Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), is made and entered into as of
the 2nd day of January, 2001, by and between CARDINAL FINANCIAL CORPORATION, a
Virginia corporation with its principal offices at 00000 Xxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000 ("Company"), and Xxxxxxx X. Xxxxxxxx ("Xxxxxxxx"), an individual
residing at 0000 Xxxxxx Xxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000.
W I T N E S S E T H:
WHEREAS, the Company, a multi-bank holding company, has organized a
centralized credit department, and
WHEREAS, Xxxxxxxx has been retained to provide services in an executive
capacity for the Company and the Banks, and the parties desire to memorialize
the terms and conditions of Xxxxxxxx'x' continuing employment; and
NOW, THEREFORE, in consideration of the promises and obligations of the
Company and Xxxxxxxx under this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE 1
SCOPE OF EMPLOYMENT
1.1. Title. Xxxxxxxx shall be employed as Executive Vice President
of the Company after the effective date of this Agreement, but no later than
January 2, 2001. Xxxxxxxx shall assume the title of Chief Credit Officer of the
Company and the Bank subsidiaries (the " Banks") effective as of the date
employment. Xxxxxxxx shall also continue to serve as Executive Vice President of
the Company.
1.2. Duties and Responsibilities. During the period he is Executive
Vice President of the Company, Ridenmour shall perform such duties as may be
assigned to him consistent with that position.
As Chief Credit Officer, Xxxxxxxx will be responsible for the
supervision of all central credit operations, the development of recommendations
to the board of directors of the Bank ("Bank Board") of credit plans and
policies for the Banks, and shall serve on professional or civic organizations
to promote the interests of the Company if so directed. Xxxxxxxx is also
required to perform such other duties consistent with his position as the
Company Board may direct from time to time.
Xxxxxxxx'x principal office shall be at a location determined by the
President and CEO of the Company.
1.3. Other Affairs. Notwithstanding anything in this Agreement to
the contrary, Xxxxxxxx may engage in charitable and community affairs and manage
his personal investments, provided that such activities are not inconsistent
with the purposes of the Company and do not unreasonably interfere with the
performance of his duties or responsibilities as set forth in this Agreement,
and provided that Xxxxxxxx shall not engage in any activities in violation of
Articles 7 and 8 of this Agreement. Xxxxxxxx may also serve as a member of the
board of directors of other organizations, subject to the advance approval of
the Company's CEO.
ARTICLE 2
RELATIONSHIP WITH CEO AND BOARD
2.1. Significant Actions. Unless otherwise specifically permitted
by Company policy, Xxxxxxxx agrees not to undertake, or authorize any other
employee of the Company to undertake, any of the following actions, except with
the prior written consent of the Company's Board, which consent may be withheld
in either Board's absolute discretion, or except as authorized by the Company's
CEO in certain instances noted below:
(a) guarantee by the Company or Banks of any loans or
indebtedness of any kind;
(b) acquisition or disposition of stock, securities,
properties, or material assets of any corporation, company, or other entity by
the Company or Banks;
(c) amendment, change, extension, renewal, waiver, or
modification of any material agreement to which the Company, Banks or their
affiliates are or may be a party, or any rights or obligations of the parties
under any of the foregoing;
(d) change corporate purpose of the Company or Banks, or
the Company's or Banks' Articles of Incorporation, By Laws, or other
organizational documents;
(e) sale, assignment, pledge, mortgage, encumbrance or
other transfer affecting assets or real or personal property of the Company or
Banks except in the ordinary course of business;
(f) enter into any contract or commitment, or series of
contracts or commitments, written or oral, which singularly or in the aggregate,
requires the Company or Banks to expend or incur liability or debt in excess of
the approved Company or Banks budgets for such expenditure.
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(g) compromise or settle any material claim asserted by
or against the Company or Banks;
(h) change the Company's or Banks' certified public
accountants, law firms, or other professionals currently retained or utilized by
the Company or Banks;
(i) change location of the principal office, or other
facilities of the Company or Banks;
(j) lend money on behalf of the Company or Banks, except
routine transactions in the ordinary course of business; or
(k) add a position or personnel function, hire an
officer, or terminate Company employees without the prior consent of the
Company's CEO.
2.2. Board Action. Unless otherwise noted herein, whenever any
action by the Company's Board is required or permitted under this Agreement, the
Chairman of the respective Board, or his designee, may decide and take such
action without approval or involvement of the full Board or a majority of the
Board. To the extent required, a vote of the full Board shall occur at a meeting
duly called and held with a quorum acting throughout in accordance with the
applicable Articles of Incorporation and By Laws, and such action must be
evidenced in writing before being effective. Meetings held by the Board in
accordance with this Agreement may be conducted by teleconference, and in
executive session.
ARTICLE 3
COMPENSATION AND BENEFITS
3.1. Salary. The Company agrees to pay Xxxxxxxx, for services
rendered hereunder, salary at the annual rate of ONE HUNDRED AND TEN THOUSAND
DOLLARS ($110,000). Such salary shall be payable in equal periodic installments,
not less frequently than monthly, less any sums, which may be required to be
deducted or withheld under the provisions of law. Xxxxxxxx'x salary may not be
adjusted downward at any time during the term of this Agreement without his
express consent. Xxxxxxxx'x salary may be adjusted upward annually at the
discretion of the Company Board, based upon its assessment of Xxxxxxxx'x
performance and the Company's financial circumstances. Xxxxxxxx will be
considered for his first annual salary raise at the time of his initial
performance review in March 2002, and will be considered for further raises at
each one-year anniversary thereafter during the term of this Agreement. As
referred to hereinafter, "Salary" means the compensation described in this
Section 3.1.
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3.2. General Expenses. Xxxxxxxx is expected from time to time to
incur reasonable and necessary expenses for promoting the business of the
Company, including expenses for travel, entertainment, and other activities
associated with Xxxxxxxx'x duties. Reasonable and necessary expenses, as
determined by the Company, incurred by Xxxxxxxx in connection with the
performance of his duties hereunder will be reimbursed provided that Xxxxxxxx
follows Company procedures for the reimbursement of such expenses, including
submission of reasonably detailed verification of the nature and amount of such
expenses.
3.3. Special Expenses. In addition to the general expenses
authorized by Section 3.2, the Company agrees to pay, or reimburse, the
following specific items:
(i) Country club membership. The Company will pay Xxxxxxxx'x
Fairfax Country Club monthly dues, reasonable periodic assessments if any and
reasonable food and entertainment expenses for business purposes.
(ii) Mobile telephone. The Company agrees to purchase a mobile
phone for Xxxxxxxx at its expense, which shall remain Company property, and
shall reimburse Xxxxxxxx for reasonable and necessary fees and charges related
to the use of such phone for business purposes.
3.4. Benefits. Except as otherwise provided in this Agreement,
Xxxxxxxx will be entitled to participate in the same manner as other executive
and managerial employees of the Company in all retirement, health and welfare,
and other fringe benefit programs applicable to other managerial employees of
the Company generally which may be authorized, adopted and amended from time to
time by the Board. This includes eligibility to participate in the Company's
qualified retirement plans as permitted by the terms of such plans. Specific
benefits that Xxxxxxxx is eligible to receive include:
(i) Medical Insurance. So long as the Company provides health and
dental insurance, Xxxxxxxx (and his eligible family members) shall have the
opportunity to participate in the same manner and on the same terms as other
officers and employees of the Company.
(ii) Long-term disability. The Company shall pay Xxxxxxxx'x full
premiums for long-term disability insurance coverage, providing a disability
benefit of up to 60% of Xxxxxxxx'x salary (as defined by the applicable plan or
policy), so long as the Company offers group long-term disability insurance
coverage for its employees.
(iii) Annual physical examination. The Company agrees to provide, at
no cost to Xxxxxxxx, one annual physical examination through a doctor of
Xxxxxxxx'x choice.
(iv) Life insurance. The Company shall pay Xxxxxxxx'x premiums, for
his purchase of a term life insurance policy providing a death benefit of
$500,000, through a carrier selected by the Company.
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(v) Automobile. The Company will lease an automobile on behalf of
Xxxxxxxx, if he so elects, with monthly payments not to exceed $700, or, in the
alternative, may provide a monthly transportation allowance to Xxxxxxxx not to
exceed $700.
(vi) Vacation. Xxxxxxxx shall be entitled to receive four weeks of
vacation leave each calendar year. Provisions regarding the accrual and
carry-over of any unused vacation time will be governed by the Company's
standard policies.
(viii) Other compensation. Upon joining the Company Xxxxxxxx will
receive a non-qualified stock option grant to purchase 7,000 shares of stock of
the Company subject to the terms of such option agreements along with a cash
signing bonus of $15,000, less applicable taxes, payable with the first pay
cycle after employment.
3.5. No Other Compensation. Except as provided in Article 4 hereof,
Xxxxxxxx shall receive no compensation or remuneration in addition to that set
forth in this Article 3 for any services by him in any capacity to the Company,
the Banks, or any affiliated corporation. Nothing contained herein shall,
however, preclude Xxxxxxxx from receiving any additional discretionary bonus or
compensation specifically approved in writing for Xxxxxxxx in advance by the
Company's Board.
3.6. Tax Consequences. Xxxxxxxx acknowledges that, to the extent
the value of any of the benefits provided to him under this Article 3 constitute
taxable income to him, he shall be responsible for the payment of such taxes and
the Company may withhold or deduct to satisfy his tax liability as permitted by
applicable law.
ARTICLE 4
VARIABLE AND EQUITY COMPENSATION
4.1. Performance Bonus. Xxxxxxxx shall be considered annually for a
cash bonus, up to, but not to exceed, thirty percent (30%) of his annual Salary,
based on the attainment of certain performance objectives established in a
Company-approved bonus/performance plan. This maximum bonus opportunity may not
be decreased below 30% of his Salary for the period in question. Xxxxxxxx shall
be considered for his initial Performance Bonus in March 2002 and each March
thereafter for the term of this Agreement. If awarded, payment of the bonus will
occur as soon as practicable after March 1 of each year.
4.2. Stock Option Grant. Each year Xxxxxxxx shall be considered for
a non-qualified stock option grant to buy stock of the Company on the date the
Company Board determines that he has achieved certain annual performance
objectives established under a Company-approved bonus/performance plan. This
grant will be up to, but will not exceed twenty percent (20%) of his annual
Salary, based on the attainment of certain performance objectives established in
a Company-approved
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bonus/performance plan. This maximum grant opportunity may not be decreased
below 20% of Xxxxxxxx'x Salary for the period in question. The Company Board
reserves the right to modify the performance goals established for Xxxxxxxx from
year to year. The other specific terms and conditions of the option will be
memorialized in a separate stock option agreement, executed by the parties on
the date of grant of the option. The parties agree generally, however, that the
exercise price of the option shall be the fair market value of the stock on the
date of grant, and that the option will vest and become exercisable after a
three-year period. Xxxxxxxx shall be considered for stock option grants annually
beginning March 2002 except as above, and each March thereafter for the term of
this Agreement. The option, if earned, shall be granted as soon as practicable
after March 1 of each year.
ARTICLE 5
TERM; RENEWAL
5.1. Term. The term of this Agreement, shall commence effective
January 2, 2001 and shall continue until January 2, 2004, at which time this
Agreement shall expire unless extended as provided in Section 5.2, or unless
earlier terminated under Article 6.
5.2. Renewal. Before the expiration of the initial term of this
Agreement on January 2nd , 2004, the Company and Ridneour agree to discuss
whether to extend the terms of the Agreement for an additional two-year period,
through January 2nd, 2006. Neither party is under any obligation to renew or
extend the terms of this Agreement. There shall be no extension or renewal of
this Agreement (except Articles 7 and 8, each of which shall continue in effect
as provided in this Agreement, unless and until modified in writing by the
parties), by operation of law or otherwise unless by the written agreement or
consent of both the Company and Xxxxxxxx prior to the expiration of the initial
term.
ARTICLE 6
EVENTS OF TERMINATION
6.1. Termination by the Company.
General. The Company shall have the right to terminate this Agreement,
with or without cause, by at least a two-thirds vote of the Company's Board, at
any time during the term of this Agreement by giving written notice to Xxxxxxxx.
The termination shall become effective on the date specified in the notice,
which termination date shall not be a date prior to the date fourteen (14) days
following the date of the notice of termination itself.
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(a) Cause Defined. For purposes of this Section 6,
"cause" shall mean (i) a material breach by Xxxxxxxx of any covenant or
condition under this Agreement; (ii) the commission by Xxxxxxxx of any willful
act constituting dishonesty, fraud, immoral or disreputable conduct which is
harmful to the Company or the Banks, or its reputation; (iii) any felony
conviction of Xxxxxxxx; (iv) any willful act of gross misconduct which is
materially and demonstrably injurious to the Company or the Banks; (v) material
violation by Xxxxxxxx of the Company's or Banks' policies as set forth in the
Company's or Banks' personnel handbooks, if one has been adopted, or announced
by Company or Banks managements from time to time; (vi) violation of the
Company's or Banks' drug and alcohol policy as set forth in the Company's or
Banks' personnel handbooks, if one has been adopted, or announced by Company or
Banks management from time to time; or (vii) any conduct that renders Xxxxxxxx
unsuitable for duty as determined by any regulatory authority that oversees
banking or financial institutions. Prior to termination for cause under
subparagraph (i) above, Xxxxxxxx shall be notified of the cause for termination
and given sixty (60) days from the date of such notice to cure his breach.
6.2. Termination by Death or Disability of the Employee.
(a) General. In the event of Xxxxxxxx'x death during the
term of this Agreement, all obligations of the parties hereunder shall terminate
immediately.
(b) Disability. If Xxxxxxxx is unable to perform his
duties hereunder, with or without any reasonable accommodation (if such
accommodation is legally required), due to mental, physical or other disability
for a period of ninety (90) consecutive days in any 180-day period, as
determined in good faith by the Company Board, this Agreement may be terminated
by the Company, at its option, by written notice to Ridneour, effective on the
termination date specified in such notice, provided that such termination date
shall not be a date prior to the date of the notice of termination itself.
6.3. Termination by Xxxxxxxx. Xxxxxxxx may terminate this Agreement
at any time, with or without cause, by giving written notice to the Company. Any
such termination shall become effective on the date specified in such notice,
provided that the Company may elect to have such termination become effective on
a date after, but not more than, fourteen (14) days after the date of the
notice.
6.4. Effect of Expiration or Termination.
(a) General. In the event this Agreement expires or is
terminated for any reason, then both parties' obligations hereunder shall
immediately cease (including any right to compensation and benefits under
Articles 3 and 4), except that: (i) Ridneour or his estate or personal
representative shall be entitled to receive the Salary owed to him through the
effective date of such expiration or termination; (ii) the Company will pay, or
reimburse, Ridneour's reasonable and necessary business expenses incurred
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prior to the date this Agreement expires or terminates; (iii) Xxxxxxxx may
continue to participate in any Company benefit plans to the extent he remains
eligible to do so; (iv) Xxxxxxxx agrees to return his Company-leased automobile
and mobile telephone to the Company; and (v) Xxxxxxxx shall become solely
responsible for the payment of any all Club dues and expenses thereafter.
(b) Treatment of Performance Bonus. Notwithstanding the
above, if this Agreement expires by its terms pursuant to Article 5, Xxxxxxxx
shall receive any Performance Bonus he has earned for the period at issue.
Additionally, if the Agreement is terminated by the Company for any reason other
than cause (including Xxxxxxxx'x death or disability), Xxxxxxxx may be
considered for his Performance Bonus, on a pro-rata basis, in the sole
discretion of the Company's Board. Such Performance Bonus will not be available
to Xxxxxxxx if he terminates the Agreement or if the Company terminates the
Agreement for cause.
(c) Special payments in the event of termination for
other than "cause." Xxxxxxxx also shall be entitled to the following additional
payments, or rights, if the Agreement is terminated without cause by the Company
for a reason other than Xxxxxxxx'x death or disability: (i) severance in an
amount equal to his annual base Salary, less any applicable deductions or
withholding, by a lump-sum payment made within thirty (30) days of the
Agreement's termination date; (ii) the right to assume his Company automobile
lease as determined by the Company; (iii) the right, for a 90-day period after
the date of termination, to exercise the option under the stock option agreement
referenced in Paragraph 4.2 to the extent the option is exercisable (vested) at
the time of termination. The option will not continue to vest with respect to
any additional shares during this 90-day period.
6.5. Cooperation. Following any termination, Xxxxxxxx shall fully
cooperate with the Company in all matters related to the handing over and
transitioning of his pending work to other employees of the Company as may be
designated by the Company's Board.
ARTICLE 7
NONCOMPETITION
7.1. Noncompetition.
(a) Xxxxxxxx agrees that, during his employment
hereunder, and for a period of one (1) year after the effective date of
termination of this Agreement, he will not:
(1) Compete (as defined below) with the Company
or the Banks; or
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(2) assist a Competitor (as defined below) of
the Company or the Banks by providing consulting or other
advisory services to that Competitor.
(b) The following terms, as used in this Article 7 shall
have the meanings set forth below:
(1) The Company's or Banks' "Business" means the
provision of banking and financial services and other
businesses or services that the Company or Banks may establish
from time to time during the term of this Agreement.
(2) The term "Competitor" means any firm,
corporation or entity that is engaged in business
substantially similar to the Company's or Banks' business and
that has a facility within five (5) miles of the Company or
Banks or any banking institution owned by the Company or
Banks.
(3) The term "Compete" means to engage in direct
competition with the Company or Banks by serving as an
employee, consultant, officer, director, proprietor, partner,
stockholder or other security holder (other than a holder of
securities of a corporation listed on a national securities
exchange or the securities of which are regularly traded in
the over-the-counter market, provided that the Employee at no
time owns in excess of 1% of the outstanding securities of
such corporation entitled to vote for the election of
directors or other than of a corporation in which the Employee
makes passive investments through a venture fund or similar
investment vehicle) of any firm, corporation or entity that is
a Competitor of the Company or Banks.
(c) Xxxxxxxx further acknowledges that this Article 7 is an
independent covenant within this Agreement, and that this covenant shall survive
any termination of Agreement and shall be treated as an independent covenant for
the purposes of enforcement.
(d) Xxxxxxxx shall, during the term of this Agreement and
thereafter, notify any prospective employer of the terms and conditions of this
Agreement regarding confidentiality, nondisclosure and noncompetition.
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ARTICLE 8
CONFIDENTIALITY AND NON-DISCLOSURE
8.1. Xxxxxxxx shall hold in strict confidence and shall not, either
during the term of this Agreement or after the termination hereof, disclose,
directly or indirectly, to any third party, person, firm, corporation or other
entity, irrespective of whether such person or entity is a competitor of the
Company or Banks or is engaged in a business similar to that of the Company or
Banks, any trade secrets or other proprietary or confidential information of the
Company or Banks or any subsidiary or affiliate of the Company or Banks
(collectively, "Proprietary Information") obtained by Ridneour from or through
his employment hereunder. Such Proprietary Information includes but is not
limited to marketing plans, product plans, business strategies, financial
information, forecasts, personnel information and customer lists. Ridneour
hereby acknowledges and agrees that all Proprietary Information referred to in
this Article 8 shall not be used for any purpose other than his duties hereunder
and shall be deemed trade secrets of the Company or Banks and of its
subsidiaries and affiliates, and that Xxxxxxxx shall take such steps, undertake
such actions and refrain from taking such other actions, as mandated by the
provisions hereof and by the provisions of the Virginia Uniform Trade Secret
Act. Ridneour further acknowledges that the Company's or Banks' products and
titles may consist of copyrighted material, and Xxxxxxxx shall exercise his best
efforts to prevent the use of such copyrighted material by any person or entity
which has not prior thereto been authorized to use such information by the
Company or Banks.
8.2. Xxxxxxxx further hereby agrees and acknowledges that any
disclosure of any Proprietary Information prohibited herein, or any breach of
the provisions of Articles 7 and 8 of this Agreement, may result in irreparable
injury and damage to the Company which will not be adequately compensable in
monetary damages, that the Company will have no adequate remedy at law therefor,
and that the Company may obtain such preliminary, temporary or permanent
mandatory or restraining injunctions, orders or decrees as may be necessary to
protect the company against, or on account of, any breach by Xxxxxxxx of the
provisions contained in Articles 7 or 8.
8.3. Xxxxxxxx further agrees that, upon termination of this
Agreement, whether voluntary or involuntary or with or without cause, he shall
notify any new employer, partner, associate or any other firm or corporation
with whom Ridneour shall become associated in any capacity whatsoever of the
provisions of Articles 7 and 8, and that the Company may give such notice to
such firm, corporation or other person.
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ARTICLE 9
MISCELLANEOUS
9.1. Severability. The Company and Xxxxxxxx recognize that the laws
and public policies of the Commonwealth of Virginia are subject to varying
interpretations and change. It is the intention of the Company and of Ridneour
that the provisions of this Agreement shall be enforced to the fullest extent
permissible under the laws and public policies of Virginia, but that the
unenforceability (or the modification to conform to such laws or public
policies) of any provision or provisions hereof shall not render unenforceable,
or impair, the remainder of this Agreement. Accordingly, if any provisions of
this Agreement shall be determined to be invalid or unenforceable, either in
whole or in part, this Agreement shall be deemed amended to delete or modify, as
necessary, the offending provision or provisions and to alter the balance of
this Agreement in order to render it valid and enforceable.
9.2. Assignment. Except as provided below, neither the rights nor
obligations under this Agreement may be assigned by either party, in whole or in
part, by operation of law or otherwise, except that it shall be binding upon and
inure to the benefit of any successor of the Company and its subsidiaries and
affiliates, whether by merger, reorganization or otherwise, or any purchaser of
all or substantially all of the assets of the Company.
9.3. Notices. Any notice expressly provided for under this
Agreement shall be in writing, shall be given either manually or by mail and
shall be deemed sufficiently given when actually received by the party to be
notified or when mailed, if mailed by certified or registered mail, postage
prepaid, addressed to such party at their addresses as set forth below. Either
party may, by notice to the other party, given in the manner provided for
herein, change their address for receiving such notices.
If to the Company, to:
X. Xxxxxxx Xxxx
President & CEO
Cardinal Financial Corporation
00000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
If to Xxxxxxxx, to:
Xx. Xxxxxxx X. Xxxxxxxx
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
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9.4. Governing Law. This Agreement shall be executed, construed and
performed in accordance with the laws of the Commonwealth of Virginia without
reference to conflict of laws principles. The parties agree that the venue for
any dispute hereunder will be the state or federal courts sitting in Virginia
and the parties hereby agree to the exclusive jurisdiction thereof.
9.5. Headings. The section headings contained in this Agreement are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
9.6. Entire Agreement; Amendments. This Agreement constitutes and
embodies the entire agreement between the parties in connection with the subject
matter hereof and supersedes all prior and contemporaneous agreements and
understandings in connection with such subject matter. No covenant or condition
not expressed in this Agreement shall affect or be effective to interpret,
change or restrict this Agreement. In the event of a conflict or inconsistency
between the terms of this Agreement and the Company's policies regarding
employees, the terms of this Agreement shall supersede the conflicting or
inconsistent Company policies. No change, termination or attempted waiver of any
of the provisions of this Agreement shall be binding unless in writing signed by
Xxxxxxxx and on behalf of the Company by an officer thereunto duly authorized by
the Company's Board of Directors. No modification, waiver, termination,
rescission, discharge or cancellation of this Agreement shall affect the right
of any party to enforce any other provision or to exercise any right or remedy
in the event of any other default.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
CARDINAL FINANCIAL CORPORATION
By: /s/
---------------------------------
Title:
-------------------------------
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EMPLOYEE:
/s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
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