Exhibit 10.1
MANAGEMENT CONTINUITY
AGREEMENT
This Management Continuity
Agreement, dated as of March 2, 2017 (“Agreement”), is by and between Virginia
National Bankshares Corporation, a Virginia corporation, and any successor
thereto (the “Company”), and
[Name
of Employee]
(the “Executive”).
1.
Purpose
The Company recognizes that
the possibility of a Change in Control exists and the uncertainty and questions
that it may raise among management may result in the departure or distraction of
management personnel to the detriment of the Company and its shareholders.
Accordingly, the purpose of this Agreement is to encourage the Executive to
continue employment with the Company and/or its affiliates or successors in
interest by merger or acquisition after a Change in Control by providing
reasonable employment security to the Executive and to recognize the prior
service of the Executive in the event of a termination of employment under
certain circumstances after a Change in Control.
2.
Term of the Agreement
The term of this Agreement
will be effective on the date set forth above (the “Effective Date”) and will
continue until December 31, 2019; provided however, that on December 31, 2018
and each December 31
st
thereafter (each such December 31
st
referred to as the “Renewal Date”), this Agreement will be automatically
extended for an additional calendar year so as to terminate two (2) years from
such Renewal Date. The Agreement will not, however, be extended if the Company
gives the Executive written notice of such non-renewal before the Renewal Date
(the initial and any extended term of this Agreement is referred to as the
“Change in Control Period”).
3.
Employment after a Change in Control
If a Change in Control of
the Company (as defined in Section 12) occurs during the Change in Control
Period and the Executive is employed by the Company on the date the Change in
Control occurs (the “Change in Control Date”), the Company will continue to
employ the Executive in accordance with the terms and conditions of this
Agreement for the period beginning on the Change in Control Date and ending on
the second anniversary of such date (the “Employment Period”). If a Change in
Control occurs on account of a series of transactions, the Change in Control
Date is the date of the last of such transactions.
4.
Terms of Employment
(a)
Position and Duties
.
During the Employment Period, (i) the Executive’s position, position title,
authority, reporting structure, duties and responsibilities will be the same in
all material respects with the most significant of those held, exercised and
assigned to Executive by the Company at any time during the twelve (12) month
period immediately preceding the Change in Control Date and (ii) the Executive’s
services will be performed at
either the location where
the Executive was performing his services immediately preceding the Change in
Control Date or any office that is the headquarters of the Company prior to the
Change in Control and is less than thirty-miles (30) miles from such location.
(b)
Compensation
.
(i)
Base Salary
. During the
Employment Period, the Executive will receive an annual base salary (the “Annual
Base Salary”) at least equal to the highest base annualized salary paid or
payable to the Executive by the Company and its affiliated companies during the
twelve (12) month period immediately preceding the Change of Control Date.
During the Employment Period, the Annual Base Salary will be reviewed at least
annually and will be increased at any time and from time to time as will be
substantially consistent with increases in base salary generally awarded in the
ordinary course of business to other peer executives of the Company and its
affiliated companies, but may not be decreased. Any increase in the Annual Base
Salary will not serve to limit or reduce any other obligation to the Executive
under this Agreement. The Annual Base Salary will not be reduced after any such
increase, and the term Annual Base Salary as used in this Agreement will refer
to the Annual Base Salary as so increased. The term “affiliated companies”
includes any company controlled by, controlling or under common control with the
Company during the twelve (12) months immediately preceding the Change of
Control Period.
(ii)
Annual Bonus
. In addition
to the Annual Base Salary, the Executive will be awarded for each year ending
during the Employment Period and for which the Executive is employed on the last
day of the year an annual bonus (the “Annual Bonus”) in one lump sum cash
payment at least equal to the average annual bonus paid or payable, including by
reason of any deferral, for the two (2) years immediately preceding the year in
which the Change in Control Date occurs. Each such Annual Bonus will be paid no
later than two and one-half (2 ½) months after the end of the year for which the
Annual Bonus is awarded.
(iii)
Incentive, Savings and Retirement Plans
. During the Employment Period, the Executive will
be entitled to participate in all incentive (including stock incentive), savings
and retirement, insurance plans, policies and programs applicable generally to
other peer executives of the Company and its affiliated companies, but in no
event will such plans, policies and programs provide the Executive with
incentive opportunities, savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than those
provided by the Company and its affiliated companies for the Executive under
such plans, policies and programs as in effect at any time during the twelve
(12) months immediately preceding the Change in Control Date.
(iv)
Welfare Benefit Plans
.
During the Employment Period, the Executive and/or the Executive’s family, as
the case may be, will be eligible for participation in and will receive all
benefits under welfare benefit plans, policies and programs provided by the
Company and its affiliated companies to the extent applicable generally to other
peer executives of the Company and its affiliated companies, but in
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no event will such plans,
policies and programs provide the Executive with benefits that are less
favorable, in the aggregate, than the most favorable of such plans, policies and
programs in effect at any time during the twelve (12) months immediately
preceding the Change in Control Date.
(v)
Fringe Benefits
. During
the Employment Period, the Executive will be entitled to fringe benefits in
accordance with the most favorable plans, policies and programs of the Company
and its affiliated companies in effect for the Executive at any time during the
twelve (12) months immediately preceding the Change in Control Date or, if more
favorable to the Executive, as in effect generally from time to time after the
Change in Control Date with respect to other peer executives of the Company and
its affiliated companies.
(vi)
Paid Time Off
. During the
Employment Period, the Executive will be entitled to paid time off in accordance
with the most favorable plans, policies and programs of the Company and its
affiliated companies in effect for the Executive at any time during the twelve
(12) months immediately preceding the Change in Control Date or, if more
favorable to the Executive, as in effect generally from time to time after the
Change in Control Date with respect to other peer executives of the Company and
its affiliated companies.
5.
Termination of Employment Following a Change in
Control
(a)
Death or Disability
. The
Executive’s employment will terminate automatically upon the Executive’s death
during the Employment Period. If the Company determines in good faith that a
Disability of the Executive has occurred during the Employment Period, it may
terminate the Executive’s employment. For purposes of this Agreement,
“Disability” means the Executive’s inability to perform the essential functions
of his/her position with the Company on a full time basis for one hundred eighty
(180) consecutive days or a total of at least two hundred forty (240) days in
any twelve (12) month period as a result of the Executive’s incapacity due to
physical or mental illness (as determined by an independent physician selected
by the Board of the Company).
(b)
Cause
. The Company may
terminate the Executive’s employment during the Employment Period for Cause. For
purposes of this Agreement, “Cause” means (i) gross incompetence, gross
negligence, willful misconduct in connection with the performance of the
Executive’s duties or breach of a fiduciary duty owed to the Company or any
affiliated company; (ii) conviction of or entering of a guilty plea or a plea of
no contest with respect to a felony or a crime of moral turpitude or commission
of an act of embezzlement or fraud against the Company or any affiliated
company; (iii) any material breach by the Executive of a material term of this
Agreement, including, without limitation, material failure to perform a
substantial portion of his/her duties and responsibilities hereunder; or (iv)
deliberate dishonesty of the Executive with respect to the Company or any
affiliated company.
(c)
Good Reason
. The Executive’s employment may be terminated during the Employment
Period by the Executive for Good Reason. The Executive must provide written
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notice to the Company of
the existence of the event or condition constituting such Good Reason within
ninety (90) days of the Executive becoming aware of the event or condition
alleged to constitute Good Reason. Upon delivery of such notice by the
Executive, the Company shall have a period of thirty (30) days during which it
may remedy in good faith the event or condition constituting Good Reason, to the
Executive’s satisfaction and the Executive’s employment shall continue in effect
during the thirty (30) day period. In the event the Company shall remedy in good
faith the event or condition constituting Good Reason, then such notice of
termination shall be null and void, and the Company shall not be required to pay
the amount due to the Executive under Section 6(a). If the Company has not
remedied the event or condition constituting Good Reason during the thirty (30)
day cure period and the Executive does not terminate his/her employment for Good
Reason within ninety (90) days thereafter by providing the Company with a Notice
of Termination (as such term is defined herein), then the Executive will deemed
to have waived his/her right to terminate for Good Reason with respect to such
grounds.
For purposes of this
Agreement, “Good Reason” means:
(i)
a
material reduction in the Executive’s duties or authority or any of the
employment characteristics as described in Section 4(a);
(ii)
a
failure by the Company to comply with any of the provisions of Section 4(b);
(iii)
the
Company’s requiring the Executive to be based at any office or location other
than that described in Section 4(a)(ii);
(iv)
the
failure by the Company to comply with and satisfy Section 7(b); or
(v)
the
Company fails to honor any term or provision of this Agreement.
Notwithstanding the
foregoing, Good Reason shall not include any resignation by the Executive where
Cause for the Executive’s termination by the Company exists.
(d)
Notice of Termination
. Any
termination during the Employment Period by the Company or by the Executive for
Good Reason shall be communicated by written Notice of Termination to the other
party hereto. For purposes of this Agreement, a “Notice of
Termination” shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon.
(e)
Date of Termination
. “Date
of Termination” means (i) if the Executive’s employment is terminated by the
Company for Cause, or by the Executive for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as the case may
be, (ii) if the Executive’s employment is terminated by the Company other than
for Cause or Disability, the date specified in the Notice of Termination (which
shall not be less than thirty (30) nor more than sixty (60) days from the date
such Notice of Termination is given unless the Executive otherwise agrees), and
(iii) if the Executive’s employment is terminated for Disability,
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thirty (30) days after
Notice of Termination is given, provided that the Executive shall not have
returned to the full-time performance of his/her duties during such thirty (30)
day period.
(f)
Resignation of All Other Positions
. Effective upon the termination of the
Executive’s employment for any reason, the Executive shall be deemed to have
resigned from all positions the Executive holds as an officer or member of the
Board of Directors (or a committee thereof) of the Company or any of its
affiliates.
6.
Compensation Upon Termination
(a)
Termination Without Cause or for Good
Reason
. In the event the
Executive’s employment with the Company terminates or is terminated during (i)
the six (6) months immediately preceding a Change in Control, or (ii) during the
Employment Period, unless such termination in either case is or was (A) by the
Company for Cause or (B) by the Executive other than for Good Reason, Executive
shall be entitled to the following benefits; provided with respect to the
payments set forth in paragraphs (ii), (iii) and (iv) below, the Executive (or
the legal representative of the Executive or the Executive’s estate) signs a
release and waiver of claims in favor of the Company, its affiliates and their
respective officers and directors in the form attached hereto as Attachment A,
and such release has become effective (the “Release”) (for avoidance of doubt,
no release is required in connection with the payments set forth in paragraph
(i) below).
(i)
Accrued Obligations
. The
Accrued Obligations are the sum of: (1) the Executive’s Annual Base Salary
through the Date of Termination at the rate in effect just prior to the time a
Notice of Termination is given; (2) the amount, if any, of any incentive or
bonus compensation theretofore earned which has not yet been paid; (3) the
product of the Annual Bonus paid or payable, including by reason of deferral,
for the most recently completed year and a fraction, the numerator of which is
the number of days in the current year through the Date of Termination and the
denominator of which is 365; and (4) any benefits or awards (including both the
cash and stock components) which pursuant to the terms of any plans, policies or
programs have been earned or become payable, but which have not yet been paid to
the Executive (but not including amounts that previously had been deferred at
the Executive’s request, which amounts will be paid in accordance with the
Executive’s existing directions). The Accrued Obligations will be paid to the
Executive in a lump sum cash payment within ten (10) days after the Date of
Termination;
(ii)
Salary Continuance Benefit
. The Salary Continuance Benefit is an amount equal to two (2) times the
Executive’s Final Compensation. For purposes of this Agreement, “Final
Compensation” means the Annual Base Salary in effect at the Date of Termination,
plus an amount equal to the average Annual Bonus paid or payable for the two (2)
most recently completed years and any amounts contributed by the Executive
during the most recently completed year pursuant to a salary reduction agreement
or any other program that provides for pre-tax salary reductions or compensation
deferrals. The Salary Continuance Benefit will be paid to the Executive in a
lump sum cash payment on the first regular payroll date following the sixtieth
(60
th
) day after the Date of
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Termination, provided that
on or before such date the Release has been executed and any period in which the
Executive may revoke such Release has expired, without such Release having been
revoked; and
(iii)
Welfare Continuance Benefit
. For eighteen (18) months following the Date of
Termination, the Executive and his/her eligible dependents will continue to be
covered under all health and dental plans, disability plans, life insurance
plans (including split dollar endorsement agreements related to Bank Owned Life
Insurance policies), and all other welfare benefit plans (as defined in Section
3(1) of ERISA) (“Welfare Plans”) in which the Executive and his/her dependents
were participating immediately prior to the Date of Termination (the “Welfare
Continuance Benefit”) to the extent permissible under the terms of the
respective Welfare Plans and applicable law. Health and medical coverage will be
provided under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (“COBRA”). The Executive will pay only that portion of the COBRA
premiums that he was paying as an active employee prior to the Date of
Termination. The Company will pay any additional premium costs. Notwithstanding
the foregoing, the Welfare Continuance Benefit as to any Welfare Plan will cease
if and when the Executive has obtained coverage under one or more welfare
benefit plans of a subsequent employer that provides for substantially equal or
greater benefits to the Executive and his/her dependents with respect to the
specific type of benefit; and
(iv)
401(k) Contributions
. A
lump sum cash payment equal to the total contributions made by the Company to
the Executive’s account in the Company sponsored 401(k) retirement savings plan
during the two-year period prior to termination of employment. This payment will
be paid to the Executive on the first regular payroll date following the
60
th
day after the Date of Termination, provided that on or before
such date the Release has been executed and any period in which the Executive
may revoke such Release has expired, without such Release having been revoked.
(b)
Death
. If the Executive
dies during the Employment Period while employed, this Agreement will terminate
without any further obligation on the part of the Company under this Agreement,
other than for (i) payment of the Accrued Obligations (which shall be paid to
the Executive’s beneficiary designated in writing or his/her estate, as
applicable, in a lump sum cash payment within thirty (30) days of the date of
death); (ii) the timely payment of the Welfare Continuance Benefit to the
Executive’s spouse and other dependents; and (iii) the timely payment of all
death and retirement benefits pursuant to the terms of any plan, policy or
arrangement of the Company and its affiliated companies. If the Executive dies
after the Date of Termination, but prior to the expiration of the Welfare
Continuance Benefit period, the Executive’s spouse and other dependents will be
entitled to the remaining payment of the Welfare Continuance Benefit due to the
Executive under Section 6(a)(iii).
(c)
Disability
. If the
Executive’s employment is terminated because of the Executive’s Disability
during the Employment Period, this Agreement will terminate without any further
obligation on the part of the Company under this Agreement, other than for (i)
payment of the Accrued Obligations (which shall be paid to the Executive in a
lump sum cash payment within thirty (30) days of the Date of Termination; (ii)
the timely payment of the Welfare
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Continuance Benefit; and
(iii) the timely payment of all disability and retirement benefits pursuant to
the terms of any plan, policy or arrangement of the Company and its affiliated
companies.
(d)
Cause; Other than for Good Reason
. If the Executive’s employment is terminated for Cause during the
Employment Period, this Agreement will terminate without further obligation to
the Executive other than the payment to the Executive of the Annual Base Salary
through the Date of Termination, plus the amount of any compensation previously
deferred by the Executive. If the Executive terminates employment during the
Employment Period, excluding a termination for Good Reason, this Agreement will
terminate without further obligation to the Executive other than for the Accrued
Obligations (which will be paid in a lump sum in cash within thirty (30) days of
the Date of Termination) and any other benefits to which the Executive may be
entitled pursuant to the terms of any plan, program or arrangement of the
Company and its affiliated companies.
(e)
Potential Limitation of Payments and
Benefits
.
(i) Subject to subsection
(ii) below, in the event that the aggregate value of the payments and benefits
to which Executive may be entitled under this Agreement or any other agreement,
plan, program or arrangement in connection with a Change in Control (the “Change
in Control Termination Benefits”) would subject Executive to the excise tax
imposed under Section 4999 of the Code (the “Excise Tax”), then the Change in
Control Termination Benefits shall be reduced in a manner determined by the
Company (by the minimum possible amount) that is consistent with the
requirements of Section 409A of the Code until no amount or benefit payable to
Executive will be subject to the Excise Tax.
(ii) Notwithstanding the
foregoing, no reduction in the Change in Control Termination Benefits shall be
made if Executive’s Net After-Tax Benefit (as defined below) assuming such
reduction was not made exceeds by $25,000 or more of Executive’s Net After-Tax
Benefit assuming such reduction was made.
(iii) “Net After-Tax
Benefit” shall mean the amount of the Change in Control Termination Benefits
which Executive receives or is then entitled to receive, less the amount of all
applicable taxes payable by you with respect to the Change in Control
Termination Benefits, including any Excise Tax.
(iv) All calculations and
determinations under this Section 6(e) shall be made by an independent
accounting firm or independent tax counsel appointed by the Company (the “Tax
Advisor”) whose determinations shall be conclusive and binding on the Company
and Executive for all purposes. The Tax Advisor may rely on reasonable, good
faith assumptions and approximations concerning the application of Section 280G
and Section 4999 of the Code. The Company shall bear all costs of the Tax
Advisor.
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7.
Binding Agreement; Successors
(a)
This
Agreement will be binding upon and inure to the benefit of the Executive (and
his/her personal representative), the Company and any successor organization or
organizations which shall succeed to substantially all of the business and
property of the Company, whether by means of merger, consolidation, acquisition
of all or substantially of all of the assets of the Company or otherwise,
including by operation of law.
(b) The Company 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 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.
(c) For purposes of this
Agreement, the term “Company” includes any subsidiaries of the Company and any
corporation or other entity which is the surviving or continuing entity in
respect of any merger, consolidation or form of business combination in which
the Company ceases to exist; provided, however, that for purposes of determining
whether a Change in Control has occurred herein, the term “Company” refers to
Virginia National Bankshares Corporation or its successors.
8.
Fees and Expenses; Mitigation
(a)
The
Company will pay or reimburse the Executive for all costs and expenses,
including without limitation court costs and reasonable attorneys’ fees,
incurred by the Executive (i) in the Company’s contesting or disputing any
termination of the Executive’s employment or (ii) in the Company’s seeking to
obtain or enforce any right or benefit provided by this Agreement, in each case
provided the Executive is the prevailing party in a proceeding brought in a
court of competent jurisdiction. The Company shall reimburse the foregoing costs
on a current basis after the Executive submits a claim for reimbursement with
the proper documentation of the costs and expenses.
(b)
The
Executive shall not be required to mitigate the amount of any payment the
Company becomes obligated to make to the Executive in connection with this
Agreement, by seeking other employment or otherwise. The amount of any payment
provided for in Section 6 shall not be reduced, offset or subject to recovery by
the Company by reason of any compensation earned by the Executive as the result
of employment by another employer after the Date of Termination, or otherwise.
9.
No
Employment Contract
Nothing in this Agreement
will be construed as creating an employment contract between the Executive and
the Company prior to Change in Control.
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10.
Survival of Certain Restrictive Covenants
Section 4 of the
Non-Disclosure, Non-Solicitation and Non-Competition Agreement dated as of the
same hereof, between the Company and the Executive (the “Loyalty Agreement”)
with respect to the Executive’s covenants concerning non-competition will not
apply to the Executive after the Executive ceases to be employed by the Company
following a Change in Control, unless the Executive is entitled to receive any
severance benefits provided for in Section 6(a) of this Agreement in connection
with the termination of his/her employment without Cause or for Good Reason in
which case the restrictions imposed by Section 4 in the Loyalty Agreement will
continue to apply. The non-solicitation restrictions in Section 3 of the Loyalty
Agreement and the non-disclosure in Section 2 of the Loyalty Agreement together
with the other provisions of the Loyalty Agreement, except to the extent Section
4 of the Loyalty Agreement may not apply as provided above, will survive the
termination of the Executive’s employment and are incorporated into and made a
part of this Agreement as though the Loyalty Agreement was set forth in full in
this Agreement.
11.
Notice
Any notices and other
communications provided for by this Agreement will be sufficient if in writing
and delivered in person, or sent by registered or certified mail, postage
prepaid (in which case notice will be deemed to have been given on the third day
after mailing), or by overnight delivery by a reliable overnight courier service
(in which case notice will be deemed to have been given on the day after
delivery to such courier service). Notices to the Company shall be directed to
the Secretary of the Company, with a copy directed to the Chairman of the Board
of the Company. Notices to the Executive shall be directed to his/her last known
address.
12.
Definition of a Change in Control
No benefits shall be
payable hereunder unless there shall have been a Change in Control of the
Company as set forth below. For purposes of this Agreement, a “Change in
Control” means:
(a)
The
acquisition by any Person of beneficial ownership of thirty percent (30%) or
more of the then outstanding shares of common stock of the Company, provided
that an acquisition directly from the Company (excluding an acquisition by
virtue of the exercise of a conversion privilege) shall not constitute a Change
in Control;
(b)
Individuals who constitute the Board on the date of this Agreement (the
“Incumbent Board”) cease to constitute a majority of the Board, provided that
any director whose nomination was approved by a vote of at least two-thirds of
the directors then comprising the Incumbent Board will be considered a member of
the Incumbent Board; provided however, that any director whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the directors of the Company shall not be
considered a member of the Incumbent Board;
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(c) Consummation by the
Company of a reorganization, merger, share exchange or consolidation (a
“Reorganization”), provided that a Reorganization will not constitute a Change
in Control if, upon consummation of the Reorganization, each of the following
conditions is satisfied:
(i)
more
than fifty percent (50%) of the then outstanding shares of common stock of the
corporation resulting from the Reorganization is beneficially owned by all or
substantially all of the former shareholders of the Company in substantially the
same proportions as their ownership existed in the Company immediately prior to
the Reorganization;
(ii)
no
Person beneficially owns thirty percent (30%) or more of either (1) the then
outstanding shares of common stock of the corporation resulting from the
transaction or (2) the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors; and
(iii)
at
least a majority of the members of the board of directors of the corporation
resulting from the Reorganization were members of the Incumbent Board at the
time of the execution of the initial agreement providing for the Reorganization.
(d) Approval by the
shareholders of the Company of a complete liquidation or dissolution of the
Company, or the consummation of a sale or other disposition of all or
substantially all of the assets of the Company.
(e) For purposes of this
Agreement, “Person” means any individual, entity or group (within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934 (the “Exchange Act”),
other than any employee benefit plan (or related trust) sponsored or maintained
by the Company or any affiliated company, and “beneficial ownership” has the
meaning given the term in Rule 13d-3 under the Exchange Act.
13.
Miscellaneous
No provision of this
Agreement may be amended, modified, waived or discharged unless such amendment,
modification, waiver or discharge is agreed to in a writing signed (a) by the
Executive and (b) for the Company by either the Chairman of the Board, Chairman
of the Compensation Committee, Chief Executive Officer, or President of the
Company; provided, however, the Executive may not sign on behalf of the Company
even if he/she holds one of the identified positions with the Company. This
Agreement replaces and supersedes any prior agreements, written or oral,
relating to the subject matter hereof, and all such agreements are hereby
terminated and are without any further legal force or effect. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
of 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 provisions
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 that are not expressly set
forth in this Agreement.
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14.
Governing Law
The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the Commonwealth of Virginia. The Company and the Executive
submit to the exclusive jurisdiction and venue of any state or federal court
located within the Commonwealth of Virginia for resolution of any such claims,
causes of action or disputes arising out of or relating to or concerning this
Agreement.
15.
Validity
The invalidity or
unenforceability of any provision 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.
16.
Deferred Compensation Omnibus Provision
(a) It is intended that
payments and benefits under this Agreement that are considered to be deferred
compensation subject to Section 409A of the Code shall be provided and paid in a
manner, and at such time and in such form, as complies with the applicable
requirements of Section 409A of the Code to avoid the unfavorable tax
consequences provided for therein for non-compliance. Notwithstanding any other
provision of this Agreement, the Company’s Compensation Committee or Board of
Directors is authorized to amend this Agreement, to amend or void any election
made by the Executive under this Agreement and/or to delay the payment of any
monies and/or provision of any benefits in such manner as may be determined by
it to be necessary or appropriate to comply with Section 409A of the Code or to
comply with an exception from Section 409A if that is the intent of the
provision. For purposes of this Agreement, all rights to payments and benefits
hereunder shall be treated as rights to receive a series of separate payments
and benefits to the fullest extent allowed by Section 409A of the Code.
(b)
If the
Executive is deemed on the date of separation of service with the Company to be
a “specified employee,” as defined in Section 409A(a)(2)(B) of the Code, then
payment of any amount or provision of any benefit under this Agreement that is
considered deferred compensation subject to Section 409A of the Code shall not
be made or provided prior to the earlier of (A) the expiration of the six (6)
month period measured from the date of separation of service or (B) the date of
death (the “409A Deferral Period”).
(c)
In the
case of benefits that are subject to Section 409A of the Code, the Executive may
pay the cost of benefit coverage, and thereby obtain benefits, during the 409A
Deferral Period and then be reimbursed by the Company when the 409A Deferral
Period ends. On the first day after the end of the 409A Deferral Period, all
payments delayed pursuant to this Section 16 (whether they would have otherwise
been payable in a single lump sum or in installments in the absence of such
deferral) shall be paid or reimbursed to the Executive in a lump sum, and any
remaining payments and benefits due under this Agreement shall be paid or
provided as originally scheduled.
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(d)
“Termination of employment” shall have the same meaning as “separation of
service,” as that phrase is defined in Section 409A of the Code (taking into
account all rules and presumptions provided for in the Section 409A
regulations).
17.
Clawback
The Executive agrees that any incentive based compensation or award that
he receives, or has received, from the Company or its Affiliates under this
Agreement or otherwise, will be subject to clawback by the Company as may be
required by applicable law or stock exchange listing requirement and on such
basis as the Board of Directors of the Company determines, but in no event with
a look-back period of more than two (2) years, unless required by applicable law
or stock exchange listing requirement.
[Signatures follow on next
page.]
12
IN WITNESS WHEREOF, this
Agreement has been executed as a sealed instrument by Virginia National
Bankshares Corporation by its duly authorized officer, and by the Executive, as
of the date first above written.
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VIRGINIA NATIONAL
BANKSHARES
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CORPORATION
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By:
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Name:
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Title:
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EXECUTIVE:
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[Name of Employee]
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13
Attachment
A
RELEASE
For good and valuable
consideration, the receipt of which is hereby acknowledged,
[Name of Executive]
(“Employee”), hereby irrevocably and
unconditionally releases, acquits, and forever discharges [Virginia National
Bankshares Corporation or successor entity] (the “Company”) and each of its
agents, directors, members, affiliated entities, officers, employees, former
employees, attorneys, and all persons acting by, through, under or in concert
with any of them (collectively “Releasees”) from any and all charges,
complaints, claims, liabilities, grievances, obligations, promises, agreements,
controversies, damages, policies, actions, causes of action, suits, rights,
demands, costs, losses, debts and expenses of any nature whatsoever, known or
unknown, suspected or unsuspected, including, but not limited to, any rights,
claims or causes of action arising out of, or related to, (a) the Employee’s
employment or termination of employment, (b) any alleged violations or breaches
of any contracts, express or implied, or any tort, or any legal restrictions on
the Company’s right to terminate employees, or (c) any federal, state or other
governmental statute, regulation, law or ordinance, including without limitation
(1) Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights
Act of 1991; (2) the Americans with Disabilities Act; (3) 42 U.S.C. § 1981; (4)
the federal Age Discrimination in Employment Act (age discrimination); (5) the
Older Workers Benefit Protection Act; (6) the Equal Pay Act; (7) the Family and
Medical Leave Act; (8) the Employee Retirement Income Security Act (“ERISA”);
(9) the False Claims Act; (10) the Fair Labor Standards Act; (11) Consolidated
Omnibus Budget Reconciliation Act of 1985; (12) the National Labor Relations
Act; (13) the Virginia Workers’ Compensation Act; and (14) the Virginia
Commission on Human Rights Act (“Claim” or “Claims”), which Employee now has,
owns or holds, or claims to have, own or hold, or which Employee at any time
heretofore had owned or held, or claimed to have owned or held, against each or
any of the Releasees at any time up to and including the date of the execution
of this Release.
Employee hereby
acknowledges and agrees that the execution of this Release and the cessation of
Employee’s employment and all actions taken in connection therewith are in
compliance with the federal Age Discrimination in Employment Act and the Older
Workers Benefit Protection Act and that the releases set forth above shall be
applicable, without limitation, to any claims brought under these Acts. Employee
further acknowledges and agrees that:
(a) The Release given by
Employee is given solely in exchange for the consideration set forth in Section
6(a)(ii), Section 6(a)(iii) and Section 6(a)(iv) of the Management Continuity
Agreement between the Company and Employee to which this Release was initially
attached, and such consideration is in addition to anything of value which
Employee was entitled to receive prior to entering into this Release;
(b) By entering into this
Release, Employee does not waive rights or claims that may arise after the date
this Agreement is executed;
14
(c) Employee has been
advised to consult an attorney prior to entering into this Release, and this
provision of the Release satisfies the requirements of the Older Workers Benefit
Protection Act that Employee be so advised in writing;
(d) Employee has been
offered forty-five (45) days from receipt of this Release within which to
consider whether to sign this Release; and
(e) For a period of seven
(7) days following Employee’s execution of this Release, Employee may revoke
this Release and it shall not become effective or enforceable until such seven
(7) day period has expired.
No waiver or default of any
term of this Release shall be deemed a waiver of any subsequent breach or
default of the same or similar nature.
This Release is made and
shall be enforced pursuant to the laws of the Commonwealth of Virginia, except
where such laws of the Commonwealth of Virginia are preempted by federal law.
Should any part of this
Release be found to be void, that determination will not affect the remainder of
this Release.
This release shall be
binding upon the heirs and personal representatives of Employee and shall inure
to the benefit of the successors and assigns of the Company.
15
Exhibit 10.2
Non-Disclosure,
Non-Solicitation and Non-Competition Agreement
Date: March 2, 2017
Name: Glenn W. Rust
Virginia National Bank and
its affiliates, including Virginia National Bankshares Corporation and VNBTrust,
N.A., also known as VNB Wealth Management (together “VNB”), has provided you
with the continued opportunity to be a key member of VNB’s executive management
team. As a condition of your employment opportunity with VNB, you must sign and
return this Non-Disclosure, Non-Solicitation and Non-Competition Agreement (this
“Agreement”).
In consideration of this
employment opportunity, your compensation, including your base salary, potential
incentive compensation, Management Continuity Agreement with VNB, benefits,
training, personal and professional growth potential, the opportunity to play an
integral role in the continued growth and development of a community-based
financial services organization, and other good and valuable consideration, the
adequacy and receipt of which are hereby acknowledged, with your signature you
acknowledge and agree to the following:
1. Acknowledgement of
VNB’s Interest.
You acknowledge that VNB
has invested substantial time, money and resources in the development and
retention of its customers, accounts, business and employees. You acknowledge
and agree that any and all "goodwill" associated with any customer, account,
business or employee of VNB belongs exclusively to VNB. You further acknowledge
and agree that during the course of your performing services for VNB, VNB
employees and/or customers may furnish, disclose or otherwise make available to
you confidential and proprietary information and that VNB may provide you with
unique and specialized training. You also acknowledge that (a) such
relationships, information and training have been, and will continue to be,
developed by VNB through the expenditure by VNB of substantial time, effort and
money, (b) all such relationships, information and training are valuable to VNB
and (c) use of such relationships, information and training by you other than
for VNB’s benefit will cause substantial harm to VNB.
2. Non-Disclosure of
Confidential and Proprietary Information.
VNB has developed and
continues to develop, use and maintain confidential and proprietary information,
which may include competitive information and trade secrets, concerning VNB’s
business, customers and employees, including, without limitation, the following:
identity and other information related to present and prospective customers;
business organization and structure; business and marketing plans and
strategies; training programs and materials; product information; personnel
information including employees' capabilities, salaries, benefits, and any other
terms of employment; policies, standards and procedures; current and prospective
vendors and contracts; and profit, loss and other financial information
(collectively, the "Confidential Information"). You acknowledge that during your
employment with VNB you will have direct and indirect access to, and knowledge
of, the Confidential Information, and you agree to take all reasonable measures
to protect the confidentiality of such Confidential Information. You agree to
use the Confidential Information, both during and after your employment, for the
sole benefit of VNB.
You agree and attest that
any and all such Confidential Information is, and shall remain, the sole
property of VNB. You agree that you will hold such Confidential Information in
the strictest confidence and that you will not (except as required in the course
of your employment with VNB, as required by any court, supervisory authority or
administrative agency, or as otherwise required by applicable law) disclose,
either directly or indirectly, any Confidential Information to any other
business, firm, entity or person, unless such information
has become a matter of
public knowledge at the time of such disclosure. You further agree that you will
not remove or retain any Confidential Information regardless of how it is
maintained. You agree to return to VNB any and all copies of the Confidential
Information that you have, or have had, in your possession immediately upon
termination of employment, whether voluntary or involuntary or upon any request
by VNB. The terms of this paragraph are in addition to, and not in lieu of, any
legal or other contractual obligations that you may have, or believe you may
have, relating to the protection of the Confidential Information or your
employment. The terms of this paragraph shall survive indefinitely the
termination of this Agreement and/or your employment with VNB.
3.
Non-Solicitation.
a. You agree that both
during the course of your employment, and for a period of twelve (12) months
following the voluntary or involuntary termination of your employment, you will
not, directly or indirectly, on your own behalf or in the service of or on
behalf of any other person or entity other than VNB, solicit, divert or
appropriate, or attempt to solicit, divert or appropriate, any business from any
VNB customers or prospective customers with whom/which you have had contact
during the course of your employment or about whom/which you have obtained
Confidential Information during the course of your employment.
b. You agree that both
during the course of your employment, and for a period of twelve (12) months
following the voluntary or involuntary termination of your employment, you will
not (i) enter into, and will not participate in, any plan or arrangement to
cause any employee of VNB to terminate his or her employment with VNB, or (ii)
directly or indirectly solicit any VNB employee for employment in connection
with any business initiated by you or any other person, firm, company or
corporation.
4. Non-Competition.
You agree that both during
the course of your employment, and for a period of three (3) months following
the voluntary or involuntary termination of your employment, you will not accept
employment or otherwise engage in any activity or work, that is in any way
competitive with the business of VNB in which you are significantly involved at
any time during your employment with VNB in a geographic area within a 30 mile
radius of your then current office location (or, if applicable, the office
location at which you were primarily working immediately prior to the
termination of your employment with VNB) or within a 10 mile radius of any other
VNB location. For purposes of this Agreement, you acknowledge and agree that VNB
and its affiliates are engaged in the financial services business which
includes, without limitation, commercial and retailing banking and lending,
treasury management, private banking, trust, investment/brokerage services,
wealth management and funds management. You also acknowledge that VNB has
strategic plans related to offering services such as leasing, brokerage,
international and factoring, and that those services and businesses will be
considered competitive with VNB under the terms of this Agreement to the extent
that you are significantly involved in such services or businesses during your
employment with VNB.
5. Enforcement of this
Agreement.
You agree that the
provisions outlined above are necessary and reasonable to protect the best
interests of VNB, its customers, and its employees. Further, you agree that in
the event of your breach of any of the provisions of this Agreement, VNB would
suffer substantial irreparable harm and that monetary damages alone may not be
sufficient to protect VNB adequately from such breach. In the event of a breach
or threatened breach by you of any of the provisions of this Agreement, in
addition to such other remedies as VNB may have available at law, VNB shall be
entitled to seek and obtain equitable relief, in the form of specific
performance, or temporary, preliminary or permanent injunctive relief, or any
other equitable remedy which then may be available. The seeking or granting of
an injunction or other equitable remedy shall not affect VNB’s right to seek and
obtain damages or other equitable relief on account of any such
Page 2 of 3
actual or threatened
breach. You agree to pay all reasonable costs and expenses incurred by VNB in
enforcing the provisions of this Agreement, including VNB’s attorneys’
fees.
6. Miscellaneous
a. You acknowledge that you
will be an “at will” employee of VNB and that your employment may be terminated
at any time, with or without cause, at the option of you or VNB. You also
acknowledge that neither this Agreement nor any employee handbook or other
document you may receive creates any contractual rights contrary to the
foregoing and that no representative or agent of Employer other than an
Authorized Representative of VNB through a written, signed document has any
authority to enter into any agreement for employment for any specified time
period or to make any other agreement contrary to the foregoing. For purposes of
this Agreement, an “Authorized Representative of VNB” shall mean either the
Chairman of the Board, Chairman of the Compensation Committee, Chief Executive
Officer, or President of VNB; provided, however, you may not sign on behalf of
VNB even if you hold one of the identified positions with VNB.
b. This Agreement contains
the entire understanding between you and VNB and supersedes any prior written or
oral agreements with VNB. This Agreement shall not be modified or waived except
by written instrument signed by you and an Authorized Representative of VNB.
c. In the event that any
provision of this Agreement shall be declared unenforceable or invalid, the
remaining provisions shall continue to be valid and enforceable.
d. This Agreement shall
inure to the benefit of and be enforceable by VNB and/or VNB’s successors in
interest, subsidiaries and affiliates.
e. You acknowledge that
this Agreement shall be governed and enforced in accordance with the laws of the
Commonwealth of Virginia, without regard to conflicts of law principal. You
agree that the state and federal courts located in the City of Charlottesville
or the County of Albemarle shall be the exclusive jurisdictions for the
resolution of any disputes concerning this Agreement, and you agree to submit to
the jurisdiction of those courts.
f. You acknowledge that you
have had the opportunity to consult with an attorney prior to signing this
Agreement.
With your signature, you
attest to your understanding of the provisions outlined above and voluntarily
agree to each of the terms of this Agreement.
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/s/ Glenn W.
Rust
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(SEAL)
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Signature
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Printed
Name:
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Glenn W. Rust
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Date:
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March 2, 2017
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ACCEPTED:
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Virginia National Bank
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By
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/s/ Steven W.
Blaine
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Steven W. Blaine
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Chairman of VNB’s Compensation Committee
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Date:
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March 2,
2017
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Page 3 of 3
Exhibit 10.3
Non-Disclosure,
Non-Solicitation and Non-Competition Agreement
Date: March 2, 2017
Name: ________________
Virginia National Bank and
its affiliates, including Virginia National Bankshares Corporation and VNBTrust,
N.A., also known as VNB Wealth Management (together “VNB”), has provided you
with the [continued] opportunity to be a key member of VNB’s executive
management team. As a condition of your employment opportunity with VNB, you
must sign and return this Non-Disclosure, Non-Solicitation and Non-Competition
Agreement (this “Agreement”).
In consideration of this
employment opportunity, your compensation, including your base salary, potential
incentive compensation, Management Continuity Agreement with VNB, benefits,
training, personal and professional growth potential, the opportunity to play an
integral role in the continued growth and development of a community-based
financial services organization, and other good and valuable consideration, the
adequacy and receipt of which are hereby acknowledged, with your signature you
acknowledge and agree to the following:
1. Acknowledgement of
VNB’s Interest.
You acknowledge that VNB
has invested substantial time, money and resources in the development and
retention of its customers, accounts, business and employees. You acknowledge
and agree that any and all "goodwill" associated with any customer, account,
business or employee of VNB belongs exclusively to VNB. You further acknowledge
and agree that during the course of your performing services for VNB, VNB
employees and/or customers may furnish, disclose or otherwise make available to
you confidential and proprietary information and that VNB may provide you with
unique and specialized training. You also acknowledge that (a) such
relationships, information and training have been, and will continue to be,
developed by VNB through the expenditure by VNB of substantial time, effort and
money, (b) all such relationships, information and training are valuable to VNB
and (c) use of such relationships, information and training by you other than
for VNB’s benefit will cause substantial harm to VNB.
2. Non-Disclosure of
Confidential and Proprietary Information.
VNB has developed and
continues to develop, use and maintain confidential and proprietary information,
which may include competitive information and trade secrets, concerning VNB’s
business, customers and employees, including, without limitation, the following:
identity and other information related to present and prospective customers;
business organization and structure; business and marketing plans and
strategies; training programs and materials; product information; personnel
information including employees' capabilities, salaries, benefits, and any other
terms of employment; policies, standards and procedures; current and prospective
vendors and contracts; and profit, loss and other financial information
(collectively, the "Confidential Information"). You acknowledge that during your
employment with VNB you will have direct and indirect access to, and knowledge
of, the Confidential Information, and you agree to take all reasonable measures
to protect the confidentiality of such Confidential Information. You agree to
use the Confidential Information, both during and after your employment, for the
sole benefit of VNB.
You agree and attest that
any and all such Confidential Information is, and shall remain, the sole
property of VNB. You agree that you will hold such Confidential Information in
the strictest confidence and that you will not (except as required in the course
of your employment with VNB, as required by any court, supervisory authority or
administrative agency, or as otherwise required by applicable law) disclose,
either directly or indirectly, any Confidential Information to any other
business, firm, entity or person, unless such information has become a matter of
public knowledge at the time of such disclosure. You further agree that you will
not remove or retain any Confidential Information regardless of how it is
maintained. You agree to return to VNB any and all copies of the Confidential
Information that you have, or have had, in your possession
immediately upon
termination of employment, whether voluntary or involuntary or upon any request
by VNB. The terms of this paragraph are in addition to, and not in lieu of, any
legal or other contractual obligations that you may have, or believe you may
have, relating to the protection of the Confidential Information or your
employment. The terms of this paragraph shall survive indefinitely the
termination of this Agreement and/or your employment with VNB.
3. Non-Solicitation.
a. You agree that both
during the course of your employment, and for a period of twelve (12) months
following the voluntary or involuntary termination of your employment, you will
not, directly or indirectly, on your own behalf or in the service of or on
behalf of any other person or entity other than VNB, solicit, divert or
appropriate, or attempt to solicit, divert or appropriate, any business from any
VNB customers or prospective customers with whom/which you have had contact
during the course of your employment or about whom/which you have obtained
Confidential Information during the course of your employment.
b. You agree that both
during the course of your employment, and for a period of twelve (12) months
following the voluntary or involuntary termination of your employment, you will
not (i) enter into, and will not participate in, any plan or arrangement to
cause any employee of VNB to terminate his or her employment with VNB, or (ii)
directly or indirectly solicit any VNB employee for employment in connection
with any business initiated by you or any other person, firm, company or
corporation.
4. Non-Competition.
You agree that both during
the course of your employment, and for a period of three (3) months following
your voluntary termination of your employment for any reason or VNB’s
termination of your employment for “Cause”, as defined below, you will not
accept employment or otherwise engage in any activity or work, that is in any
way competitive with the business of VNB in which you are significantly involved
at any time during your employment with VNB in a geographic area within a 30
mile radius of your then current office location (or, if applicable, the office
location at which you were primarily working immediately prior to the
termination of your employment with VNB) or within a 10 mile radius of any other
VNB location. For purposes of this Agreement, you acknowledge and agree that VNB
and its affiliates are engaged in the financial services business which
includes, without limitation, commercial and retailing banking and lending,
treasury management, private banking, trust, investment/brokerage services,
wealth management and funds management. You also acknowledge that VNB has
strategic plans related to offering services such as leasing, brokerage,
international and factoring, and that those services and businesses will be
considered competitive with VNB under the terms of this Agreement to the extent
that you are significantly involved in such services or businesses during your
employment with VNB. For purposes of this Section, “Cause” means (i) gross
incompetence, gross negligence, willful misconduct in connection with the
performance of your duties or breach of a fiduciary duty owed to VNB or any
affiliated company; (ii) your conviction of or entering of a guilty plea or a
plea of no contest with respect to a felony or a crime of moral turpitude or
commission of an act of embezzlement or fraud against VNB or any affiliated
company; (iii) any material breach by you of a material term of this Agreement,
your Management Continuity Agreement or other agreement related to your
employment, including, without limitation, material failure to perform a
substantial portion of your duties and responsibilities; or (iv) your deliberate
dishonesty with respect to VNB or any affiliated company.
5. Enforcement of this
Agreement.
You agree that the
provisions outlined above are necessary and reasonable to protect the best
interests of VNB, its customers, and its employees. Further, you agree that in
the event of your breach of any of the provisions of this Agreement, VNB would
suffer substantial irreparable harm and that monetary damages alone may not be
sufficient to protect VNB adequately from such breach. In the event of a breach
or threatened breach by you of any of the provisions of this Agreement, in
addition to such other remedies as VNB may have available at law, VNB shall be
entitled to seek and obtain equitable relief, in the form of
Page 2 of 3
specific performance, or
temporary, preliminary or permanent injunctive relief, or any other equitable
remedy which then may be available. The seeking or granting of an injunction or
other equitable remedy shall not affect VNB’s right to seek and obtain damages
or other equitable relief on account of any such actual or threatened breach.
You agree to pay all reasonable costs and expenses incurred by VNB in enforcing
the provisions of this Agreement, including VNB’s attorneys’ fees.
6. Miscellaneous
a. You acknowledge that you
will be an “at will” employee of VNB and that your employment may be terminated
at any time, with or without cause, at the option of you or VNB. You also
acknowledge that neither this Agreement nor any employee handbook or other
document you may receive creates any contractual rights contrary to the
foregoing and that no representative or agent of Employer other than an
Authorized Representative of VNB through a written, signed document has any
authority to enter into any agreement for employment for any specified time
period or to make any other agreement contrary to the foregoing. For purposes of
this Agreement, an “Authorized Representative of VNB” shall mean either the
Chairman of the Board, Chairman of the Compensation Committee, Chief Executive
Officer, or President of VNB; provided, however, you may not sign on behalf of
VNB even if you hold one of the identified positions with VNB.
b. This Agreement contains
the entire understanding between you and VNB and supersedes any prior written or
oral agreements with VNB. This Agreement shall not be modified or waived except
by written instrument signed by you and an Authorized Representative of VNB.
c. In the event that any
provision of this Agreement shall be declared unenforceable or invalid, the
remaining provisions shall continue to be valid and enforceable.
d. This Agreement shall
inure to the benefit of and be enforceable by VNB and/or VNB’s successors in
interest, subsidiaries and affiliates.
e. You acknowledge that
this Agreement shall be governed and enforced in accordance with the laws of the
Commonwealth of Virginia, without regard to conflicts of law principal. You
agree that the state and federal courts located in the City of Charlottesville
or the County of Albemarle shall be the exclusive jurisdictions for the
resolution of any disputes concerning this Agreement, and you agree to submit to
the jurisdiction of those courts.
f. You acknowledge that you
have had the opportunity to consult with an attorney prior to signing this
Agreement.
With your signature, you
attest to your understanding of the provisions outlined above and voluntarily
agree to each of the terms of this Agreement.
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(SEAL)
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Signature
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Printed Name:
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Date:
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ACCEPTED:
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Virginia
National Bank
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By
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Glenn W. Rust,
President and Chief Executive Officer
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Date:
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Page 3 of 3
