EMPLOYMENT AGREEMENT
EXECUTION
VERSION
THIS
AGREEMENT is entered into and effective as of the 9th
day of March 2008, by and between VILLAGE BANK, a Virginia chartered bank
corporation (the "Corporation") and Xxxxxxx X. Xxxxxxxx (the "Executive").
W
I T N E S S E T H:
WHEREAS,
the
Corporation desires to retain the services of Executive on the terms and
conditions set forth herein and, for purpose of effecting the same, the Board
of
Directors of the Corporation has approved this Employment Agreement and
authorized its execution and delivery on the Corporation's behalf to the
Executive; and
WHEREAS,
the
Corporation and Village Bank and Trust Financial Corporation have entered into
an Agreement and Plan of Reorganization and Merger dated March 9, 2008 with
River City Bank (the “Merger Agreement”) pursuant to which River City Bank would
merge with and into the Corporation (the “Merger”); and
WHEREAS,
the
Executive has significant experience serving in senior bank management
positions, including those of President and CEO at River City Bank, and the
Corporation desires to employ the Executive as a key executive officer of the
Corporation whose dedication, availability, advice and counsel to the
corporation is deemed important to the Board of Directors of the Corporation,
the Corporation and its stockholders;
WHEREAS,
the
services of the Executive, his experience and knowledge of the affairs of the
Corporation, and his reputation and contacts in the industry are valuable to
the
Corporation; and
WHEREAS,
the
Corporation wishes to attract and retain such well-qualified executives and
it
is in the best interests of the Corporation and of the Executive to secure
the
services of the Executive; and
WHEREAS,
the
Corporation considers the establishment and maintenance of a sound management
to
be part of its overall corporate strategy and to be essential to protecting
and
enhancing the best interests of the Corporation and its stockholders;
and
NOW,
THEREFORE,
to
assure the Corporation of the Executive's dedication, the availability of his
advice and counsel to the Corporation,
and to
induce the Executive to remain and continue in the employ of the Corporation
and
for other good and valuable consideration, the receipt and adequacy whereof
each
party hereby acknowledges, the Corporation and the Executive hereby agree as
follows:
1. EMPLOYMENT:
The
Corporation agrees to, and does hereby, employ Executive, beginning on the
effective date of the Merger and the Executive agrees to, and does hereby,
accept such employment, for the period beginning on the effective date of the
Merger and ending on the second anniversary of the effective date of the Merger,
which period of employment may be extended or terminated only upon the terms
and
conditions hereinafter set forth.
Until
the
Merger is completed, neither Executive nor the Corporation shall have any
obligations to the other under this Agreement.
If
the
Merger is not completed, then on the date the Merger Agreement terminates,
this
Agreement also shall terminate.
2. EXECUTIVE
DUTIES:
Executive agrees that, during the term of his employment under this Agreement
and in his capacity of
Senior Vice President,
he will
devote his full business time and energy to the business, affairs and interests
of the Corporation and serve it diligently and to the best of his ability.
The
services and duties to be performed by Executive shall be those appropriate
to
his office and title as currently and from time to time hereafter specified
in
the Corporation's By-laws or otherwise specified by the President
of the Corporation. It is acknowledged that Xx. Xxxxxxxx is an operating member
of Hartoak Properties, L. L. C. which will not impact his Bank
work.
3. COMPENSATION:
The
Corporation agrees to pay Executive, and Executive agrees to accept, as
compensation for all services rendered by him to the Corporation during the
period of his employment under this Agreement, base salary at the annual rate
of
One
Hundred Thirty-One
Thousand Dollars ($131,000.00),
which
shall be payable in monthly, semi-monthly or bi-weekly installments in
conformity with Corporation's policy relating to salaried employees. Such salary
may be increased in the sole and absolute discretion of the Corporation's Board
of Directors or Committee thereof duly authorized by the Board to so act. The
Board of Directors, in its discretion, may cause the Corporation to pay bonuses
to the Executive from time to time.
4. PARTICIPATION
IN BENEFIT PLANS, REIMBURSEMENT OF BUSINESS EXPENSES AND OTHER
BENEFITS:
(i)
During the term of employment under this Agreement, Executive shall be entitled
to participate in any pension, group insurance, hospitalization, deferred
compensation or other benefit, bonus or incentive plans of the Corporation
presently in effect (including, without limitation, stock option plans) or
hereafter adopted by the Corporation and generally available to any employees
of
senior executive status, and, additionally, Executive shall be entitled to
have
the use of Corporation's facilities and executive benefits as are customarily
made available by the Corporation to its executive officers.
(ii) During
the term of this Agreement, to the extent that such expenditures are
substantiated by the Executive as required by the Internal Revenue Service
and
policies of the Corporation, the Corporation shall reimburse the Executive
promptly for all expenditures (including travel, entertainment, parking,
business meetings, and the monthly costs, including dues, of maintaining
memberships at appropriate clubs) made in accordance with rules and policies
established from time to time by the Board of Directors of the Corporation
in
pursuance and furtherance of the Corporation's business and good
will.
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(iii) The
Corporation shall provide a monthly stipend of Five Hundred Dollars ($500.00)
to
the Executive for the maintenance and expense of operation of the Executive's
automobile. Additionally, the Bank will reimburse ½ of the $350.00 Monthly dues
for membership in the Federal Club.
Section
5. is intentionally omitted.
6. ILLNESS:
In the
event Executive is unable to perform his duties with reasonable accommodations
under this Agreement on a full-time basis for a period of four (4) consecutive
months by reason of illness or other physical or mental disability, and at
or
before the end of such period he does not return to work on a full-time basis,
the Corporation may terminate this Agreement without further or additional
compensation payment being due the Executive from the Corporation pursuant
to
this Agreement, except benefits accrued through the date of such termination
under employee benefit plans of the Corporation. These benefits shall include
long-term disability and other insurance or other benefits then regularly
provided by the Corporation to disabled employees, as well as any other
insurance benefits so provided.
7. DEATH:
In the
event of Executive's death during the term of this Agreement, this Agreement
shall terminate as of the end of the month in which Executive dies. This
Section
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shall not affect the rights of any person under other contract between the
Executive and either the Corporation or under any life insurance
policy.
8. TERMINATION
WITHOUT CAUSE/RESIGNATION FOR GOOD REASON:
(a) Notwithstanding
the provisions of Section 1 hereof, the Board of Directors of the Corporation
may, without Cause (as hereafter defined), terminate the Executive's employment
under this Agreement at any time in any lawful manner by giving not less than
thirty (30) days written notice to the Executive. The Executive may resign
for
Good Reason (as hereafter defined) at any time by giving not less than thirty
(30) days written notice to the Corporation. If the Corporation terminates
the
Executive's employment without Cause or the Executive resigns for Good Reason,
then in either event:
(i) The
Executive shall be paid for the remainder of the then current term of this
Agreement, at such times as payment was theretofore made, the salary required
under Section 4 that the Executive would have been entitled to receive during
the remainder of the then current term of this Agreement had such termination
not occurred; and
(ii) The
Corporation shall maintain in full force and effect for the continued benefit
of
the Executive for the next six (6) months following the month in which the
termination occurs, all employee benefit plans and programs or arrangements
in
which the Executive was entitled to participate immediately prior to such
termination, provided that continued participation is possible under the general
terms and provisions of such plans and programs. In the event that Executive's
participation in any such plan or program is barred, the Corporation shall
arrange to provide the Executive with benefits substantially similar to those
which the Executive was entitled to receive under such plans and
program.
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(iii) The
Executive shall thereon have no further recourse, and the Corporation shall
have
no further obligation, under the Agreement.
(b) For
purposes of this Agreement, "Good Reason" shall mean:
(i) The
assignment of duties to the Executive by the Corporation which (A) are
materially different from the Executive's duties on the date hereof, or (B)
result in the Executive having significantly less authority and/or
responsibility than he has on the date hereof, without his express written
consent;
(ii) The
removal of the Executive from or any failure to re-elect him to the position
of
Senior
Vice President
of the
Corporation, except in connection with a termination of his employment by the
Corporation for Cause or by reason of the Executive's disability or
death;
(iii) A
reduction by the Corporation of the Executive's base salary to less than
One
Hundred Thirty-One Thousand Dollars ($131,000.00) per year;
(iv) The
failure of the Corporation to provide the Executive with substantially the
same
fringe benefits (including paid vacations) that were provided to him immediately
prior to the date hereof; or
(v) The
failure of the Corporation to obtain the assumption of and agreement to perform
this Agreement by any successor as contemplated in Section 11(c)
hereof.
(c) Resignation
by the Executive for Good Reason shall be communicated by a written Notice
of
Resignation to the Corporation, within
fourteen (14) days of the initial existence of the condition constituting Good
Reason and following a thirty (30) day period in which the Employer may remedy
the condition without incurring any obligation hereunder.
A
"Notice of Resignation" shall mean a notice which shall indicate the specific
provision(s) in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for a resignation
for Good Reason.
(d) If
within
thirty (30) days after any Notice of Resignation is given the Corporation
notifies the Executive that a dispute exists concerning the resignation for
Good
Reason and that it is requesting arbitration pursuant to Section 17, the
Corporation shall continue to pay the Executive his full salary and benefits
as
described in Sections 4 and 5, as and when due and payable, at least until
such
time as a final decision is reached by the panel of arbitrators. If Good Reason
for resignation by the Executive is ultimately determined not to exist, then
all
sums paid by the Corporation to the Executive, including but not limited to
the
cost to the Corporation of providing the Executive such fringe benefits, from
the date of such resignation to the date of the resolution of such dispute
shall
be promptly repaid by the Executive to the Corporation with interest at the
rate
charged from time to time by the Corporation to its most substantial customers
for unsecured extensions of credit. Should it ultimately be determined that
Good
Reason for resignation by the Executive is ultimately determined to exist,
then
the Executive shall be entitled to retain all sums paid to him pending the
resolution of such dispute and he shall be entitled to receive, in addition,
the
payments and other benefits provided for in Section 8(a).
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A
failure
by the Corporation to notify the Executive that a dispute exists concerning
the
resignation for Good Reason within thirty (30) days after any Notice of
Resignation is given shall constitute a final waiver by the Corporation of
its
right to contest either that such resignation was for Good Reason or its
obligations to the Executive under Section 8(a) hereof.
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(e)
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If
the Executive's employment terminates after a Change of Control (as
defined in Section 10 hereof), the payments to which he is entitled
pursuant to Section 10 shall be in lieu of any payment to which he
might
otherwise be entitled under the terms of Section 8(a)(i). The benefits
to
which the Executive is entitled under Section 8(a)(ii) shall be payable
whether or not his employment terminates after a Change of
Control
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.
9. RESIGNATION-TERMINATION
FOR CAUSE_REGULATORY TERMINATION –
The
Bank or the Executive may terminate this Agreement, with or without cause,
subject to the following conditions:
| (a) |
Notwithstanding
the provision of Section 1 of this agreement, the Board of Directors
of
the Corporation may, in its sole discretion, terminate the Executive’s
employment for Cause. For the purpose of this agreement, “Cause” shall
mean personal dishonesty, incompetence, willful misconduct, breach
of
fiduciary duty involving personal profit, intentional failure to
perform
stated duties, willful violation of any law, rule, or regulation
(other
than traffic violations or similar offenses) or final cease-and-desist
order, repeated abuse of alcohol or illegal drugs by Executive which
substantially affects his ability to perform his job duties or which
results in material economic injury to the Corporation or material
breach
of any provision of this agreement.
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| (b) |
If
the Executive is discharged by the Corporation for Cause, or he terminates
his employment without default by the Corporation in performance
of its
obligations under this Agreement, the Corporation shall have no further
obligation to him, and he shall have no further rights under this
Agreement.
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| (c) |
In
the event the Executive resigns from or otherwise voluntary terminates
his
employment by the Corporation at any time (except for Good Reason),
or if
the Corporation rightfully terminates the Executive’s employment for
Cause, the Corporation thereafter shall have no obligation to make
any
further payments under this Agreement.
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| (d.) |
If
Executive is suspended and/or prohibited from participating in the
conduct
of the Corporation’s affairs by a notice served under the Federal Deposit
Insurance Act or any other regulatory authority, the Corporation’s
obligations under this agreement shall be terminated.
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10. CHANGE
OF CONTROL:
(a) If
the
Executive's employment terminates for any reason other than for Cause or
voluntary resignation during the term of this Agreement and any renewal term
following a Change of Control, the Corporation shall
(i) On
or
before the Executive's last day of employment with the Corporation (in addition
to all other payments
and benefits to which the Executive is entitled under any other contract) pay
to
the Executive as compensation for services rendered to it a cash amount (subject
to any applicable payroll or other taxes required to be withheld) equal to
two
(2.00) times the Executive's salary and bonus received during the twelve (12)
months ending with the termination of the Executive's employment, provided
that,
at the option of the Executive, the cash amount required to be paid hereby
shall
be paid by the Corporation in equal monthly installments over the twenty-four
(24) months succeeding the date of termination, payable on the first day of
each such
month.
(b)
For
purposes of this Agreement, a "Change of Control" shall mean (i) the acquisition
by any "person" or "group" (as defined in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 ("Exchange Act")), other than the Corporation,
any subsidiary of the Corporation or any Corporation's or subsidiary's employee
benefit plan, directly or indirectly, as "beneficial owner" (as defined in
Rule
13d-3 under the Exchange Act) of securities of the Corporation representing
fifty percent (50%) or more of either the then outstanding shares or the
combined voting power of the then outstanding securities of the Corporation;
(ii) or other business combination of the Corporation with any other "person"
or
"group" (as defined in Sections 13(d) and 14(d) of the Exchange Act) or
affiliate thereof, other than a merger or consolidation that would result in
the
outstanding common stock of the Corporation immediately prior thereto continuing
to represent either by remaining outstanding or by being converted into common
stock of the surviving entity or a parent or affiliate thereof, at least fifth
percent (50%) of the outstanding common stock of the Corporation or such
surviving entity or a parent or affiliate thereof outstanding immediately after
such merger, consolidation or other business combination, or (iii) a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the Corporation's
assets; or (iv) any other event or circumstance which is not covered by the
foregoing subsections but which the Board of Directors of the Corporation
determines to affect control of the Corporation and with respect to which the
Board of Directors adopts a resolution that the event or circumstance
constitutes a Change of Control for purposes of the Agreement. Notwithstanding
the foregoing, an acquisition by the Corporation of another corporation, a
financial or structural reorganization of the Corporation, or the creation
by
the Corporation of a bank holding company of which it is a subsidiary shall
not
be considered to result in a change of control.
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11. COVENANTS:
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(a.)
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The
Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise;
provided, if Executive secures other full time employment after a
termination without Cause or a resignation for Good Reason (other
than
self employment or employment by an entity he owns or controls),
the
obligations of the Corporation under Section 8(a) shall be reduced
dollar
for dollar by the cash compensation received by the Executive from
such
other employment. This Section 11(a) shall not be interpreted to
require
or permit any reduction of benefits to which the Executive may be
entitled
under Section 10.
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(b.)
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During
the period of Executive’s employment hereunder and for a period of one
year after termination or expiration of such employment for any reason,
the Executive agrees that neither he nor any corporation, partnership
or
business he owns, controls or participates in shall for himself,
or on
behalf of or in conjunction with any other person, partnership or
corporation directly or indirectly (i) solicit or attempt to solicit
any
customer, independent contractor, employee or officer of the Corporation
for the purpose of employing such person or causing him or her to
terminate their relationship or employment with the Corporation,
or (ii)
solicit or attempt to solicit any current customer of the Corporation
for
services provided by the
Corporation.
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(c.)
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The
Executive covenants that he is not the subject of any contract that
prevents him from executing this Agreement and performing the duties
of
Senior
Vice President.
The executive further covenants that he is not subject to any covenants
or
obligations not to compete and is not subject to any other restrictions
or
obligations which would prevent him from fulfilling the duties specified
in this agreement.
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12. NOTICES:
For the
purposes of this Agreement, notices and all other communications provided for
in
the Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
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If
to the Executive:
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Xxxxxxx
X. Xxxxxxxx
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0000
Xxxxxxxx Xxxx Xxxxx
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Xxxxxxxxxxxxxx,
Xxxxxxxx 00000
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If
to the Corporation:
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Xxxxxx
X. Xxxxxxx, Chief Executive Xxxxxxx
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Xxxxxxx
Xxxx
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X.
X. Xxx 000
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Xxxxxxxxxx,
Xxxxxxxx 00000
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With
a copy to:
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Xxxxx
X. Xxxx, Esquire
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McGuireWoods
LLP
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000
Xxxx Xxxx Xxxxxx
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Xxxxxxxx,
Xxxxxxxx 00000-0000
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or
at
such other address as any party may have furnished to the other in writing
in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
13. MODIFICATION
- WAIVERS - APPLICABLE LAW:
No
provisions of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing, signed by the
Executive and on behalf of the Corporation by such officer as may be
specifically designated by the Board of Directors of the Corporation. No waiver
by either party hereto at any time of any breach by the other party hereto
of,
or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provision
or conditions at the same or at any prior or subsequent time. No agreements
or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party, which are not set forth
expressly in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the Commonwealth
of Virginia.
14. INVALIDITY
- ENFORCEABILITY - SEVERABILITY:
The
invalidity or unenforceability of any provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect. Any provision in this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective only to the extent of such prohibition or
unenforceability without invalidating or affecting the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
In
the
event that a court of competent jurisdiction determines that any portion of
this
Agreement is in violation of any law or public policy, only the portions of
this
Agreement that violate such law or public policy shall be stricken. All portions
of this Agreement that do not violate any statute or public policy shall
continue in full force and effect. Further, any court order striking any portion
of this Agreement shall modify the stricken terms as narrowly as possible to
give as much effect as possible to the intentions of the parties under this
Agreement.
15. SUCCESSOR
RIGHTS:
This
Agreement shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If Executive should die while any amounts
would still be payable to him hereunder, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement
to
his executor or, if there is no such executor, to his estate.
16. HEADINGS:
Descriptive headings contained in this Agreement are for convenience only and
shall not control or affect the meaning or construction of any provision
hereof.
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17. ARBITRATION:
Any
dispute, controversy or claim arising under or in connection with this Agreement
shall be settled exclusively by arbitration, conducted before a panel of three
arbitrators, in Richmond, Virginia in accordance with the Commercial Arbitration
Rules of the American Arbitration Association then in effect. The Corporation
shall pay all administrative fees associated with such arbitration. Judgment
may
be entered on the arbitrators’ award in any court having jurisdiction. Subject
to Section 11(a), unless otherwise provided in the rules of the American
Arbitration Association, the arbitrators shall, in their award, allocate between
the parties the costs of arbitration, which shall include reasonable attorneys'
fees and expenses of the parties, as well as the arbitrators’ fees and expenses,
in such proportions as the arbitrators deem just.
18. CONFIDENTIALITY:
(a) The
Executive acknowledges that the Corporation may disclose certain confidential
information to the Executive during the term of this Agreement to enable him
to
perform his duties hereunder. The Executive hereby covenants and agrees that
he
will not, without the prior written consent of the Corporation, during the
term
of this Agreement or at any time thereafter, disclose or permit to be disclosed
to any third party by any method whatsoever any of the Confidential Information
of the Corporation. For purposes of this Agreement, "Confidential Information"
shall include, but not be limited to, any and all records, notes, memoranda,
data, ideas, processes, methods, techniques, systems, formulas, patents, models,
devices, programs, computer software, writings, research, personnel information,
customer information, the Corporation's financial information, plans, or any
other information of whatever nature in the possession or control of the
Corporation which has not been published or disclosed to the general public,
or
which gives to the Corporation an opportunity to obtain an advantage over
competitors who do not know of or use it. The Executive further agrees that
if
his employment hereunder is terminated for any reason, he will leave with the
Corporation and will not take originals or copies of any and all records,
papers, programs, computer software and documents and all matter of whatever
nature which bears secret or confidential information of the
Corporation.
The
foregoing paragraph shall not be applicable if and to the extent the Executive
is required to testify in a judicial or regulatory proceeding pursuant to an
order of a judge or administrative law judge issued after the Executive and
his
legal counsel urge that the aforementioned confidentiality be
preserved.
The
foregoing covenants will not prohibit the Executive from disclosing confidential
or other information to other employees of the Corporation or any third parties
to the extent that such disclosure is necessary to the performance of his duties
under this Agreement.
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IN
WITNESS WHEREOF,
the
parties have executed this Agreement effective as of the date first above
written.
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"EXECUTIVE"
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ATTEST:
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By:
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Xxxxxxx
X. Xxxxxxxx
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VILLAGE
BANK
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ATTEST:
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By:
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AUTHORIZED
OFFICER
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Xxxxxx
X. Xxxxxxx
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CHIEF
EXECUTIVE OFFICER
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