EXHIBIT 10.6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of this 1st day of January, 1997, by
and among Second National Financial Corporation (the "Company") and O. R. (Ed)
Xxxxxx, Jr. (the "Executive").
In consideration of the mutual covenants and agreements set forth herein,
the parties agree as follows:
1. Employment and Duties. The Executive agrees to accept and perform the
managerial duties and responsibilities of President, Chief Executive Officer and
Director of the Company and its wholly owned subsidiary, Second Bank & Trust
(the "Bank"), and agrees to devote his time and attention on a full-time basis
to the discharge of such duties and responsibilities of an executive nature as
may be assigned him by the Board of Directors of the Company, the Bank, or their
respective designees. As President and Chief Executive Officer, the Executive
shall have general supervision over, responsibility for and control over the
other officers, agents and employees of the Company and its subsidiaries, shall
have the power to hire all employees of the Company and its subsidiaries other
than any officer or prospective officer whom the Board directs to be employed
with a written employment contract entered into or approved by the Board of
Directors of the Company (after notifying the Executive and providing him an
opportunity to comment) and other than the employee in charge of the internal
auditing function for the Company or any subsidiary (the "internal auditor"),
and shall have the power to discharge all employees of the Company and its
subsidiaries other than any officer with a written employment contract entered
into or approved by the Board of Directors of the Company and other than the
internal auditor. The Executive may accept any elective or appointed positions
or offices with any duly recognized associations or organizations whose
activities or purposes are closely related to the banking business or service to
which would generate good will for the Company and its subsidiaries.
2. Term. The term of employment of the Executive under of this Agreement
shall be deemed to have commenced on January 1, 1997 and continues through
December 31, 1999, unless terminated or extended as hereinafter provided. This
Agreement shall be extended for an additional year annually following the
original term unless either party notifies the other in writing at least ninety
(90) days prior to the end of the original term, or the end of any additional
one-year term, that the Agreement shall not be extended beyond its current term.
3. Salary. During the first year of this Agreement, the Company shall
pay the Executive an annual base salary not less than $135,000.00. Such base
salary shall be paid to the Executive in accordance with established payroll
practices of the Company. For each remaining year of this Agreement, and for
each year thereafter if this Agreement is extended, the Company agrees to review
the Executive's base salary and to consider implementing changes to such base
salary as it may deem appropriate; however, such base salary shall not be less
than $145,000 in the second year and $155,000 in the third year.
4. Benefits.
(a) During the term of this Agreement, the Executive shall be eligible for
participation in any plans, programs or forms of compensation or benefits that
the Company or its subsidiaries provide to the class of employees that includes
the Executive, on a basis not less favorable than that provided to such class of
employees, including, without limitation, group medical, disability and life
insurance, vacation and sick leave, and a retirement plan; provided however, a
reasonable transition period following any merger, statutory share exchange,
consolidation or acquisition or transaction involving the Company or any of its
subsidiaries shall be permitted in order to make appropriate adjustments in
compliance with this Section 4(a). The Company will offer the Executive a
supplemental retirement plan to ensure that the Executive may retire at age 65
at an appropriate percentage of base salary.
(b)The Company, in its discretion and pending shareholder approval, may
adopt an incentive stock option plan. If the Company adopts such a plan, the
Executive shall be eligible to participate to the extent and in the manner
provided by the Board of Directors of the Company in its sole discretion.
(c) The Executive shall be entitled to four weeks vacation annually without
loss of pay.
(d) The Company will pay the Executive's country club initiation fee and
dues on such basis as may be determined by the Board of Directors of the Company
from time to time.
(e) During the term of this Agreement, the Company shall provide the
Executive with an appropriate automobile as determined by the Board of Directors
of the Company.
5. Reimbursement of Expenses. The Company shall promptly reimburse the
Executive, upon presentation of adequate substantiation, including receipts, for
the reasonable travel, entertainment, lodging and other business expenses
incurred by the Executive, including, without limitation, those expenses
incurred by the Executive and his spouse in attending trade and professional
association conventions, meetings and other related functions. However, the
Company reserves the right to review these expenses periodically and determine,
in its sole discretion, whether future reimbursement of such expenses to the
Executive will continue without prior Board approval of the expenses.
6. Termination of Employment.
(a) Death or Disability. The Executive's employment under this Agreement
shall terminate automatically upon the Executive's death. In the event of
termination due to death of the Executive, his survivors, designees or estate
shall continue to receive, in addition to all other benefits accruing upon
death, full compensation hereunder for a period of three (3) months following
the month in which his death occurred. If the Company determines that the
Disability, as hereinafter defined, of the Executive has occurred, it may
terminate the Executive's employment and this Agreement upon thirty (30) days'
written notice provided that, within thirty (30) days after receipt of such
notice, the Executive shall not have returned to full-time performance of his
assigned duties. "Disability" shall mean the absence of the Executive from his
assigned duties with the Company on a full-time basis for the greater of ninety
(90) consecutive calendar days or the longest waiting period under any long term
disability insurance contract or program provided to him as an employee as a
result of incapacity due to mental or physical illness or disability as
determined by a physician selected by the Company.
(b) Termination by Company With or Without Cause. The Company may
terminate the Executive's employment during the term of this Agreement, with or
without cause. For purposes of this Agreement, "cause" shall include but not be
limited to:
(i) willful misconduct of the Executive in connection with the
performance of his duties which the Company believes does or may result in
material harm to the Company;
(ii) misappropriation of funds or property of the Company by the
Executive;
(iii)disloyalty or dishonesty;
(iv) the failure of the Executive to perform any of the duties
and responsibilities required by his job (other than by reason of Disability);
or
(v) the Executive's conviction of a felony or misdemeanor
involving moral turpitude.
(c) Termination by Executive for Good Reason. The Executive may
terminate his employment for Good Reason. For purpose of this Agreement, "Good
Reason" shall mean:
(i) the continued assignment to the Executive of duties
inconsistent with the Executive's position, authority, duties or
responsibilities as contemplated by Section 1 hereof;
(ii) any action taken by the Company which results in a
substantial reduction in the status of the Executive, including a diminution in
his position, authority, duties or responsibilities, excluding for this purpose
an isolated, insubstantial and/or inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice thereof given
by the Executive;
(iii) the relocation of the Executive to any other primary place
of employment which might require him to move his residence which, for this
purpose, includes any reassignment to a place of employment located more than 50
miles from the Executive's initially assigned place of employment, without the
Executive's express written consent to such relocation;
(iv) any failure by the Company to comply substantially with the
provisions of Sections 3 and 4 hereof, other than an isolated, insubstantial or
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive; or
Notwithstanding the above, "Good Reason" shall not include the removal of the
Executive as an officer of any subsidiary of the Company (including the Bank) in
order that he might concentrate his efforts on the Company.
(d) Termination by Resignation. Except as contained in any other written
agreement or amendment of this Agreement, if the Executive resigns or
voluntarily leaves the employment of the Company, the Company's obligations to
the Executive under this Agreement shall terminate, and the Company shall have
no further liability to the Executive hereunder after the effective date of such
resignation except that the Executive shall not be denied any benefits due to
him under any plan subject to the provisions of ERISA or a plan under which he
has a vested interest.
(e) Disability. If payments under a long term disability policy or plan
shall cease due to discontinuance of the plan for failure for any reason of the
provider of such policy to continue to make payments, Company will provide the
benefits to Executive in accordance with the terms of such policy or plan as if
it were still in full force and effect. Notwithstanding the above, in no event
shall the Company's obligation under this subparagraph be for more than two
years.
7. Obligations of the Company Upon Termination.
(a) Without Cause; Good Reason. Except as set forth in Sections 7(b) and
7(c) below, if during the term of this Agreement, the Company shall terminate
the Executive's employment without Cause or the Executive shall terminate
employment for Good Reason, the Company will pay to the Executive in a lump sum
within thirty (30) days after the termination of employment the sum of the
Executive's annual base salary through the date of termination to the extent not
theretofore paid and the balance of the Executive's annual base salary for a
period of eighteen months from the date of termination of employment. In
addition, the Company shall maintain in full force and effect for the
Executive's continued benefit, until eighteen months from the date of
termination of employment, all health and insurance plans as required by federal
law, and provided that the Executive's continued participation is possible under
the general terms and provisions of such plans and programs. If the Company
reasonably determines that maintaining such health and insurance plans in full
force and effect for the benefit of the Employee until eighteen months from the
date of termination of employment is not feasible, the Company shall pay the
Employee a lump sum equal to the estimated cost of maintaining such plans for
eighteen months.
(b) Non-Competition. Notwithstanding the foregoing, all such payments
and benefits under Section 7(a) otherwise continuing for periods after the
Executive's termination of employment shall cease to be paid, and the Company
shall have no further obligation due with respect thereto, in the event the
Executive engages in "Competition" or makes any "Unauthorized Disclosure of
Confidential Information." In addition, in exchange for the payments on
termination as provided herein, other provisions of this Agreement and other
valuable consideration hereby acknowledged, the Executive agrees that he will
not engage in competition for a period of two (2) years after the Executive's
employment with the Company ceases for any reason, including the expiration or
nonrenewal of this Agreement. For purposes hereof:
(i) "Competition" means the Executive's engaging, without the
written consent of the Board of Directors of the Company or a person authorized
thereby, in an activity as an officer, a director, an employee, a partner, a
more than one percent shareholder or other owner, an agent, a consultant, or in
any other individual or representative capacity within 50 miles of any branch
office of the Company or any of its subsidiaries (unless the Executive's duties,
responsibilities and activities, including supervisory activities, for or on
behalf of such activity, are not related in any way to such competitive
activity) if it involves:
(A) engaging in or entering into the business of any
banking, lending or any other business activity in which the Company or any of
its affiliates is actively engaged at the time the Executive's employment
ceases, or
(B) soliciting or contacting, either directly or
indirectly, any of the customers or clients of the Company or any of its
affiliates for the purpose of competing with the products or services provided
by the Company or any of its affiliates, or
(C) employing or soliciting for employment any employees
of the Company or any of its affiliates for the purpose of competing with the
Company or any of its affiliates.
(ii) "Unauthorized Disclosure of Confidential Information" means
the disclosure of information in violation of Section 9 of this Agreement.
(iii) All determinations regarding whether the Executive has
engaged in Competition or made an Unauthorized Disclosure of Confidential
Information under this Agreement shall be made by the Board of the Directors of
the Company reasonably and in good faith.
(iv) For purposes of this Agreement, "customers" or "clients" of
the Company or any of its affiliates means individuals or entities to whom the
Company or any of its affiliates has provided banking, lending, or other similar
financial services at any time from January 1, 1997 through the date the
Executive's employment with the Company ceases.
(c) Death or Disability. If the Executive's employment is terminated by
reason of death or disability in accordance with Section 6(a) hereof, this
Agreement shall terminate without further obligation to the Executive or his
legal representatives under this Agreement except as otherwise specified in
Section 6(a).
(d) Cause; Other Than for Good Reason. If the Executive's employment
shall be terminated for cause, this Agreement shall terminate without further
obligation to the Executive other than to pay to the Executive his annual base
salary through the date of termination. If the Executive terminates his
employment other than for Good Reason, this Agreement shall terminate without
further obligation to the Executive.
(e) Remedies. The Executive acknowledges that the restrictions set forth
in paragraph 7(b) of this Agreement are just, reasonable, and necessary to
protect the legitimate business interests of the Company. The Executive further
acknowledges that if he breaches or threatens to breach any provision of
paragraph 7(b), the Company's remedies at law will be inadequate, and the
Company will be irreparably harmed. Accordingly, the Company shall be entitled
to an injunction, both preliminary and permanent, restraining the Executive from
such breach or threatened breach, such injunctive relief not to preclude the
Company from pursuing all available legal and equitable remedies. In addition to
all other available remedies, if the Executive violates the provisions of
paragraph 7(b), the Executive shall pay all costs and fees, including attorneys'
fees, incurred by the Company in enforcing the provisions of that paragraph. If,
on the other hand, it is finally determined by a court of competent jurisdiction
that a breach or threatened breach did not occur under paragraph 7(b) of this
Agreement, the Company shall reimburse the Executive for reasonable legal fees
incurred to defend that claim.
8. Change of Control.
(a) Notwithstanding any other term or provision of this
Agreement, in the event of a Change of Control as hereinafter defined, the
Executive may choose either of the following two alternatives, if written notice
of his choice is given to the Company within ninety (90) days of such Change of
Control:
(i) the term of this Agreement as provided in Section 2
hereof shall be deemed to have commenced on the occurrence of the Change of
Control and shall continue for two (2) consecutive years (24 months) or the
balance of the term of this Agreement, whichever is greater; or
(ii) the Executive may resign his employment from the
Company, terminate this Agreement, and receive as severance benefits the
continuation for the 24 months immediately following such Change of Control or
the provision of written notice under this Agreement, whichever is later, of his
salary and benefits as provided in Sections 3 and 4(a) of this Agreement and the
vesting and immediate exercisability of any stock options as provided for in
Section 4(b), respectively, provided however, that the aggregate value of all
such severance benefits under this Agreement, when added to the value of all
other payments or benefits payable to or with respect to the Executive (even
though not paid or provided pursuant to this Agreement), which constitute
"parachute payments" under IRC Section 280G shall be reduced to the extent
necessary so that none of such benefits and payments (whether or not paid or
provided pursuant to this Agreement) constitute "excess parachute payments" on
which an excise tax is imposed pursuant to IRC Section 4999. Any such reduction
shall normally be effected first by reducing taxable payments or benefits and
then by reducing nontaxable payments and benefits, with noncash payments or
benefits being reduced before cash payments or benefits in each such category,
unless the Company and Executive otherwise agree. The severance benefits to be
provided by the Company under this provision shall be provided without regard to
whether the Executive becomes employed by another employer.
(b) Change of Control Defined.
For purposes of this Agreement, a "Change of
"Control" shall mean:
(i) the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") of beneficial ownership (within the
meaning of Rule 13d-3 under the Exchange Act), of securities of the Company
representing 20% or more of the combined voting power of the then outstanding
securities; provided, however, that the following acquisitions shall not
constitute a Change of Control:
(A) any acquisition directly from the Company (excluding
an acquisition by virtue of the exercise of a conversion privilege);
(B) any acquisition by the Company;
(C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company; or
(D) any acquisition pursuant to a reorganization, merger
or consolidation by any corporation owned or proposed to be owned, directly or
indirectly, by shareholders of the Company if the shareholders' ownership of
securities of the corporation resulting from such transaction constitutes a
majority of the ownership of securities of the resulting entity and at least a
majority of the members of the Board of Directors of the corporation resulting
from such transaction were members of the Incumbent Board as defined in this
Agreement at the time of the execution of the initial agreement providing for
such reorganization, merger or consolidation;
(E) any acquisition resulting from negotiations that
began on or before June 30, 1997; or
(ii) where individuals who, as of the inception of this
Agreement, constitute the Board of Directors of the Company (the "Incumbent
Board") cease for any reason to constitute at least a majority of such Board of
Directors; provided, however, that any individual becoming a director subsequent
to the effective date of this Agreement whose election, or nomination for
election by the shareholders was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on behalf
of a person other than a member of the Board of Directors; or
(iii) the shareholders of the Company approve, or the Company
otherwise consummates,
(A) a merger, statutory share exchange, or consolidation
of the Company with any other corporation, except as provided in subparagraph
(i) D of this section; provided however, that the approval by shareholders of
the Company or any of its predecessors of an agreement entered into on or before
January 31, 1997 shall not constitute a Change of Control herein, or
(B) the sale or other disposition of all or
substantially all of the assets of the Company.
9. Confidentiality. The Executive recognizes that as an employee of the
Company he will have access to and may participate in the origination of
non-public, proprietary and confidential information and that he owes a
fiduciary duty to the Company. Confidential information may include, but is not
limited to, trade secrets, customer lists and information, internal corporate
planning, methods of marketing and operation, and other data or information of
or concerning the Company or its customers that is not generally known to the
public or in the banking industry. The Executive agrees that he will never
reveal any such confidential information, either directly or indirectly, to any
third party except as may be authorized in writing specifically by the Company.
10. Severability. If any provision of this Agreement, or part thereof,
is determined to be unenforceable for any reason whatsoever, it shall be
severable from the remainder of this Agreement and shall not invalidate or
affect the other provisions of this Agreement, which shall remain in full force
and effect and shall be enforceable according to their terms. No covenant shall
be dependent upon any other covenant or provision herein, each of which stands
independently.
11. Modification. The parties expressly agree that should a court find
any provision of this Agreement, or part thereof, to be unenforceable or
unreasonable, the court may modify the provision, or part thereof, in a manner
which renders that provision reasonable, enforceable, and in conformity with the
public policy of Virginia.
12. Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia.
13. Notices. All written notices required by this Agreement shall be
deemed given when delivered personally or sent by registered or certified mail,
return receipt requested, to the parties at their addresses set forth on the
signature page of this Agreement. Each party may, from time to time, designate a
different address to which notices should be sent.
14. Amendment. This Agreement may not be varied, altered, modified or in
any way amended except by an instrument in writing executed by the parties
hereto or their legal representatives.
15. Binding Effect. This Agreement shall be binding upon the Executive
and on the Company, its successors and assigns effective on the date first above
written subject to the approval by the Board of Directors of the Company. The
Company will require any successor to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
16. Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the matters addressed herein and it supersedes all
other prior agreements and understandings, both written and oral, express or
implied, with respect to the subject matter of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written herein.
SECOND NATIONAL FINANCIAL CORPORATION
By________________________
Its_____________________
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
___________________________
O. R. (Ed) XXXXXX, JR.
"EXECUTIVE"
Address:
____________________________
____________________________
