of the counties of Henrico or Essex, Virginia, unless the Corporation moves its principal executive offices to the place to which the Executive is required to move; | ||
| (iii) | A reduction by the Corporation of the Executive’s base salary, as the same may have been increased from time to time; | ||
| (iv) | The Corporation’s continued failure to comply with any material term of this Agreement after thirty (30) days prior written notice from Executive. |
(e) The Corporation shall have the right to terminate Executive’s employment under this
Agreement at any time for Cause, which termination shall be effective immediately. Termination
for “Cause” shall mean material failure of the Executive to perform his duties under this
Agreement, incompetence, unlawful business conduct, theft, commission of a felony, a material violation
of the Corporation’s work rules or policies; or a material breach of this Agreement. The term “Cause”
also shall include conduct that results in, or that in the reasonable judgment of the Corporation’s
board of directors, is likely to result in, material damage to the Corporation. In the event
Executive’s employment under this Agreement is terminated for Cause, Executive shall thereafter have no
right to receive compensation or other benefits under this Agreement.
(f) The Corporation may terminate Executive’s employment under this Agreement, after
having established that the Executive is unable to perform his obligations under this
Agreement because of the Executive’s disability by giving to Executive written notice of its intention
to terminate his employment for disability. Executive’s employment with the Corporation shall
terminate effective on the 90th day after receipt of such notice if, within 90 days after such
receipt, Executive shall fail to return to the full performance of the essential functions of his
position (and if
5
Executive’s disability has been established pursuant to the definition of “disability” set forth
below). For purposes of this Agreement, “disability” means either (i) disability which after the
expiration of more than 13 consecutive weeks after its commencement is determined to be total and
permanent by a physician selected and paid for by the Corporation or its insurers, and acceptable
to Executive or his legal representative, which consent shall not be unreasonably withheld; or (ii)
disability as defined in the policy of disability insurance maintained by the Corporation or its
Affiliates for the benefit of Executive, whichever shall be more favorable to Executive.
Notwithstanding any other provision of this Agreement, the Corporation shall comply with all
requirements of the Americans with Disabilities Act, 42 U.S.C. §
12101 et. seq.
(g) If Executive is suspended and/or temporarily prohibited from participating in the conduct
of the Corporation’s affairs by a notice served pursuant to the Federal Deposit Insurance Act, the
Corporation’s obligations under this Employment Agreement shall be suspended as of the date of
service unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the
Corporation may in its discretion (i) pay Executive all or part of the compensation withheld while
its contract obligations were suspended, and (ii) reinstate (in whole or in part) any of its
obligations which were suspended.
(h) The Corporation and Executive are parties to a Change in Control Agreement of even date
herewith and it is their intent that following any change in control of the Corporation (as
defined in such Change in Control Agreement), that Executive’s right to severance pay or other
benefits following a termination of employment shall be governed by such Change in Control
Agreement and that no such benefits shall be payable under this Agreement.
6
Section 8. Confidentiality/Nondisclosure.
Executive acknowledges that the information, observations and data obtained by Executive while
employed by the Corporation concerning the business, customers or affairs of the Corporation
(“Confidential Information”) are the property of the Corporation and that the protection of
such information is of vital importance to the Corporation’s business. Executive covenants and
agrees that Executive shall not, directly or indirectly, at any time disclose to any unauthorized
person or third party, or use for Executive’s own purposes any Confidential Information without the
proper written consent of the Corporation, other than in connection with the usual conduct of the
business of the Corporation. Such Confidential Information shall expressly include, but shall not
be limited to, information concerning the Corporation’s trade secrets, business operations,
business records, customer lists or other customer information. Upon termination of employment, the
Executive shall deliver to the Corporation all property in his possession which belongs to the
Corporation including all originals and copies of documents, forms, records or other information,
in whatever form it may exist, concerning the Corporation or its business, customers, products or
services. In construing this provision it is agreed that it shall be interpreted broadly so as to
provide the Corporation with the maximum protection. This Section 8 shall not be applicable to any
Confidential Information which (i) has become generally known to and available for use by the
public other than as a result of Executive’s acts or omissions or (ii) which Executive is required
to disclose pursuant to an order of a court of competent
jurisdiction; provided that prior to
making such disclosure Executive provides a copy of such order and the proposed disclosure to the
Corporation and allows the Corporation reasonable opportunity to comment on the proposed
disclosure.
Section 9. Covenant Not to Compete and Related Covenants.
(a) This Section 9(a) shall cease to apply (i) if Executive’s employment with the
Corporation is terminated for “Cause,” as defined in Section 7(e) of this Agreement, or, (ii)
if the BOE Merger is not consummated and the Agreement terminates under Section 2, at the end of its
three-year term, without Executive’s having become entitled to payment under Section 7. Except
as provided in the preceding sentence, during the term of this Agreement, and for the longer of:
(x) twenty-four (24) months from and after the date that Executive is (for any reason,
other than his termination by the Corporation for “Cause”) no longer employed by the
Corporation; or
(y) for a period of twenty-four (24) months from the date of entry by a court of
competent jurisdiction of a final judgment enforcing this covenant in the event of a breach
by Executive.
Executive covenants and agrees that he will not serve as the chief executive officer or other
executive officer of any bank or bank holding company within twenty-five (25) miles of
headquarters of the Corporation or within twenty-five (25) miles of any bank branch operated by
the Corporation.
(b) This Section 9(b) shall cease to apply (i) if Executive’s employment with the
Corporation is terminated for “Cause,” as defined in Section 7(e) of this Agreement, or, (ii)
if the
7
BOE Merger is not consummated and the Agreement terminates under Section 2, at the end of its
three-year term, without Executive’s having become entitled to payment under Section 7. Except as
provided in the preceding sentence, during the term of this Agreement, and for the longer of:
(x) twenty-four (24) months from and after the date that Executive is (for any
reason, other than his termination by the Corporation for “Cause”) no longer employed by
the Corporation; or
(y) for a period of twenty-four (24) months from the date of entry by a court of
competent jurisdiction of a final judgment enforcing this covenant in the event of a breach
by Executive.
the Executive will not, directly or indirectly, on behalf of the Executive or any other person or
entity, solicit or induce, or attempt to solicit or induce, any person currently employed by the
Corporation to terminate his or her relationship with the Corporation.
(c) This Section 9(c) shall cease to apply (i) if Executive’s employment with the
Corporation is terminated for “Cause,” as defined in Section 7(e) of this Agreement or, (ii)
if the BOE Merger is not consummated and the Agreement terminates under Section 2, at the end of its
three-year term, without Executive’s having become entitled to payment under Section 7. Except
as provided in the preceding sentence, during the term of this Agreement, and for the longer of:
(x) twenty-four (24) months from and after the date that Executive is (for any
reason, other than his termination by the Corporation for “Cause”) no longer employed by
the Corporation; or
(y) for a period of twenty-four (24) months from the date of entry by a court of
competent jurisdiction of a final judgment enforcing this covenant in the event of a breach
by Executive.
the Executive will not, except to the extent necessary to carry out his duties as an employee of
the Corporation, directly or indirectly provide Competitive Services (as defined below) to any
Customer (as defined below), and shall not, directly or indirectly, on behalf of the Executive or
any other person or entity, solicit or divert away or attempt to solicit or divert away any
Customer of the Corporation for the purpose of selling or providing Competitive Services, provided
the Corporation is then still engaged in the sale or provision of Competitive Services.
(d) It is agreed that notwithstanding the above to the contrary, Executive may engage in
business ventures as long as they are not competitive with the Corporation. The parties intend
that the covenants and restrictions in this Section 9 be enforceable against Executive regardless
of the reason that his employment by the Corporation may terminate (except as otherwise specifically
provided in Sections 9(a), (b), and (c), above). The existence of any claim or cause of action
by the Executive against the Corporation, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Corporation of the restrictive covenants set
forth in Sections 8 and 9 of this Agreement.
8
(e) For purposes of this Agreement, the term “Customer” means any individual or entity
to whom or to which the Corporation provided Competitive Services within two years of the date
on which the Executive’s employment terminates.
(f) For purposes of this Agreement, “Competitive Services” means providing
financial products and services of the types that, as of the date of this Agreement, are
provided to Customers of the Corporation, whether such services are provided directly by the Corporation
or by others under a contractual arrangement with the Corporation.
(g) The Executive agrees that the covenants in this Section 9 are reasonably necessary to
protect the legitimate interests of the Corporation, are reasonable with respect to the time
and territory and do not interfere with the interests of the public. The Executive further agrees
that the descriptions of the covenants contained in this Section 9 are sufficiently accurate and
definite to inform the Executive of the scope of the covenants. Finally, the Executive agrees that the
consideration set forth in this Agreement is full, fair and adequate to support the
Executive’s obligations hereunder and the Corporation’s rights hereunder. The Executive acknowledges that
in the event the Executive’s employment with the Corporation is terminated for any reason, the
Executive will be able to earn a livelihood without violating such covenants.
(h) The parties have attempted to limit the Executive’s right to compete only to the extent
necessary to protect the Corporation from unfair competition. The parties recognize, however, that
reasonable people may differ in making such a determination. Accordingly, the parties intend that
the covenants contained in this Section 9 to be completely severable and independent, and any
invalidity or unenforceability of any one or more such covenants will not render invalid or
unenforceable any one or more of the other covenants. The parties further agree that, if the scope
or enforceability of a covenant contained in this Section 9 is in any way disputed at any time, a
court or other trier of fact may modify and reform such provision to substitute such other terms
as are reasonable to protect the Corporation’s legitimate business interests.
(i) As consideration for acceptance of the covenant not to compete described in Section 9(a)
for the term of this Agreement and 24-month period described in subsection (a) above, the
Executive shall receive a payment of $75,000 if the Executive’s employment with the Corporation
terminates other than for Cause on or before December 31, 2008, payable as follows: Twenty-nine
percent (29%) of any amount due under the preceding sentence shall be paid on the first day of the
seventh month following the date the Executive’s employment terminates and the balance shall be
paid in equal monthly installments on the first day of the seventeen (17) succeeding months. The
consideration payable under this Section 9(i) shall not be treated as severance pay, and shall be
payable if applicable regardless of whether the Executive receives severance pay or other
compensation under this Agreement or any other agreement with the Corporation.
Section 10.
Injunctive Relief, Damages, Etc.
The Executive agrees that, given the nature of the positions held by Executive with the
Corporation, each and every one of the covenants and restrictions set forth in Section 9 above are
reasonable in scope, length of time and geographic area and are necessary for the protection of
the significant investment of the Corporation in developing, maintaining and expanding its
business.
9
Accordingly, the parties hereto agree that in the event of any breach by Executive of any of the
provisions of Section 9 that monetary damages alone will not adequately compensate the Corporation
for its losses and, therefore, that it shall be entitled to any and all legal or equitable relief
available to it, specifically including, but not limited to, injunctive relief, and the Executive
shall be liable for all damages, including actual and consequential damages, costs and expenses,
and legal costs and actual attorneys fees incurred by the Corporation as a result of taking action
to enforce, or recover for any breach of Section 9. The covenants contained in Section 9 shall be
construed and interpreted in any judicial proceeding to permit their enforcement to the maximum
extent permitted by law.
Section 11. Invalid Provisions.
The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall remain in full
force and effect. Any provision in this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be valid and enforceable to the fullest extent
permitted by law without invalidating or affecting the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.
Section 12. Notices.
Any and all notices, designations, consents, offers, acceptance or other communications
provided for herein shall be given in writing and shall be deemed properly delivered if delivered
in person or by registered or certified mail, return receipt requested, addressed in the case of
the Corporation to its Chairman and Chief Executive Officer or in the case of Executive to his
last known address.
Section 13. Governing Law.
Except where preempted by federal law, the Employment Agreement shall be subject to and
construed in accordance with the laws of the Commonwealth of Virginia.
Section 14.
Assumption.
By its signature hereto, Community Banker’s Acquisition Corp. acknowledges that when the
Merger is effective, it will succeed to all of the rights and obligations of the Corporation
hereunder. Executive agrees that the Corporation’s rights hereunder shall be enforceable by
Community Banker’s Acquisition Corp. after the Merger is effective.
Section 15. Captions.
The captions used in this Employment Agreement are intended for descriptive and reference
purposes only and are not intended to affect the meaning of any Section hereunder.
10
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
above written.
| TRANSCOMMUNITY FINANCIAL CORP. |
|||||
| By: | /s/ Xxxx X. Xxxxx, Xx. | ||||
| Name: | Xxxx X. Xxxxx, Xx. | ||||
| Chairman | |||||
| By: | /s/ Xxxxx X. Xxxxx | ||||
| Name: | Xxxxx X. Xxxxx | ||||
[This space intentionally left blank.]
11
Community Banker’s Acquisition Corp. hereby executes this Agreement for the limited purpose
described in Section 14.
| COMMUNITY BANKER’S ACQUISITION CORP. |
||||
| By: | /s/ Xxxx X. Xxxxxxxx | |||
12
