Exhibit 10 (ii)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") made in duplicate
originals and effective this 1st day of August, 1998, is between SOUTH BRANCH
VALLEY BANCORP, INC., a West Virginia corporation and bank holding company (the
"Company"), and XXXXXX XXXXXX ("Employee").
WHEREAS, the Company is forming a subsidiary entity (the "Virginia
Bank") for purposes of conducting banking operations in the Commonwealth of
Virginia; and
WHEREAS, the Company offers the terms and conditions of employment
hereinafter set forth and the Employee has indicated his willingness to accept
such terms and conditions in consideration of his employment with the Company.
NOW, THEREFORE, in consideration of the mutual promises and
covenants made in this Agreement, the parties agree as follows:
1. EMPLOYMENT. The Company hereby employs Employee and Employee
hereby accepts employment with the Company as President, Chief Executive Officer
and Chairman of the Board of Directors of the Virginia Bank and member of the
Board of Directors of the Company upon the terms and conditions set forth
herein.
2. TERM. The term of this Agreement shall be for three (3) years,
unless one of the parties terminates this Agreement as provided herein. The
Board of Directors of the Company shall review the Agreement at least annually,
and may, with the consent of the Employee, extend this term of employment for
additional one (1) year term(s), in which case such term shall end one (1) year
from the date on which it is last renewed.
3. DUTIES. Employee shall perform and have all of the duties and
responsibilities that may be assigned to him from time to time by the Board of
Directors of the Company. Employee shall devote his best efforts on a full-time
basis to the performance of such duties.
4. COMPENSATION AND BENEFITS. During the term of employment, the
Company agrees to pay Employee a base salary and to provide benefits as set
forth in Exhibit A, which is attached hereto and incorporated herein by
reference.
5. TERMINATION BY THE COMPANY OR EMPLOYEE. The employment of
Employee with the Company may be terminated by any one of the following means,
in which case Employee shall be entitled to such compensation as is described
below:
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A. Mutual Agreement: The Employee's employment may be
terminated by mutual agreement of the parties upon such
terms and conditions as they may agree.
B. For Cause.
(1) The Employee's employment may be terminated by the
Company for cause consisting of one or more of the
reasons specified in Paragraph 5(B)(2)(a) - (e) below;
provided, however, that if the cause of termination is
for a reason specified in Paragraph 5(B)(2)(a) below,
and if in the reasonable judgment of the Board of
Directors of the Company the damage incurred by the
Company as a result of Employee's conduct constituting
cause is damage of a type that is capable of being
substantially reversed and corrected, the Company shall
give Employee thirty (30) days advance notice of the
Company's intention to terminate his employment for
cause and a reasonable opportunity to cure the cause of
the possible termination to the satisfaction of the
Company.
(2) For purposes of this Agreement, the term "cause" shall
be defined as follows:
(a) Employee's repeated negligence, malfeasance or
misfeasance in the performance of Employee's
duties that can reasonably be expected to have an
adverse impact upon the business and affairs of
the Company;
(b) Employee's commission of any act constituting
theft, intentional wrongdoing or fraud;
(c) The conviction of the Employee of a felony
criminal offense in either state or federal court;
(d) Any single act by Employee constituting gross
negligence or which causes material harm to the
reputation, financial condition or property of the
Company; or
(e) The death of Employee during the term of this
Agreement, in which event the Company shall pay to
the estate of the Employee any compensation for
services rendered but unpaid prior to the
Employee's date of death.
(3) The Board of Directors of the Company shall determine,
in its sole discretion, whether any acts and/or
omissions on the part of Employee constitute "cause" as
defined above. Notwithstanding the foregoing, Employee
shall be entitled to arbitrate a finding of the Board of
Directors of "cause" in accordance with Paragraph 9
hereof.
(4) In the event that Company terminates Employee's
employment for cause as defined above, Employee shall be
entitled to be paid his regular salary and benefits up
to the effective date of the termination, but not any
additional compensation.
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C. Not for Cause. Employee's employment may be terminated by
the Company for any reason permitted under applicable law
so long as Employee is given thirty (30) days advance
written notice (or payment in lieu thereof). In the event
of a termination pursuant to this subparagraph, Employee
shall be entitled to payment from the Company equivalent to
the base salary compensation set forth in this Agreement
for the remaining term of the Agreement or severance pay
equal to six (6) months of base salary payments, whichever
is greater.
D. Employee Resignation. Employee recognizes and understands
the vital role he plays in the Company's establishment of
the Virginia Bank, and therefore agrees not to resign from
employment during the initial three-year term of this
Agreement except in the event of his disability. If the
Employee resigns in violation of this commitment, Employee
agrees to comply with the restrictions set forth in
Paragraph 6 below.
E. Change in Control. Exhibit B hereto sets forth the rights and
responsibilities of the parties in the event of a change in
control, as defined therein, and is incorporated herein by
reference.
F. No Charter or Branch. In the event that (1) employment of
Employee as set forth herein is not approved by the
regulatory authorities or (2) the Company is rendered
unable either by lack of regulatory approval or by business
impracticability to establish operations in the City of
Winchester, County of Xxxxxxxxx, Virginia either by way of
the formation and charter of the Virginia Bank or the
establishment of a branch bank, the Company and Employee
agree that this Agreement shall terminate as of the date
upon which such fact(s) become(s) reasonably apparent. The
parties further agree that each shall hold the other
harmless in any such event.
6. NONCOMPETITION AND NONSOLICITATION. In consideration of the
covenants set forth herein, including but not limited to the severance pay set
forth in Paragraph 5(E) and Exhibit A, Employee agrees as follows:
A. For a period of five (5) years after Employee's employment
with the Company is terminated by Employee for any reason
other than Employee's disability, Employee shall not,
directly or indirectly, engage in the business of banking
in the City of Winchester or the County of Xxxxxxxxx,
Virginia. For purposes of this Paragraph 6(A), being
engaged in the business of banking shall mean Employee's
presence or work in a bank office in the specified
geographic area or Employee's solicitation of business from
clients with a primary or principle office in the specified
geographic area.
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B. During Employee's employment by the Company and for five
(5) years after Employee's employment with the Company is
terminated by Employee for any reason other than Employee's
disability, Employee shall not, on his own behalf or on
behalf of any other person, corporation or entity, either
directly or indirectly, solicit, induce, recruit or cause
another person in the employ of the Company or its
affiliates to terminate his or her employment for the
purpose of joining, associating or becoming an employee
with any business which is in competition with any business
or activity engaged in by the Company or its affiliates.
C. Employee further recognizes and acknowledges that in the
event of the termination of Employee's employment with the
Company for any reason other than Employee's disability,
(1) a breach of the obligations and conditions set forth
herein will irreparably harm and damage the Company; (2) an
award of money damages may not be adequate to remedy such
harm; and (3) considering Employee's relevant background,
education and experience, Employee believes that he will be
able to earn a livelihood without violating the foregoing
restrictions. Consequently, Employee agrees that, in the
event that Employee breaches any of the covenants set forth
in this Paragraph 6, the Company and/or its affiliates
shall be entitled to both a preliminary and permanent
injunction in order to prevent the continuation of such
harm and to recover money damages, insofar as they can be
determined, including, without limitation, all costs and
attorneys' fees incurred by the Company in enforcing the
provisions of this Paragraph 6. Such relief may be sought
notwithstanding the arbitration provision set forth in
Paragraph 10 below.
7. DEFINITION OF DISABILITY. For purposes of the Agreement, the term
"disability" shall mean a physical or mental condition rendering Employee
substantially and permanently unable to perform the duties of an officer and
director of a banking organization.
8. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and sent by registered or certified
mail listed herein. In the case of Employee to the following address: Xxxx
Xxxxxx Xxx 000, Xxxxxxxxx, Xxxxxxxx 00000. In the case of the Company to the
President addressed to H. Xxxxxxx Xxxxx, III in care of South Branch Valley
Bancorp, Inc., X.X. Xxx 000, Xxxxxxxxxx, XX 00000. Any notice sent pursuant to
this paragraph shall be effective when deposited in the mail.
9. CONFIDENTIAL INFORMATION. Employee shall not, during the term of
this Agreement or at any time thereafter, directly or indirectly, publish or
disclose to any person or entity any confidential information concerning the
assets, business or affairs of the Company, including but not limited to any
trade secrets, financial data, employee or customer/client information or
organizational structure.
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10. ARBITRATION. Any dispute between the parties arising out of or
with respect to this Agreement or any of its provisions or Employee's employment
with the Company shall be resolved by the sole and exclusive remedy of binding
arbitration. Arbitration shall be conducted in Martinsburg, West Virginia in
accordance with the rules of the American Arbitration Association ("AAA"). The
parties agree to select one arbitrator from an AAA employment panel. The
arbitration shall be conducted in accordance with the West Virginia Rules of
Evidence and all discovery issues shall be decided by the arbitrator. The
arbitrator shall supply a written opinion and analysis of the matter submitted
for arbitration along with the decision. The arbitration decision shall be final
and subject to enforcement in the local circuit court.
11. ENTIRE AGREEMENT. This Agreement constitutes the entire
Agreement between the parties and shall supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and may not be changed or amended except by an instrument
in writing to be executed by each of the parties hereto.
12. SEVERABILITY. If any provision hereof, or any portion of any
provision hereof, is held to be invalid, illegal or unenforceable, all other
provisions shall remain in force and effect as if such invalid, illegal or
unenforceable provision or portion thereof had not been included herein. If any
provision or portion of any provision of this Agreement is so broad as to be
unenforceable, such provision or a portion thereof shall be interpreted to be
only so broad as is enforceable.
13. HEADINGS. The headings contained in this Agreement are included
for convenience or reference only and shall have no effect on the construction,
meaning or interpretation of this Agreement.
14. GOVERNING LAW. The laws of the State of West Virginia
shall govern the interpretation and enforcement of this Agreement.
15. AMENDMENTS. Any amendments to the Agreement must be in writing
and signed by all parties hereto except that extensions of the term of this
Agreement under Paragraph 2 above, may be evidenced by minutes of a meeting of
the Board of Directors.
16. WAVIER OF BREACH. No requirement of this Agreement may be waived
except by a written document signed by the party adversely affected. A waiver of
a breach of any provision of the Agreement by any party shall not be construed
as a waiver of subsequent breaches of that provision.
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17. COUNTERPARTS. This Agreement may be executed in counterparts,
all of which shall be considered one and the same Agreement and each of which
shall be deemed an original.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in its corporate name by its corporate officer thereunto duly
authorized, and Employee has hereunto set his hand and seal, as of the day and
year first above written:
SOUTH BRANCH VALLEY BANCORP, INC.
By: __________________________________
Its: _________________________________
--------------------------------------
Xxxxxx Xxxxxx
Exhibit A
Compensation and Benefits
A. Base Salary. Employee's starting base salary shall be $75,000 per year. As
of the date that the Virginia Bank opens for business, the base salary
shall be increased to $100,000 per year. Employee shall be considered for
salary increases on the basis of merit beginning in the second year of his
employment.
B. Bonus. In addition to the base salary provided for herein, Employee shall
be eligible for incentive bonuses subject to goals and criteria to be
determined by the Board of Directors of the Company.
C. Vacation. Employee shall be entitled to all paid vacation and holidays and
other paid leave as provided by the Company to other employees.
D. Fringe Benefits. Except as specified below, the Company shall afford
to Employee the benefit of all fringe benefits afforded to all other
Company officers, including but not limited to retirement plans, stock
ownership or stock option plans, life insurance, disability, health and
accident insurance benefits or any other fringe benefit plan now
existing or hereinafter adopted by the Company, subject to the terms
and conditions thereof.
(1) The Company shall pay 65% of the actual premiums paid by the
Company for Employee's health and accident insurance benefits and
Employee shall be responsible for the remaining 35% of the actual
premiums.
(2) The Company shall provide life insurance for the Employee in the
amount of $100,000.
E. Business Expenses. The Company shall reimburse Employee for all reasonable
expenses incurred by Employee in carrying out his duties and
responsibilities, including but not limited to reimbursing civic club
organization dues and reasonable expenses for customer entertainment.
F. Automobile. The Company shall purchase from Employee the 1996 Buick
Ultra owned by him as of the execution of this Agreement and provide
such vehicle for the employee's business and personal use. The
purchase price of the vehicle shall be agreed upon between the
Company's President and Employee. Following the purchase, the Company
shall be responsible for expenses associated with the vehicle including
but not limited to taxes, gasoline, licenses, maintenance, repair,
insurance and reasonable cellular phone charges. Employee shall be
subject to tax for his personal use of the vehicle in accordance with
the Internal Revenue Code and any applicable state law. Upon approval
of the Company, appropriate replacement vehicles may be provided in the
future.
G. Director's Fees. The Company shall pay Employee the same director's fees
as are provided to other inside officer members of the Board of Directors.
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Exhibit B
Change in Control Agreement
A. Definitions. For purposes of this Exhibit B, the following definitions
shall apply:
(1) "Change of Control" means
(a) a change of ownership of the Company that would have to be
reported to the Securities and Exchange Commission as a
Change of Control, including but not limited to the
acquisition by any "person" and/or entity as defined by
securities regulations and law, of direct or indirect
"beneficial ownership" as defined, of twenty-five percent
(25%) or more of the combined voting power of the Company's
then outstanding securities; or
(b) the failure during any period of three (3) consecutive
years of individuals who at the beginning of such period
constitute the Board for any reason to constitute at least
a majority thereof, unless the election of each director
who was not a director at the beginning of such period has
been approved in advance by directors representing at least
two-thirds (2/3) of the directors at the beginning of the
period; or
(c) the consummation of a "Business Combination" as defined in the
company's Articles of Incorporation.
(2) "Salary" means the greater of $75,000 or the average of Employee's
full earnings reported on IRS Form W-2 for the two full year periods
immediately prior to the date of the consummation of the Change of
Control or for the two full year periods immediately preceding the
Date of Termination, whichever is greater.
(3) For purposes of this Exhibit B, "Good Cause" has the same meaning as
the term "cause" set forth in Paragraph 5(B)(2) of the foregoing
Employment Agreement.
(4) "Disability" means a physical or mental condition rendering Employee
substantially unable to perform the duties of an officer and
director of a banking organization.
(5) "Retirement" means termination of employment by Employee in
accordance with Company's (or its successor's) retirement plan,
including early retirement as approved by the Board of Directors.
(6) "Good Reason" means
(a) A Change of Control in the Company (as defined above) and:
(i) a decrease in Employee's Salary below its level in
effect immediately prior to the date of consummation
of the Change of Control, without Employee's prior
written consent; or
(ii) a material reduction in the importance of Employee's job
responsibilities or assignment of job responsibilites
inconsistent with employee's responsibility prior to the
Change in Control without Employee's prior written
consent; or
(iii) a geographical relocation of Employee to an office more
than 20 miles from Employee's location at the time of
the Change of Control or the imposition of travel
requirements inconsistent with those existing prior to
the Change in Control without Employee's prior written
consent; or
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(b) Failure of the Company to obtain assumption of this Change in
Control Agreement by its successor as required by Paragraph
E(1) below; or
(c) Any removal of Employee from, or failure to re-elect Employee
to any of Employee's positioins with Company immediately prior
to a Change in Control (except in connection with the
termination of Employee's employment for Good Cause, death,
Disability or Retirement) without Employee's prior consent.
(7) "Wrongful Termination" means termination of Employee's employment by
the Company or its affiliates for any reason other than at
Employee's option, Good Cause or the death, Disability or Retirement
of Employee prior to the expiration of eighteen (18) months after
consummation of the Change of Control.
B. Compensation of Employee Upon Termination for Good Reason or Wrongful
Termination within Twenty-four (24) Months of a Change in Control. Except
as hereinafter provided, if Employee terminates his employment with the
Company for Good Reason or the Company terminates Employee's employment in
a manner constituting Wrongful Termination, the Company agrees as follows:
(1) The Company shall pay Employee a cash payment equal to Employee's
Salary, on a monthly basis, multiplied by the number of months
between the Date of Termination and the date that is eighteen (18)
months after the date of consummation of the Change of Control.
(2) For the year in which termination occurs, Employee will be entitled
to receive his reasonable share of the Company's cash bonuses, if
any, allocated in accordance with existing principles and authorized
by the Board of Directors. The amount of Employee's cash incentive
award shall not be reduced due to Employee not being actively
employed for the full year.
(3) Employee will continue to participate, without discrimination, for
the number of months between the Date of Termination and the date
that is eighteen (18) months after the date of the consummation of
the Change of Control in benefit plans (such as retirement,
disability and medical insurance) maintained after any Change of
Control for employees, in general, of the Company, or any successor
organization, provided Employee's continued participation is
possible under the general terms and conditions of such plans. In
the event Employee's participation in any such plan is barred, the
Company shall arrange to provide Employee with benefits
substantially similar to those which Employee would have been
entitled had his participation not been barred. However, in no event
will Employee receive from the Company the employee benefits
contemplated by this subparagraph if Employee receives comparable
benefits from any other source.
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(4) In the event Employee becomes entitled to any payments or benefits
under this Change in Control Agreement or any benefit plan or
program of the Company, if any such payments or benefits will be
subject to the tax (the "Excise Tax") imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (or any similar tax that
may hereinafter be imposed), the Company shall pay to employee an
additional amount or amounts (each, a "Gross Up Payment"), such that
the net amount or amounts retained by Employee, after deduction of
any Excise Tax on any of the above-described payments or benefits
and any federal, state and local income tax and excise tax upon
payment provided for by this section, shall be equal to the amount
of such payment or benefits prior to the imposition of such Excise
Tax.
(5) Paragraph 6 (Noncompetition and Nonsolicitation) of the foregoing
Agreement shall not apply.
C. Other Employment. Employee shall not be required to mitigate the amount of
any payment provided for in this Change in Control Agreement by seeking
other employment. The amount of any payment provided for in this Change in
Control Agreement shall not be reduced by any compensation earned or
benefits provided (except as set forth in Paragraph B(3) above) as the
result of employment by another employer after the Date of Termination.
D. Rights of Company Prior to the Change of Control. This Change in
Control Agreement shall not effect the right of the Company or Employee
to terminate the foregoing Agreement or the employment of Employee in
accordance thereof; provided, however, that any termination or
reduction in salary or benefits that takes place after discussions have
commenced that result in a Change in Control shall be presumed (without
clear and convincing evidence to the contrary) to be a violation of
this Change in Control Agreement entitling Employee to the benefits
hereof, so that any termination by Company shall be deemed to be a
wrongful termination, and all references in this Change in Control
Agreement to Salary shall be deemed to mean the Salary, as defined
herein, based on the earnings Employee would have had prior to any
reduction thereof.
E. Successors; Binding Agreement.
(1) The Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by
agreement in form and substance satisfactory to Employee, to expressly
assume and agree to perform this Change in Control Agreement. Failure
of the Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of the this Change in Control
Agreement and shall entitle Employee to compensation from the Company
in the same amount and on the same terms as he would be entitled to
hereunder if he terminated his employment for Good Reason hereunder.
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(2) This Change in Control Agreement and all rights of Employee hereunder
shall inure to the benefit of and be enforceable by Employee's
personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees, and legatees. If Employee
should die while any amounts would still be payable to him hereunder
if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to Employee's devisee, legatee, or other designee or, if
there be no such designee, to Employee's estate
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