AMENDED AND RESTATED EMPLOYMENT AGREEMENT
EXHIBIT 10.2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, entered into as of the day of ,
2008, provided, however, that all provisions applicable to compliance under Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”) shall be effective as of January 1, 2005, by
and between MARATHON FINANCIAL CORPORATION, a Virginia corporation, predecessor by merger to
PREMIER COMMUNITY BANKSHARES, INC., a Virginia corporation, predecessor by merger to XXXXXX XXXXX
BANKSHARES, INC. (the “Corporation”), UNITED BANKSHARES, INC. (“United”) and XXXXXX X. XXXXX (the
“Executive”).
WITNESSETH:
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 and United have approved this Employment Agreement and authorized its execution and
delivery on the Corporation and United’s behalf to the Executive; and
WHEREAS, prior to July 13, 2007, the Executive was the duly elected and acting President and
Chief Executive Officer of the Corporation and, as such, his advice and counsel to the Corporation
is deemed important to the Board of Directors of the Corporation, the Corporation, United and its
stockholders; and
WHEREAS, prior to July 13, 2007, the services of the Executive, and, from and after July 13,
2007, his experience and knowledge of the affairs of the Corporation, and his reputation and
contacts in the industry are extremely 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 have secured the continued
services of the Executive up to July 13, 2007, and to offer Executive the opportunity, but not to
require Executive, to continue performing certain services thereafter; and
WHEREAS, the Corporation considers the establishment and maintenance of a sound and vital
management to be part of its overall corporate strategy and to be essential to protecting and
enhancing the best interests of the Corporation, United and its stockholders; and
WHEREAS, the Corporation, by Marathon Financial Corporation, predecessor by merger to Premier
Community Bankshares, Inc., predecessor by merger to the Corporation, entered into an Employment
Agreement with the Executive dated April 1, 1998;
WHEREAS, by this Agreement, the Corporation, United and the Executive desire to amend and
restate the Employment Agreement, and for the purpose of complying with the requirements of Code
Section 409A, and for the purpose of setting forth, in writing, certain additional agreements
entered into between the Executive, the Corporation and United in 2007 and 2008, and the
Corporation, United and the Executive intend this amendment to comply with Transition Relief
promulgated by the Internal Revenue Service pursuant to Code Section 409A, and accordingly,
notwithstanding any other provisions of this Amended and Restated Agreement, this amendment applies
only to amounts that would not otherwise be payable in 2006, 2007 or 2008 (except for payments to
be made in 2007 and 2008 under Section 4 of this Agreement,) and shall not cause (i) an amount to
be paid in 2006 that would not otherwise be payable in such year, (ii) an amount to be paid in 2007
that would not otherwise be payable in such year, (other than any payments made in 2007 under
Section 4) or (iii) an amount to be paid in 2008 that would not otherwise be payable in such year,
(other than any payments made in 2008 pursuant to Section 8(d) or any payment made in 2008 under
Section 4,) and, to the extent necessary, to qualify under Transition Relief issued under said Code
Section 409A, to not be treated as a change in the form and timing of a payment under section
409A(a)(4) or an acceleration of a payment under section 409A(a)(3), the Executive, by executing
this amended and restated Agreement, shall be deemed to have elected, on or before December 31,
2008, the timing and form of distribution provisions of this Amended and Restated Agreement, and to
have otherwise further revised this Agreement, all prior to December 31, 2008,
NOW, THEREFORE, to assure the Corporation of the Executive’s continued dedication, prior to
July 13, 2007, and to offer to Executive the opportunity to provide thereafter the benefit of his
advice and counsel to the Board of Directors of the Corporation, and to induce the Executive to
remain and continue in the employ of the Corporation prior to July 13, 2007 and to offer Executive
the opportunity, but not to require, Executive to perform services thereafter, and for other good
and valuable consideration, the receipt and adequacy whereof each party hereby acknowledges, the
Corporation, United and the Executive hereby agree as follows:
1. EMPLOYMENT:
(a) In General. The Corporation agrees to, and does hereby employ the Executive, and the
Executive agrees to, and does hereby accept such employment, for the period beginning as of the
date hereof and ending on March 31, 1999, which period of employment may be extended or terminated
only upon the terms and conditions hereinafter set forth. Notwithstanding the foregoing, the
Corporation, United and the Executive acknowledge and agree that this Agreement was extended for
successive one year periods up to and including the period from April 1, 2007 to April 2, 2008, but
that for the period from July 13, 2007 to July 13, 2009, Executive is not required to perform
services hereunder, but may do so in his discretion, unless and until (i) resignation by Executive
(ii) termination of Executive by the Corporation or United, (iii) Disability or death of Executive
or (iv) July 13, 2009, whichever is earlier.
(b) Specified Employee. The Executive is a “Specified Employee” if the Executive shall meet
the requirements of Code Section 416(i)(1)(A)(i), (ii) or (iii) (applied in accordance with the
regulations thereunder and disregarding section 416(i)(5)) at any time during the 12-month period
ending on any Specified Employee Identification Date, which shall be December 31 of each calendar
year (or otherwise meeting the requirements applicable to qualification as a “Specified Employee”
under Code Section 409A and the regulations and guidance issued thereunder) that the Executive
shall, in such event, for purposes of this Agreement, thereafter be a Specified Employee under this
Agreement for the period of time consisting of the entire 12-month period beginning on the
Specified Employee Effective Date, and said Specified Employee Effective Date shall be the first
day of the fourth month following the Specified Employee Identification Date.
(c) Separation from Service. “Separation from Service” or termination of employment means the
severance of the Executive’s employment with the Corporation, United or any
Affiliate for any reason. The Executive separates from service with the Corporation, United or any Affiliate if he
dies, retires, separates from service because of the Executive’s Disability, or otherwise has a
termination of employment with the Corporation, United or Affiliate. However, the employment
relationship is treated as continuing intact while the Executive is on military leave, sick leave,
or other bona fide leave of absence if the period of such leave does not exceed six months, or if
longer, so long as the Executive’s right to reemployment with the Corporation, United or Affiliate
is provided either by statute or by contract. If the period of leave exceeds six months and the
Executive’s right to reemployment is not provided either by statute or by contract, the employment
relationship is deemed to terminate on the first date immediately following such six-month period.
Notwithstanding the foregoing, where a leave of absence is due to any medically determinable
physical or mental impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than six months, where such impairment causes the employee to
be unable to perform the duties of his position of employment or any substantially similar position
of employment, a 29-month period of absence shall be substituted for such six-month period. In
addition, notwithstanding any of the foregoing, the term “Separation from Service” shall be
interpreted under this Agreement in a manner consistent with the requirements of Code Section 409A
including, but not limited to, (i) an examination of the relevant facts and circumstances, as set
forth in Code Section 409A and the regulations and guidance thereunder, in the case of any
performance of services or availability to perform services after a purported termination or
Separation from Service, and in the event the level of services performed by Executive permanently
decreases to no more than 20 percent of the average level of bona fide services performed for the
Corporation, United or any affiliate, (whether as an employee or an independent contractor,) over
the immediately preceding 36-month period, the Executive shall be presumed to have a Separation
from Service, (ii) in any instance in which the Executive is participating or has at any time
participated in any other plan which is, under the aggregation rules of Code Section 409A and the
regulations and guidance issued thereunder, aggregated with this Agreement and with respect to
which amounts deferred hereunder and under such other plan or plans are treated as deferred under a
single plan (hereinafter sometimes referred to as an “Aggregated Plan” or together as the
“Aggregated Plans”), then in such instance the Executive shall only be considered to meet the
requirements of a Separation from Service hereunder if the Executive meets (a) the requirements of
a Separation from Service under all such Aggregated Plans and (b) the requirements of a Separation
from Service under this Agreement which would otherwise apply (iii) in any instance in which the
Executive is an employee and an independent contractor of the Corporation, United or any Affiliate
or both, the Executive must have a Separation from Service in all such capacities to meet the
requirements of a Separation from Service hereunder, although, notwithstanding the foregoing, if
the Executive provides services both as an employee and a member of the Board of Directors of the
Corporation, United or any Affiliate or both or any combination thereof, the services provided as a
director are not taken into account in determining whether the Executive has had a Separation from
Service as an employee under this Agreement, provided that no plan in which the Executive
participates or has participated in his capacity as a director is an Aggregated Plan and (iv) a
determination of whether a Separation from Service has occurred shall be made in accordance with
Treasury Regulations Section 1.409A-1(h)(4) or any similar or successor law, regulation of guidance
of like import, in the event of an asset purchase transaction as described therein.
2. RENEWAL TERM: This Agreement may be renewed and extended for successive terms of
12 months each by an appropriate written instrument executed by the Executive and on behalf of the
Corporation or United. Any decision by the Corporation or United to renew and extend this
Agreement shall not bind the Corporation or United unless such decision is reviewed and
approved by the Board of Directors of the Corporation or United. If this Agreement is neither renewed and
extended in writing before the end of its term or any renewal term nor expressly terminated, it
shall automatically renew for successive one-year periods. Notwithstanding the foregoing, the
Corporation, United and the Executive acknowledge and agree that this Agreement was extended for
successive one year periods up to and including the period from April 1, 2007 to April 2, 2008, but
that from and after July 13, 2007, for the period from July 13, 2007 to July 13, 2009, or any part
thereof, Executive is not required to perform services hereunder, but may do so in his discretion,
unless and until (i) resignation by Executive (ii) termination of Executive by the Corporation or
United, (iii) Disability or death of Executive or (iv) July 13, 2009, whichever is earlier, and
that this Agreement shall thereupon terminate, subject to fulfillment of provisions of this
Agreement which by their terms impose obligations after termination, as the case may be.
3. EXECUTIVE DUTIES: The Executive agrees that, during the term of his employment
under this Agreement and in his capacity as President and Chief Executive Officer, 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 the
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 its Board of Directors
or by United’s Board of Directors. Notwithstanding the foregoing, the Corporation, United and the
Executive acknowledge and agree that this Agreement was extended for successive one year periods up
to and including the period from April 1, 2007 to April 2, 2008, but that from and after July 13,
2007, for the period from July 13, 2007 to July 13, 2009, Executive is not required to perform
services hereunder, but may do so in his discretion, unless and until (i) resignation by Executive
(ii) termination of Executive by the Corporation or United, (iii) Disability or death of Executive
or (iv) July 13, 2009, whichever is earlier.
4. COMPENSATION:
(a) The Corporation agrees to pay the Executive, and the 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 Eight Thousand
Dollars ($108,000.00), which shall be payable in monthly, semi-monthly or bi-weekly installments in
conformity with the Corporation’s policy relating to salaried employees. Such salary may be
increased in the sole and absolute discretion of the Corporation’s or United’s Board of Directors
or Committee thereof duly authorized by the Board to so act; provided, however, that said annual
salary, after being so increased, shall not be decreased without prior written consent of the
Executive. Notwithstanding the foregoing, from and after the Change of Control on July 13, 2007,
for the period from July 13, 2007 to July 13, 2009, regardless of whether or not the Executive
performs any services during such period or any part thereof, and regardless of any termination of
this Agreement, other than a termination of the Executive for Cause, but ‘for Cause’ shall not
include a termination for failure to perform services hereunder, the Corporation and United
acknowledge and agree that Executive shall receive payment of salary hereunder for such period from
July 13, 2007 to July 13, 2009.
(b) The Board of Directors of the Corporation or United from time to time may authorize the
payment of cash bonuses to the Executive. In lieu of cash payments, the Board of Directors shall
select a bonus value and the Corporation may grant to the Executive an option to purchase common
stock of the Corporation or United at the fair market value per share of such stock at
the date of grant. The duration of any such stock option shall be fixed at the date of grant and the fixed
period shall be not less than five (5) years or more than ten (10) years in the discretion of the
Board of Directors. The value of any such option shall be equal or approximately equal to the
bonus value selected by the Board of Directors. After the Board of Directors has selected the
bonus value and the duration of the option, the independent certified public accountants regularly
engaged by the Corporation or United shall compute the number of shares of the Corporation or
United common stock to be covered by the option, employing the same method used by the Corporation
or United to value the stock options for financial accounting purposes. Any bonus awarded
hereunder, if any, in respect of services rendered by Executive during a calendar year shall be
payable by the Corporation or United, as the case may be, to Executive on or before the fifteenth
day of the third calendar month after such calendar year.
(c) The Executive may elect to defer a portion of his annual salary and/or bonus into a
deferred compensation plan other than the 401(k).
5. PARTICIPATION IN BENEFIT PLANS, REIMBURSEMENT OF BUSINESS EXPENSES AND MOVING
EXPENSES:
(a) During the term of employment under this Agreement, the 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, the Corporation’s stock option plans) according to the terms of the applicable plan
documents or hereafter adopted by the Corporation and generally available to any employees of
senior executive status and, additionally, the Executive shall be entitled to have the use of the
Corporation’s facilities and executive benefits as are customarily made available by the
Corporation to its executive officers. Prior to Separation of Service of Executive, the
Corporation shall continue to provide the Executive a motor vehicle for personal and business use.
(b) 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, all provided such expense is incurred by the Executive prior
to July 13, 2009. The reimbursement of an eligible expense shall be made by the Corporation no
later than the last day of Executive’s taxable year during which the expense was incurred or, if
later, the fifteenth day of the third month after such expense was incurred, and the Executive is
required to request reimbursement and substantiate any such expense no later than ten days prior to
the last date on which the Corporation is required to provide reimbursement for such expense
hereunder. The amount of expenses eligible for reimbursement, or in-kind benefits provided, during
the Executive’s taxable year shall not affect the expenses eligible for reimbursement, or in-kind
benefits to be provided, in any other taxable year. The right to reimbursement or in-kind benefits
under this Agreement is not subject to liquidation
or exchange for another benefit. In addition, the right to reimbursement or in-kind benefits
under this Agreement is all subject to the provisions of Section 8(d) so that in the event that any
reimbursement would be payable hereunder on or before the date which is six months after a
Separation of Service of the Executive other than by death, if the Executive is a Specified
Employee on such date, such
payment shall instead be made on the date which is six months after the
date of such Separation of Service of the Executive other than by death.
6. ILLNESS: In the event the Executive is unable to perform his duties under this
Agreement on a full-time basis for a period of six (6) 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. “Disability” or “Disabled” shall mean that the Executive (i)
is unable to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of
any medically determinable physical or mental impairment which can be expected to result in death
or has lasted or can be expected to last for a continuous period of not less than 12 months,
receiving income replacement benefits for a period of not less than 3 months under an accident and
health plan covering employees of the Corporation or an Affiliate. In addition, notwithstanding
any of the foregoing, the terms “Disability” and “Disabled” shall be interpreted under this
Agreement in a manner consistent with the requirements of Code Section 409A.
7. DEATH: In the event of the Executive’s death during the term of this Agreement,
his estate, legal representatives or named beneficiaries (as directed by the Executive in writing)
shall be paid, on the date of death, provided, however, that in accordance with Code Section 409A
and to the extent permitted by regulations and guidance issued thereunder, a payment shall be
treated as having been made on a date specified in this Agreement if it is made on a later date
within the Executive’s same taxable year as the designated date, or, if later, if made no later
than the fifteenth day of the third month after such designated date, provided that, in any event,
the Executive is not permitted, directly or indirectly, to designate the taxable year of any
payment, in a lump sum, the cash equivalent of the Executive’s compensation from the Corporation at
the rate in effect at the time of the Executive’s death for a period of one (1) month from the date
of the Executive’s death.
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) Starting on the date of Executive’s Separation from Service pursuant to this Section 8(a),
all subject to the provisions of Section 8(d) below, the Executive shall be paid for the remainder
of the then current term of this Agreement, in monthly installments, 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; provided, however that if
Executive’s Separation from Service shall occur after July 13, 2007, the Executive, the Corporation
and United acknowledge and agree that payment shall be made to Executive solely under Section 4 and
that payment, made under Section 4 shall be the only payment due to Executive under Section 4 and
this Section 8(a)(i), as Executive is entitled to receive payments under Section 4, for the period
July 13, 2007 to July 13, 2009, even if a termination or Separation from Service occurs, and
(ii) The Executive will continue to participate, without discrimination, for the period of
time during which the Executive would be entitled (or would, but for such plan, be entitled) to
continuation coverage under a group health plan of the service recipient under Code section 4980B
(COBRA) if the Executive elected such coverage and paid the applicable premiums, but in no event
shall such period exceed the remainder of the then current term of this Agreement had such
termination not occurred, in any plan of disability insurance and any plan of medical insurance
maintained after any such Separation from Service pursuant to this Section 8(d) for employees, in
general, of the Corporation, or any successor organization, provided the Executive’s continued
participation is possible under the general terms and conditions of such plans. In the event the
Executive’s participation in any such plan is barred, the Corporation shall arrange to provide the
Executive, for the period of time during which the Executive would be entitled (or would, but for
such plan, be entitled) to continuation coverage under a group health plan of the service recipient
under Code Section 4980B (COBRA) if the Executive elected such coverage and paid the applicable
premiums, but in no event shall such period exceed the remainder of the then current term of this
Agreement following the Date of Separation from Service, with medical expense or reimbursement
benefits substantially similar to those which the Executive would have been entitled had his
participation not been barred, provided the cost of providing such benefits does not exceed 200% of
the Corporation’s cost at the date the Executive’s employment terminates. However, in no event
will the Executive receive from the Corporation the employee benefits contemplated by this section
if the Executive receives comparable benefits from any other source. In addition, the amount of
expenses eligible for reimbursement, or in-kind benefits provided hereunder, if any, during the
Executive’s taxable year may not affect the expenses eligible for reimbursement, or in-kind
benefits to be provided, in any other taxable year, any reimbursement of an eligible expense
hereunder must be made on or before the last day of the Executive’s taxable year following the
taxable year in which the expense was incurred and the right to reimbursement or in-kind benefits
is not subject to liquidation or exchange for any other benefit, and if any such reimbursement of
expenses or in-kind benefit payment is deferred compensation within the meaning of Code Section
409A and the regulations thereunder, then such reimbursement or such in-kind benefit payment shall
be subject to the provisions of Section 8 (d) below, and
(b) For purposes of this Agreement, “Good Reason” shall mean:
(i) The assignment of duties to the Executive by the Corporation which are materially
different from the Executive’s duties on the date hereof, or result in the Executive having
significantly less authority and/or responsibility than he has on the date hereof, without his
express written consent; or
(ii) The removal of the Executive from or any failure to re-elect him to the position of
President and Chief Executive Officer 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
(iii) A reduction by the Corporation of the Executive’s base salary, as the same may have been
increased from time to time; or (iv) The failure of the Corporation to provide the Executive with
substantially the same or comparable 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; or
(c) Resignation by the Executive for Good Reason shall be communicated by a written Notice of
Resignation to the Corporation. 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) Six Month Delay for Payment after Termination of Employment or Separation from Service of
Any Specified Employee. Notwithstanding the provisions of this Section 8, or any other provision
of this Agreement, if any payment is to be made under this Section 8 or any other provision of this
Agreement, to the Executive upon or based upon Separation from Service other by death, in the event
that the Executive is a Specified Employee on the date of the Executive’s termination of employment
or Separation from Service, and such payment is to be made to the Executive upon or within six
months after the Executive’s termination of employment or Separation from Service, other than by
death, then such payment shall instead be made on the date which is six months after such
termination of employment or Separation from Service of Executive (other than by death), provided,
further, however, that in the case of any monthly or other installments to be paid upon or based
upon termination of employment or Separation from Service other than by death, if any such monthly
or other installments are to be paid on or before the date which is six months after the
Executive’s termination of employment or Separation from Service, other than by death, (in the
event that the Executive is a Specified Employee on the date of the Executive’s termination of
employment or Separation from Service other than by death), the first such installment shall be
paid on the date which is six months after such Separation from Service of the Executive (other
than by death), with the monthly (or other interval, as the case may be) installments to continue
thereafter. Notwithstanding any of the foregoing, or any other provision of this Agreement, no
payment upon or based upon Separation from Service or termination of employment may be made under
this Agreement before the date that is six months after the date of Separation from Service or, if
earlier, the date of death of the Executive in the event that the Executive is a Specified Employee
on the Executive’s of Separation from Service.
9. RESIGNATION — TERMINATION FOR CAUSE:
Notwithstanding the provisions 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.
“Termination for cause” shall mean termination because of: (1) the Executive’s act or acts of
dishonesty which are intended to result in the Executive’s substantial personal gain at the expense
of the Employer; or (2) the willful and repeated failure by the Executive to substantially
perform his duties with the Employer after a written demand for substantial performance is delivered to the
Executive by the Employer which specifically identifies the manner in which the Employer believes
that the Executive has not substantially performed his duties; or (3) the Executive’s deliberate
violation of a company rule reasonably designed to protect the legitimate business interest of the
Employer; or (4) the Executive’s unprofessional or unethical acts, or conduct which actually has,
or has the significant likelihood of, discrediting the Employer or damaging the Employer’s
reputation, character and standing; or (5) a material breach of any provision of this Agreement; or
(6) a knowing violation by the Executive of any banking law or regulation that results in material
damage to the Corporation or any bank controlled by the Corporation.
No act or omission to act on the Executive’s behalf in reliance upon an opinion of counsel to
the Corporation or counsel to the Executive shall be deemed to be willful. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to him a copy of a certification by a majority of the non-officer
members of the Board of Directors of the Corporation finding that, in the good faith opinion of
such majority, the Executive was guilty of conduct which is deemed to be Cause and specifying the
particulars thereof in detail, after reasonable notice to the Executive and an opportunity for him,
together with his counsel, to be heard before such majority.
Termination of the Executive’s employment by the Corporation for Cause pursuant to Section 9
shall be communicated by written Notice of Termination to the Executive. A “Notice of Termination”
shall mean a notice, which shall indicate the specific termination provision(s) in this Agreement,
relied upon and shall set forth with particularity the facts and circumstances claimed to provide a
basis for termination of employment for Cause under the provision so indicated.
In the event that the Executive resigns from or otherwise voluntarily terminates his
employment by the Corporation at any time (except a termination for Good Reason pursuant to Section
8 hereof), or if the Corporation rightfully terminates the Executive’s employment for Cause, this
Agreement shall terminate upon the date of such resignation or termination of employment for Cause
and the Corporation thereafter shall have no obligation to make any further payments under this
Agreement, provided that the Executive shall be entitled to receive any benefits, insured or
otherwise, that he would otherwise be eligible to receive under any benefit plans of the
Corporation or any affiliate of the Corporation.
10. CHANGE OF CONTROL:
(a) If the Executive’s employment terminates for any reason other than for Cause during the
term of this Agreement and any renewal term within two years following a Change of Control on the
Executive’s date of Separation from Service, subject to the provisions of Section 8(d), (in
addition to all other payments to which the Executive is entitled under this Agreement) the
Corporation shall 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) in a lump sum equal to
the greater of:
(i) the amounts to which the Executive would be entitled under Section 8(a), even if the
Executive resigns without Good Reason within two years after a Change of Control; or
(ii) the product of his annual salary and the multiple of the book value per share of the
Corporation’s common stock received by the Corporation’s shareholders in connection with such
change of control, provided such multiple shall not exceed three (3.0). For example, if the
Corporation is acquired by another corporation and the exchange ratio for the Corporation’s common
stock is based on a calculation which values the Corporation at one and one-half times its book
value, the executive’s payment pursuant to this Section 10(a) would be 150% of his then current
annual salary.
(b) For purposes of this Agreement, a Change of Control shall mean with respect to (i) the
Corporation, United or an Affiliate for whom the Executive is performing services at the time of
the Change in Control Event; (ii) the Corporation, United or any Affiliate that is liable for the
payment to the Executive hereunder (or all corporations liable for the payment if more than one
corporation is liable) but only if either the deferred compensation is attributable to the
performance of service by the Executive for such corporation (or corporations) or there is a bona
fide business purpose for such corporation or corporations to be liable for such payment and, in
either case, no significant purpose of making such corporation or corporations liable for such
payment is the avoidance of Federal Income tax; or (iii) a corporation that is a majority
shareholder of a corporation identified in paragraph (i) or (ii) of this section, or any
corporation in a chain of corporations in which each corporation is a majority shareholder of
another corporation in the chain, ending in a corporation identified in paragraph (i) or (ii) of
this section, a Change in Ownership or Effective Control of the corporation, as defined in Section
409A of the Code, and the regulations or guidance issued by the Internal Revenue Service
thereunder, meeting the requirements of such Change in Ownership of the corporation or Change in
Effective Control of the corporation as a “Change in Control Event” thereunder.
(c) Upon a Change of Control, all stock options granted to the Executive under any of the
Corporation’s stock option plans, or any successor thereto, shall become immediately exercisable
with respect to all or any portion of the shares covered thereby regardless of whether such options
are otherwise exercisable or vested.
11. LITIGATION — OBLIGATIONS — SUCCESSORS:
If litigation shall be brought to challenge, enforce or interpret any provision of this
Agreement, and such litigation does not end with judgment in favor of the Corporation, the
Corporation hereby agrees to indemnify the Executive for his reasonable attorney’s fees and
disbursements incurred in such litigation, and hereby agrees to pay post-judgment interest on any
money judgment obtained by the Executive calculated at the rate charged from time to time by the
Corporation, to its most substantial customers for unsecured extensions of credit from the date
that payment(s) to him should have been made under the judgment to date of payment.
The Corporation’s obligation to pay the Executive the compensation and benefits and to make
the arrangements provided herein shall be absolute and unconditional and shall not be affected by
any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or
other right which the Corporation may have against him or anyone else. All amounts payable by the
Corporation hereunder shall be paid without notice or demand. The Executive shall not be required
to mitigate the amount of any payment provided for in this Agreement by seeking other employment
or otherwise.
The Corporation will 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
Corporation, or either one of them, by agreement in form and substance satisfactory to the
Executive, to expressly assume and agree to perform this Agreement in its entirety. Failure of the
Corporation to obtain such agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement by the Corporation. As used in this Agreement, “Corporation” shall mean
Xxxxxx Xxxxx Bankshares, Inc. and any successor to its respective business and/or assets as
aforesaid which executes and delivers the agreement provided for in this Section 11 or which
otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.
12. LIMITATION OF BENEFITS:
If the independent accountants serving as auditors for the Corporation on the date of a Change
of Control (or the Internal Revenue Service upon examination of the tax returns of the Corporation
or the Executive) determine that some or all of the payments or benefits scheduled under this
Agreement, as well as any other payments or benefits contingent on a Change of Control, constitute
an “excess parachute payment” within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the Code), and any regulations thereunder, thereby resulting in a loss of an
income tax deduction by the Corporation or the imposition of an excise tax on the Executive under
Section 4999 of the Code (the “Excise Tax”), then the payments scheduled under this Agreement shall
be reduced to one dollar less than the maximum amount which may be paid without causing any such
payment or benefit to be nondeductible and subject to the Excise Tax.
13. 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:
If to the Executive:
|
000 Xxxxx Xxxxx Xxxxxxxxxx, Xxxxxxxx 00000 |
|
If to the Corporation:
|
Xxxxxx Xxxxx Bankshares, Inc. |
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.
14. 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, all provided that (i) no such
amendment shall be effective if it would, if effective, cause this Agreement to violate Code
Section 409A and the regulations and guidance thereunder or cause any amount of compensation or
payment hereunder to be subject to a penalty tax under Code Section 409A and the regulations and
guidance issued thereunder, which amount of compensation or payment would not have been subject to
a penalty tax under Code Section 409A and the regulations and guidance thereunder in the absence of
such amendment, and (ii) the provisions of this paragraph are irrevocable. No waiver by either
party
hereto, at any time of any breach by the other party hereto of, or in 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 State of Virginia.
15. INVALIDITY — ENFORCEABILITY: 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.
16. 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 the 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 devisee, legatee or other designee or, if there
is no such designee, to his estate.
17. 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.
18. CONFIDENTIALITY-NONSOLICITATION NONCOMPETITION:
(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 United or 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 United or 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.
(b) Subject to Section 18(d), during the term of his employment with the Corporation, and for
a period of two years following the termination thereof for any reason or for a period of two years
from the date of entry by a court of competent jurisdiction of a final judgment enforcing this
covenant or any portion thereof, whichever is later, Executive covenants and agrees:
(i) Executive shall not, without the prior written consent of the Corporation, directly or
indirectly engage or be interested in any bank, bank holding company or other enterprise which
engages, anywhere within a radius of fifty (50) miles of an office maintained by the Corporation,
in a business which markets, distributes, sells or otherwise provides products or services which
are competitive with those products or services marketed, distributed, sold or provided by the
Corporation or any of its subsidiaries. Executive shall be deemed to be directly or indirectly
interested in a corporation, firm or other enterprise if he is engaged or interested in the
business as an owner, principal, agent, employee, partner, consultant, investor, stockholder,
trustee, creditor, director or officer. This restriction shall not preclude Executive from merely
becoming the holder of any publicly traded stock, provided Executive does not acquire a stock
interest in excess of five percent. Executive further covenants and agrees that during such time
and within such area he will not solicit any existing or former customer of the Corporation for any
competing business.
(ii) Executive shall not, without the prior written consent of the Corporation, directly or
indirectly, employ or solicit any of the employees of the Corporation who were employed by the
Corporation during the time when the Executive was employed by the Corporation, to leave the
Corporation. Further, during the same period Executive shall not induce, solicit, or advise any
other person or entity, or encourage or contribute to the efforts of any such person or entity, to
employ or solicit the employment of any person employed by the Corporation during the time when the
Executive was employed by the Corporation.
(c) The parties hereto agree that given the nature of the position held by Executive with the
Corporation, the covenants and restrictions set forth in Sections 18(a) and 18(b) above are
reasonable and necessary for the protection of the significant investment of the Corporation in
developing, maintaining and expanding its business. Accordingly, the parties hereto agree,
notwithstanding any other provision of this Agreement, that in the event of any breach by Executive
of any of the provisions of Section 18(a) and 18 (b) above, that monetary damages alone will not
adequately compensate the Corporation for its losses and, therefore, that it may seek any and all
legal or equitable relief available to it, specifically including, but not limited to, injunctive
relief, without the necessity of bond, and may hold Executive liable for all damages, including
actual and consequential
damages, costs and expenses, including legal costs and reasonable attorneys’ fees incurred by
the Corporation as a result of such breach. Should a court of competent jurisdiction determine
that any provision of the covenants and restrictions set forth in Section 18(b) above is invalid or
unenforceable under applicable law by reason of the geographic or temporal scope of such provision
or the extent of any restriction imposed thereby, then the geographic or temporal scope of such
provision may be deemed modified by the court to reduce said geographic or temporal scope of such
provision, or the
extent of any unenforceable restriction, by such amount as is minimally necessary
to render such provision, as so amended, not invalid or unenforceable under applicable law. The
parties further acknowledge their intention that this Agreement shall be enforceable to the fullest
extent permitted by law.
(d) Section 18(b) shall not apply and shall not be enforceable against Executive by the
Corporation or any successor of the Corporation after any Change of Control (as defined in Section
10 of this Agreement).
19. COUNTERPARTS:
This agreement may be executed in one or more counterparts, which taken together shall
constitute an original.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written
| “EXECUTIVE” |
||||||
| ATTEST: | ||||||
| Xxxxxx X. Xxxxx | ||||||
| XXXXXX XXXXX BANKSHARES, INC. (“CORPORATION”) |
||||||
| ATTEST: | By: | |||||
| AUTHORIZED OFFICER | ||||||
| UNITED BANKSHARES, INC. |
||||||
| ATTEST: | By: | |||||
| AUTHORIZED OFFICER | ||||||
