Exhibit 10.2(a)
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made as of
December 8, 2003, between TRANSCOMMUNITY BANKSHARES INCORPORATED, a Virginia
corporation (the "Company"), and XXXXXXX X. XXXXX (the "Executive").
RECITALS:
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The Board of Directors of the Company (the "Board of Directors") desires
to assure that it will continue to have the benefit of the services and
experience of the Executive, who is an integral part of the Company's senior
management, and the Executive is willing to continue to serve as Chairman of the
Board of Directors and Chief Executive Officer of the Company upon the terms and
conditions set forth in this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing and the mutual
undertakings contained in this Agreement, the parties agree as follows:
1. Employment.
(a) The Company will continue to employ the Executive, and the
Executive will continue in the employment of the Company, to serve as Chairman
of the Board of Directors and Chief Executive Officer of the Company, in
accordance with the terms set forth in this Agreement. It is also intended that
the Executive will serve on the Board of Directors and as a member of its
Executive Committee and of such other committees as the Board of Directors may
determine from time to time, subject to the terms of this Agreement. The
Executive will perform such other services and duties as the Board of Directors
may from time to time designate and as are commensurate with the Executive's
position and titles.
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Exhibit 10.2(a)
(b) At all times while the Executive is employed by the Company
under this Agreement the Executive (i) will devote his knowledge, skill and best
efforts on a full-time basis to diligently performing his duties and obligations
to the Company (with the exception of absences on account of illness or vacation
in accordance with the Company's policies, and civic and charitable commitments
which do not involve a conflict with the Company's business and do not require
the Executive's aggregate commitment of more than ten (10) hours per month,
unless otherwise approved in advance by the Board of Directors), and (ii) will
comply with the directions and orders of the Board of Directors with respect to
the performance of his duties. In furtherance of the foregoing, the Executive
will not serve on a board of directors of any other "for profit" company unless
the Board of Directors of the Company has agreed to such action in advance.
(c) The Company will not require the Executive, as part of his
duties hereunder, to perform or participate in any activity that in the
reasonable judgment of the Executive would constitute a violation of any
applicable state or federal law, rule, ordinance, or regulation, and the
Executive will not be in violation of this Agreement if he refuses to perform or
participate in any such activity.
2. Term. This Agreement will be effective from and including January 1,
2004 (the "Commencement Date") and will remain in effect until December 31, 2005
(the "Term" of this Agreement); provided, however, that unless this Agreement is
terminated earlier in accordance with its terms, the Board of Directors, at its
option and in its sole discretion, not later than ninety (90) days before the
end of the Term, may direct the Company to renew the Term for an additional,
successive one (1) year period under the same terms and conditions as are
applicable during the initial Term, subject to such appropriate increases in
salary and other benefits as the parties may agree upon.
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Exhibit 10.2(a)
3. Effect on Other Agreements. As of the Commencement Date, this Agreement
will supersede and replace any other employment agreements between the Executive
and the Company, including but not limited to the Employment Agreement dated
June 27, 2001 (the "Prior Employment Agreement"). The term "employment
agreement" as used in the preceding sentence, however, does not include any
incentive plans, fringe benefit plans, stock option plans or agreements, or any
other employee benefit plans or programs of the Company in which the Executive
may participate from time to time. This Agreement will not affect any options
awarded to the Executive in his capacity as either an officer or a director of
the Company, and any such options will remain or become exercisable in
accordance with the terms of the grant and of any applicable stock option plan.
The Executive agrees that all obligations of the Company under the Prior
Employment Agreement incurred or accrued up to the date hereof have been
fulfilled.
4. Compensation and Benefits.
(a) During the Term of this Agreement, while the Executive is
employed by the Company, the Company will pay to the Executive an initial annual
base salary (the "Base Salary") of $160,000.00, payable in accordance with the
payroll practices of the Company and subject to applicable withholding taxes.
The Board of Directors will evaluate the Executive's performance at least
annually at the end of each fiscal year and will consider annual increases in
the Executive's Base Salary based on the Executive's performance. Any such
increase in Base Salary will be at the complete discretion of the Board of
Directors, but in no event may the Executive's Base Salary be decreased during
the Term of this Agreement.
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Exhibit 10.2(a)
(b) The Executive will not receive any compensation, whether in the
form of director fees, meeting fees, or otherwise, for his service on the Board
of Directors, on any committee thereof, or on the board or board committee of
any of the Company's affiliated banks or other subsidiaries. The Executive will
be reimbursed for all out-of-pocket expenses relating to out of town or
overnight travel (other than by car), lodging and meals, in connection with the
Company's business.
(c) During the Term of this Agreement, while the Executive is
employed by the Company, the Executive will be eligible to participate in a
similar manner as other senior executives of the Company in any incentive plans,
fringe benefit plans, stock option plans, and other executive compensation plans
and programs provided by the Company from time to time for its senior management
employees as a specifically recognized group of Company employees. The Executive
will also be eligible to participate in any employee pension or welfare benefit
plans maintained from time to time for employees of the Company in accordance
with the terms of such plans.
(d) To the extent they are not otherwise provided in accordance with
other provisions of this Agreement, the Company will also provide the following
benefits to the Executive during the Term of this Agreement:
(i) A term life insurance policy providing for a death benefit
of $800,000.00 payable to a beneficiary designated by the Executive. The Company
presently maintains at its expense a $500,000 insurance policy covering the
Executive (the "Existing Policy"). Notwithstanding anything to the contrary
herein, the Company will not be required to add another $300,000 of additional
insurance death benefit if the premium cost per one thousand dollars ($1,000.00)
of insurance coverage exceeds by more than ten percent (10%) the premium cost
per thousand dollars ($1,000.00) paid by the Company for the Existing Policy.
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Exhibit 10.2(a)
(ii) The total cost of a health insurance policy providing to
the Executive and, if the Executive so desires, to the spouse of the executive,
the same coverage as that provided from time to time to other employees of
the Company.
(iii) A long term disability insurance policy, as generally
defined in the insurance industry, that provides for benefits of at least 60%
of the Executive's annual Base Salary as in effect on the date the disability
began, and that has a waiting period of no longer than six months. While the
Company will pay the full cost of the disability insurance premiums, this cost
will be included in the Executive's taxable income as reported to the Internal
Revenue Service at the end of each calendar year.
(iv) Reimbursement up to $1,000.00 per year for a complete
annual physical examination for the Executive upon presentation of reasonable
documentation.
(v) A car allowance of not less than $625.00 per month.
(e) The Executive will be entitled to such paid sick leave,
paid vacation, and other paid or unpaid leave as may be provided by the Company
to its employees under its applicable personnel policies. Approved attendance at
(i) meetings or conventions of banking associations or organizations and (ii)
committee or other meetings of the Company or any of its subsidiaries or
affiliates will not be charged against the Executive's annual vacation
entitlement.
5. Bonus. Within ninety (90) days after the end of each fiscal year of
the Company, the Board of Directors will determine the amount, if any, of a
bonus for each such period that the Company will award to the Executive for
the performance of his duties hereunder (the "Bonus"). The Board of Directors
will determine in its sole discretion whether, and in what amount, a
bonus will be awarded to Executive. The Bonus, if any, for a given fiscal
year will be paid to the Executive no later than one hundred twenty (120)
days after the last day of such given fiscal year. All amounts paid under
this Section 5 will be net of any applicable income and payroll tax
withholding. Amounts paid under this Section 5 will not be treated as
compensation for purposes of any other Company employee benefit plan in
which the Executive may participate.
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Exhibit 10.2(a)
6. Termination of Employment and Severance Payments.
(a) Termination for Cause. At any time during the Term of this
Agreement, the Board of Directors, upon an affirmative vote of two-thirds (2/3)
or more of all members of the Board of Directors other than the Executive and
any other members who are employees of the Company or any of its subsidiaries or
affiliates (whether or not such members are in attendance at the meeting or
voting on the issue), may terminate the Executive's employment with the Company
for Cause (as hereinafter defined) upon written notice specifying the Cause and
the date of termination. For purposes of this Agreement, "Cause" means (i)
persistent refusal or willful failure of the Executive materially to perform his
duties and responsibilities to the Company, which refusal or failure continues
for thirty (30) days after the Executive receives written notice of such; (ii)
misappropriation, fraud or other dishonesty with respect to the assets or the
business of the Company; (iii) conduct or malfeasance that materially and
adversely affects the Company or its reputation in the industry; or (iv) the
conviction for, or the entering of a plea of Nolo Contendere to, a felony or a
crime involving moral turpitude. Payments under this Agreement will cease as of
the date of termination for Cause, and the Executive will be entitled only to
such Base Salary as may be payable for services rendered up to the date of
termination.
(b) Termination Without Cause. The Executive will serve at all times
at the pleasure of the Board of Directors. At any time during the Term of this
Agreement, the Board of Directors, upon an affirmative vote of two-thirds (2/3)
or more of all members of the Board of Directors other than the Executive and
any other members who are employees of the Company or any of its subsidiaries or
affiliates (whether or not such members are in attendance at the meeting or
voting on the issue), may terminate the Executive's employment with the Company
for any reason other than Cause, Disability (as hereinafter defined), or death,
and upon such termination the Company will pay the Executive severance payments
equal to the sum of:
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Exhibit 10.2(a)
(i) Base Salary payable for services rendered up to
the date of termination; plus
(ii) his Base Salary for the remainder of the then
current term of this Agreement; plus
(iii) his Base Salary for twenty-four (24) months; plus
(iv) any unpaid Bonus which the Board of Directors
voted to award to the Executive prior to the effective date of the Executive's
termination of employment.
For purposes of this Subsection (b), the Executive's Base Salary will be equal
to the greater of (A) the Base Salary in effect on the date of termination
or (B) the Executive's highest Base Salary rate in effect during the Term of
this Agreement. Amounts payable under this Subsection (b) will be paid in a
single lump sum, net of applicable withholding taxes, within thirty (30) days
after the effective date of the Executive's termination of employment.
(c) Termination in Event of Disability or Voluntary Termination. If
the Executive becomes Disabled (as hereinafter defined), or if he voluntarily
terminates his employment during the Term of this Agreement under circumstances
to which Section 6(e) does not apply, his employment under this Agreement will
terminate immediately and payment of his Base Salary hereunder will cease as of
the date of termination; provided, however, that the Company will remain liable
for payment of:
(i) Base Salary payable for services rendered up to the date
of termination; plus
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Exhibit 10.2(a)
(ii) any unpaid Bonus which the Board of Directors voted to
award to the Executive prior to the effective date of termination of his
employment. Amounts payable under this Subsection (c) will be paid in a
single lump sum, net of applicable withholding taxes, within thirty (30) days
after the effective date of the Executive's termination of employment.
For purposes of this Agreement, the term "Disability" means a
condition that (y) results from bodily injury or disease and (z) for a three (3)
consecutive month period, or the cumulative equivalent of six (6) months in any
twelve (12) consecutive month period, has rendered the Executive unable to
perform the duties pertaining to his employment with the Company. A return to
work of less than fourteen (14) consecutive days will not be considered an
interruption in the Executive's three (3) consecutive months of disability.
Disability will be determined by the Board of Directors on the basis of medical
evidence satisfactory to the Board of Directors.
(d) Death of Executive. If the Executive dies during the Term of
this Agreement, his employment under this Agreement will terminate immediately;
provided, however, that the Company will pay the following amounts to the
Executive's personal representative:
(i) Base Salary payable for services rendered up to the date
of death; plus
(ii) an amount equal to twelve (12) months of the Executive's
Base Salary as in effect on the date of his death; plus
(iii) any unpaid Bonus which the Board of Directors voted to
award to the Executive prior to his death.
Amounts payable under this Subsection (d) will be paid in a single lump sum,
net of any applicable withholding taxes, within thirty (30) days of the
Executive's date of death.
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Exhibit 10.2(a)
(e) Termination for Good Reason. Upon thirty (30) days' written
notice to the Board of Directors, the Executive may terminate his employment
under this Agreement at any time for Good Reason. For purposes of this
Agreement, "Good Reason" means the occurrence of any of the following:
(i) the Executive's Base Salary is reduced in violation of
Section 4(a);
(ii) the Executive's job duties and responsibilities are
materially diminished;
(iii) the Executive's principal place of employment is moved
to a location that is more than thirty (30) miles from his current place of
employment;
(iv) the Executive is knowingly directed by the Board of
Directors to engage in conduct that is unethical or illegal;
(v) the Board of Directors disapproves consummation of any of
the transactions set forth in the then current strategic plan of the Company as
adopted from time to time by the Board of Directors, when such disapproval is
unreasonable from the perspective of not being in the best interests of the
Company; or
(vi) the Company has otherwise breached any of its material
obligations under this Agreement.
If any of these events occurs, the Executive will give the Board of Directors
thirty (30) days' notice of his intent to terminate his employment, and the
Company will have thirty (30) days in which to remedy reasonably the
problem. If any of these events occurs, the Company fails to remedy
reasonably the problem, and the Executive does not exercise his right to
terminate his employment for Good Reason, any such failure will not operate
to waive his rights to terminate his employment for that or any subsequent
action or actions, whether similar or dissimilar, that would constitute Good
Reason hereunder. If the Executive terminates his employment for Good Reason in
accordance with this Subsection (e), the Company will pay to the Executive
severance payments equal to the sum of:
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Exhibit 10.2(a)
(i) Base Salary payable for services rendered up to the date
of termination; plus
(ii) his Base Salary for the remainder of the then current
term of this Agreement; plus
(iii) his Base Salary for twenty-four (24) months; plus
(iv) any unpaid Bonus which the Board of Directors voted
to award to the Executive prior to the effective date of the termination of his
employment. For purposes of this Subsection (e), the Executive's Base Salary
will be equal to the greater of (A) the Base Salary in effect on the date of
termination or (B) the Executive's highest Base Salary rate in effect during the
Term of this Agreement. Amounts payable under this Subsection (e) will be paid
in a single lump sum, net of applicable withholding taxes, within thirty days
of the Executive's termination of employment.
(f) Special Rules. Subject to the terms of any stock option plan,
and notwithstanding any other provision of this Agreement:
(i) The Company agrees to take all actions necessary to ensure
that if the Executive's employment with the Company terminates for disability,
retirement or Good Reason as described in Section 6(e), the Executive will have
one (1) year from the date of such termination in which to exercise any options
that are exercisable as of such date.
(ii) In no event will the Company be obligated to award any
additional stock options or restricted stock to the Executive after his
employment ceases for any reason.
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Exhibit 10.2(a)
(iii) The Company agrees to take all actions necessary to
ensure that if the Executive dies while he is employed by the Company, all stock
options and other forms of earned but unpaid compensation will immediately vest
and will be payable to or exercisable by, as the case may be, the personal
representative of the Executive.
(iv) Except as specifically set forth herein, nothing in this
Agreement is intended to affect the Executive's rights under any Company benefit
plan, compensation program, or policy, and the Executive and his beneficiaries
will remain entitled to any payments or benefits due under the terms of such
plan, program, or policy in accordance with its terms.
(v) If the employment of the Executive terminates for any
reason, the Executive will be deemed to have submitted his resignation as a
director and officer of the Company effective as of the date such termination.
Such resignation will be automatic without the need for the execution or
delivery of any further documents memorializing such resignation.
(vi) The parties agree that, on the date of execution hereof,
they will enter into and deliver that certain First Amendment to Non-Qualified
Stock Option Plan Agreement for Employee (the "Stock Option Amendment"), a copy
of which is attached hereto as Exhibit 1. Upon the execution and delivery of the
Stock Option Amendment, the obligations of the Company under Sections 6(f)(i)
and (iii) with respect to the Executive's stock option agreement will have been
discharged completely.
7. Confidential Information, Non-competition and Non-solicitation. The
Executive acknowledges that his employment with the Company gives him
personal contact with and access to the Company's confidential information,
business methods, customers, stockholders, marketing techniques and trade
secrets ("Confidential Information"). In order to ensure that Confidential
Information acquired by the Executive in the course of his employment is not
used to injure the Company's business, the parties agree as follows:
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Exhibit 10.2(a)
(a) The Executive agrees that, both during the period of his
employment with the Company and for one (1) year following his termination of
employment for any reason, he will not directly or indirectly disclose to any
third party or use for his own benefit any Confidential Information except to
the extent (i) disclosure is ordered by a court of competent jurisdiction or
(ii) the information becomes publicly disseminated by means other than a breach
of this Agreement.
(b) The Company and the Executive agree that the Company and its
affiliated banks and other subsidiaries provide financial, banking and related
services (the "Company's Business") in a number of localities. The Executive
agrees that, during his employment with the Company and for a period of six (6)
months following the termination of his employment with the Company for any
reason, he will not directly or indirectly manage, operate or participate in the
management or operation, or serve as an employee, agent or representative of any
corporation, association, partnership, or other business entity that (i) engages
in activities in competition with the Company's Business (the "Competitive
Activities") in a city or county where, as of the effective date of the
Executive's termination of employment, the Company or any affiliated bank or
other subsidiary (A) is carrying on the Company's Business, (B) has formulated
plans to carry on the Company's Business, or (C) has specifically identified as
a possible location for expansion of the Company's Business and (ii) employs or
uses the Executive in any capacity related to any aspect of the Competitive
Activities.
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Exhibit 10.2(a)
(c) The Executive agrees that, during his employment with the
Company and for a period of one (1) year following the termination of his
employment with the Company for any reason, (i) he will not serve as chief
executive officer of any bank holding company (as defined under federal banking
law), (to the extent that the Company becomes a financial holding company as
defined under federal banking law) any financial holding company, or any
federally or state chartered bank, savings and loan association or credit union
(collectively, a "Financial Institution") and (ii) will not serve as an officer
or director of any Financial Institution having assets of $1 billion or less
that engages in activities in competition with the Company's Business in any
city or county where, as of the effective date of the Executive's termination of
employment, the Company or any affiliated bank or other subsidiary (A) is
carrying on the Company's Business, (B) has formulated plans to carry on the
Company's Business, or (C) has specifically identified as a possible location
for expansion of the Company's Business.
(d) The Executive further agrees that during his employment with the
Company and for a period of one year following the termination of his employment
for any reason, he will not solicit or attempt to solicit (i) any employees of
the Company, (ii) any customers of the Company, or (iii) other individuals or
entities with or through whom the Company has done business, for the purpose of
engaging in activities in competition with the Company's Business.
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Exhibit 10.2(a)
(e) The Executive specifically agrees that during the period of his
employment with the Company and for one year following the termination of his
employment for any reason, (i) he will not solicit, directly or indirectly, any
employees of the Company to leave the Company or work elsewhere, (ii) he will
not solicit, aid or encourage, directly or indirectly, any of the Company's
customers to move their business from the Company and to place business
elsewhere, and (iii) he will not pursue an actual or potential business
opportunity that (A) is of interest to and could be pursued by the Company, (B)
came to his attention in connection with his employment, and (C) he had not
previously offered in writing to the Company with sufficient advance notice to
allow the Company to examine and either pursue or reject.
(f) The Executive recognizes and agrees that (i) damages in the
event of a breach of Subsection (a), (b), (c), (d) and/or (e) above by the
Executive would be difficult, if not impossible, to ascertain, (ii) the Company
would have no adequate remedy at law because the duties which the Executive
rendered to the Company were of a special, unique and extraordinary character,
(iii) the geographical area, activity and time period restrictions imposed upon
him in Subsections (a), (b), (c), (d) and (e) above, as the case may be, are
fair and reasonably required for the protection of the Company, and (iv) each of
Subsections (a), (b), (c), (d) and (e) above, and the separate sections,
paragraphs and items within such sections, are separate covenants and, if a
court of competent jurisdiction will refuse to enforce all of the separate
covenants of the aforementioned Subsections, then such unenforceable covenants
will be separated from the provisions hereof to the extent necessary to permit
the remaining covenants to be enforced. Executive therefore agrees that in the
event of a breach of Subsection (a), (b), (c), (d) and/or (e) by the Executive,
in addition to and without limiting any other remedy or right the Company may
have:
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Exhibit 10.2(a)
(i) The Company will have the right to an injunction or other
equitable relief in any court of competent jurisdiction, enjoining any such
breach; and
(ii) The Company will immediately terminate any payments
otherwise due to the Executive under this Agreement (including, without
limitation, payments accrued but not yet made), and the Company will have no
further liability for any future payments under this Agreement.
The existence and exercise of the Company's rights under this Subsection
(f) will not preclude the Company from pursuing any other rights and remedies at
law or in equity which the Company may have.
(g) The agreements and covenants made by the Executive in and the
obligations of the Executive under this Section 7 will survive the expiration of
this Agreement and the termination of the employment of the Executive hereunder.
The existence of any claim or cause of action by the Executive against the
Company will not constitute a defense to the enforcement of the provisions of
this Section 7.
8. Attorney's Fees In Enforcement. In the event that the Company or the
Executive institutes an action to enforce the terms of this Agreement , the
party substantially prevailing in such action will be entitled to reimbursement
for all court costs and reasonable attorney's fees incurred by it or him in
connection therewith. Such reimbursement will be payable within thirty (30) days
after the entry of a final order in such action by a court of competent
jurisdiction.
9. Payment. All amounts payable under this Agreement will be subject to
any applicable income and payroll tax withholding.
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Exhibit 10.2(a)
10. Attorney Fees in Negotiating this Agreement. The Company understands
and expects that the Executive will retain his own attorney to review this
Agreement and to represent the Executive in negotiating this Agreement. The
Company agrees to pay the reasonable fees charged by the attorney in
representing the Executive with regard to the review and negotiation of this
Agreement up to a maximum amount of $5,000.00.
11. Assignment. The rights and obligations of the Company under this
Agreement will inure to the benefit of and will be binding upon the successors
and assigns of the Company. If the Company is consolidated or merged with or
into another corporation, or if another entity purchases all or substantially
all of the Company's assets, the surviving or acquiring corporation will succeed
to the Company's rights and obligations under this Agreement. The Executive's
rights under this Agreement may not be assigned or transferred in whole or in
part, except that the personal representative of the Executive's estate will
receive any amounts payable under this Agreement after the death of the
Executive.
12. Rights Under the Agreement. The right to receive benefits under the
Agreement will not give the Executive any proprietary interest in the Company or
any of its assets. Benefits under the Agreement will be payable solely from the
general assets of the Company, and there will be no required funding of amounts
that may become payable under the Agreement. The Executive will for all purposes
be a general creditor of the Company. The interest of the Executive under the
Agreement cannot be assigned, anticipated, sold, encumbered or pledged and will
not be subject to the claims of the Executive's creditors.
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Exhibit 10.2(a)
13. Notice. For purposes of this Agreement, notices and all other
communications must be in writing and will be effective when delivered in person
or mailed by United States registered mail, return receipt requested, postage
prepaid. All notices to the Executive must be addressed to the Executive (or his
personal representative, if applicable) at his last known address of residence.
All notices to the Company must be directed to the attention of the Chairman of
the Compensation Committee of the Board of Directors at the principal place of
business of the Company. Such other addresses may be used as either party may
have furnished to the other in writing. Notices of change of address are
effective only upon receipt.
14. Miscellaneous. This instrument contains the entire agreement of the
parties. To the extent not governed by federal law, this Agreement will be
construed in accordance with the laws of the Commonwealth of Virginia, without
reference to its conflict of laws rules. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and the writing is signed by the Executive and the Company.
A waiver of any breach of or compliance with any provision or condition of this
Agreement is not a waiver of similar or dissimilar provisions or conditions. The
invalidity or unenforceability of any provision of this Agreement will not
affect the validity or enforceability of any other provision of this Agreement,
which will remain in full force and effect. This Agreement may be executed in
one or more counterparts, all of which will be considered one and the same
agreement.
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Exhibit 10.2(a)
Witness the following signatures.
TRANSCOMMUNITY BANKSHARES
INCORPORATED
Dated: December 8, 2003 By: /s/ XXXX X. XXXXX, XX.
---------------------------------
Chairman, Compensation Committee
Board of Directors
XXXXXXX X. XXXXX
Dated: December 8, 2003 By: /s/ XXXXXXX X. XXXXX
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