UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 21, 2017
SOUTHERN NATIONAL BANCORP OF VIRGINIA, Inc.
(Exact name of registrant as specified in its charter)
Virginia | 001-33037 | 20-1417448 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
6830 Old Dominion Drive, McLean, Virginia 22101
(Address of Principal Executive Offices) (Zip Code)
(703) 893-7400
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.01 Completion of Acquisition or Disposition of Assets.
Effective June 23, 2017, Southern National Bancorp of Virginia, Inc., a Virginia corporation (“ SONA ” or the “ Continuing Corporation ”), completed its previously announced merger (the “ Merger ”) with Eastern Virginia Bankshares, Inc., a Virginia corporation (“ EVBS ”), pursuant to an Agreement and Plan of Merger, dated December 13, 2016, as amended, between SONA and EVBS, including the related Plan of Merger (together, the “ Merger Agreement ”). Pursuant to the Merger Agreement, at the effective time of the Merger, EVBS merged with and into SONA, with SONA surviving as the continuing corporation and immediately following the Merger, EVB, a Virginia banking corporation and EVBS’s wholly-owned subsidiary, merged with and into SONA’s wholly-owned subsidiary, Sonabank, a Virginia banking corporation, with Sonabank surviving and continuing its corporate existence under the name “Sonabank.”
Pursuant to the Merger Agreement, holders of EVBS common stock received 0.6313 shares (the “ Exchange Ratio ”) of SONA common stock for each outstanding share of EVBS common stock held immediately prior to the effective time of the Merger and holders of Non-Voting Mandatorily Convertible Non-Cumulative Preferred Stock, Series B of EVBS (the “ EVBS Series B Preferred Stock” ) received 0.6313 shares of SONA common stock for each share of EVBS Series B Preferred Stock held immediately prior to the effective time of the Merger. The aggregate amount paid by SONA for the merger consideration was 11,535,949 shares of SONA common stock, which had a value of approximately $198.84 million based on the closing price of SONA common stock on June 23, 2017. Each share of SONA common stock outstanding immediately prior to the Merger remained outstanding and was unaffected by the Merger.
Immediately prior to the effective time of the Merger, each option to purchase shares of EVBS common stock granted under an EVBS stock plan vested and was converted into and became an option to purchase shares of common stock of the Continuing Corporation (each, an “ Assumed Option ”), which was adjusted (i) by multiplying the number of shares of common stock that could be purchased under the Assumed Option by the Exchange Ratio and rounding down to the nearest share and (ii) by dividing the per share exercise price of the option by the Exchange Ratio and rounding up to the nearest cent. The Continuing Corporation assumed each Assumed Option in accordance with the terms of the EVBS stock plan and award agreement by which it is evidenced.
Immediately prior to the effective time of the Merger, each share of EVBS common stock subject to time-based or performance-based vesting restrictions granted under an EVBS stock plan vested in full and automatically converted into unrestricted shares of common stock of the Continuing Corporation, less the amount of any required withholding tax, based on the Exchange Ratio. In addition, the Continuing Corporation assumed the EVBS stock plans at the effective time of the Merger, only with respect to the Assumed Options.
The foregoing description of the Merger and the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which is included as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
As contemplated by the terms of the Merger Agreement, SONA’s board of directors (the “ Board ”) approved the expansion of the size of the Board to 11 members and the appointment of: (i) two Class I directors to the Board, John F. Biagas and F.L. Garrett, III and (ii) three Class II directors to the Board, W. Rand Cook, Eric A. Johnson and Joe A. Shearin, as well as the designation of J. Mikesell Thomas as an observer to the Board, all effective as of the effective time of the Merger. The Board also approved, effective upon their appointment to the Board, the appointment of Messrs. Shearin and Cook to the Board’s Executive Committee, the appointment of Messrs. Biagas, Johnson and Thomas (as observer) to the Board’s Audit Committee, the appointment of Messrs. Cook and Johnson
to the Board’s Corporate Governance Committee and the appointment of Messrs. Biagas, Garrett and Thomas (as observer) to the Board’s Compensation Committee.
Each of the new directors’ terms of office will expire at SONA’s 2018 annual meeting of shareholders and thereafter in staggered three year terms according to such director’s class. Compensatory arrangements for the new directors (other than Mr. Shearin) will be consistent with SONA’s previously disclosed standard arrangements for non-employee directors. Such arrangements are described in SONA’s proxy statement for its 2017 annual meeting of shareholders filed on May 11, 2017, which disclosure is incorporated herein by reference.
None of the new directors has engaged in any transaction with SONA that would be reportable as a related party transaction under Item 404(a) of Regulation S-K.
As contemplated by the terms of the Merger Agreement, effective as of June 23, 2017:
· | Georgia S. Derrico stepped down as Chief Executive Officer of SONA and will continue to serve as Executive Chairman; |
· | R. Roderick Porter stepped down as President and Chief Operating Officer of SONA and will continue to serve as Executive Vice Chairman; |
· | William H. Lagos stepped down as Chief Financial Officer of SONA and will continue to serve as Chief Accounting Officer; |
· | William H. Stevens will continue to serve as Chief Credit Risk Officer of SONA; |
· | Thomas P. Baker will serve as Chief Credit Officer of SONA; |
· | Joe A. Shearin was appointed President and Chief Executive Officer of SONA; |
· | J. Adam Sothen was appointed Chief Financial Officer of SONA; and |
· | Douglas R. Taylor was appointed Chief Risk Officer of SONA. |
Mr. Shearin, age 61, served as President and Chief Executive Officer of EVBS since 2002. Mr. Shearin has 38 years of bank management experience including commercial, retail, marketing, sales, strategic planning, credit administration, risk management and asset/liability management. Mr. Shearin also has experience managing troubled banks that have focused significant efforts on regulatory compliance initiatives.
Mr. Sothen, age 40, joined EVBS in June 2010 as Vice President and Corporate Controller of EVBS. In September 2011, Mr. Sothen was appointed as EVBS’ Chief Financial Officer and EVB’s Executive Vice President and Chief Financial Officer. Mr. Sothen served as EVBS’ Corporate Controller until October 2012. Mr. Sothen has not engaged in any transaction with SONA that would be reportable as a related party transaction under Item 404(a) of Regulation S-K.
As previously disclosed, the change in control agreements between SONA and each of Ms. Derrico and Messrs. Porter and Baker were terminated in connection with the Merger, in each case in exchange for payment to Ms. Derrico, Mr. Porter and Mr. Baker, respectively, of $2,213,720, $1,001,550, and $335,040 , respectively, representing the cash severance that would have been due him or her pursuant to his or her respective change in control agreement, determined as if Ms. Derrico, Mr. Porter and Mr. Baker, respectively, had been terminated in a “qualifying termination” (as defined in the change in control agreement). SONA entered into termination agreements with each of Ms. Derrico and Messrs. Porter and Baker to effectuate the above-described terminations.
The foregoing description of the termination agreements is qualified in its entirety by reference to the text of the agreements, which are filed as Exhibits 10.1, 10.2, and 10.3 to this Current Report on Form 8-K and incorporated herein by reference.
As contemplated by the terms of the Merger Agreement, each of Ms. Derrico and Messrs. Porter, Baker, Shearin and Sothen entered into employment agreements with SONA, in each case effective June 23, 2017, as described in greater detail below. The following description of the employment agreements is qualified in its entirety by reference to the text of the employment agreements, which are filed as Exhibits 10.4, 10.5, 10.6, 10.7 and 10.8 to this Current Report on Form 8-K and incorporated herein by reference.
Ms. Derrico and Mr. Porter . The employment agreements with Ms. Derrico and Mr. Porter have a term of two years, and provide for a base salary of $469,577 and $318,675, respectively, and participation in such benefit plans, policies and programs as may be maintained, from time to time, by SONA. If the executive is terminated by SONA without cause (as defined in Ms. Derrico’s and Mr. Porter’s employment agreements, respectively) prior to the expiration of the term, then the executive will receive (i) a severance payment equal to his or her base salary that would have been paid through the expiration of the term, absent his or her termination of employment, payable in a single lump sum, (ii) reimbursement for group health care premiums for two years following his or her termination of employment, and (iii) continued access to a personal assistant having a salary not to exceed $60,000 for two years following termination of employment. In addition, the executive’s outstanding options will become fully-vested and exercisable as of the date of such termination. The employment agreements contain customary confidentiality covenants, as well as covenants regarding the non-solicitation of customer and employees and non-competition that apply for twelve months following the executive’s termination of employment.
Mr. Baker. The employment agreement with Mr. Baker has a term of two years, and provides for a base salary of $217,360 and participation in such benefit plans, policies and programs as may be maintained, from time to time, by SONA. If the executive is terminated by SONA without cause (as defined in Mr. Baker’s employment agreement) prior to the expiration of the term, then Mr. Baker will receive a severance payment equal to his base salary that would have been paid through the expiration of the term, absent his termination of employment, payable in a single lump sum. Mr. Baker’s employment agreement contains customary confidentiality covenants, as well as covenants regarding the non-solicitation of customer and employees and non-competition that apply for twelve months following his termination of employment.
Mr. Shearin . Mr. Shearin’s employment agreement, which replaces and supersedes his prior employment agreement with EVBS, has an initial term that expires on December 31, 2020, subject to automatic two-year renewals unless either party provides written notice of non-renewal no later than ninety days before any renewal date, and provides for an annual base salary equal to $424,200 and eligibility for equity awards and annual bonuses and certain other benefits, including continued participation in the EVBS SERP (as defined in Mr. Shearin’s employment agreement) (which was assumed by SONA in the Merger), payment of private club dues and use of an automobile at SONA’s expense. If Mr. Shearin resigns for good reason or his employment is terminated without cause (as each is defined in Mr. Shearin’s employment agreement) (including termination of employment upon the expiration or non-renewal of the term), then he is entitled to receive a monthly payment equal to one-twelfth his rate of annual base salary in effect immediately preceding such termination for thirty-six months, continuing health insurance benefits for himself and his covered spouse and dependents, with such premiums paid by SONA, for thirty-six months, out-placement services for up to two years, paid for by SONA up to a total of $10,000, and an additional amount equal to the average of the annual bonus compensation earned by him for the three immediately preceding years (or such fewer number of years for which he may have been employed), payable in a lump sum on the date of termination. These severance benefits are conditioned upon Mr. Shearin’s execution, delivery and non-revocation of a release of claims, and such payments and benefits will cease in the event Mr. Shearin violates any applicable covenants not to compete and not to solicit customers or employees set forth under the agreement.
If Mr. Shearin resigns for good reason or his employment is terminated without cause within one year after a change in control (as defined in Mr. Shearin’s employment agreement and includes the Merger) then he is entitled to receive the above-described benefits, as well as an additional amount equal to three times the highest annual bonus compensation earned for the three immediately preceding years (or such fewer number of years for which he may have been employed), payable in a lump sum on the date of termination.
Mr. Shearin’s employment agreement contains a confidentiality provision that is in effect during his employment and for at least five years after the termination of his employment and covenants not to compete and not to solicit customers or employees that are in effect for twelve months after the termination of his employment, provided that the covenants not to compete and not to solicit customers or employees do not apply for one year following the effective date of the employment agreement and do not apply following a change in control that occurs after the effective date of the employment agreement.
If the payments and benefits under the employment agreement, together with other payments and benefits Mr. Shearin may have the right to receive, on account of a change in control would exceed the maximum limit imposed on the total of such payments and benefits by Section 280G of the tax code (without triggering the excise tax imposed under Section 4999 of the tax code), the employment agreement provides that Mr. Shearin will receive whichever of the following is more favorable to him on a net after-tax basis: (i) the payments and benefits reduced to the extent necessary so that none of the payments or benefits is subject to the excise tax or (ii) the full amount of the payments and benefits, which is subject to the excise tax, with Mr. Shearin being responsible for paying any excise tax imposed.
Mr. Sothen . The employment agreement with Mr. Sothen, which replaces and supersedes Mr. Sothen’s rights under the EVBS Executive Severance Plan, has an initial term that expires on December 31, 2019, subject to automatic one-year renewals unless either party provides written notice of non-renewal no later than thirty days before any renewal date, and provides for an annual base salary of $193,785 and eligibility for equity awards and annual bonuses and certain other benefits. Pursuant to the terms of the employment agreement, if Mr. Sothen resigns for good reason or his employment is terminated without cause (as each is defined in Mr. Sothen’s employment agreement), then he is entitled to receive a monthly payment equal to one-twelfth his rate of annual base salary in effect immediately preceding such termination for twenty-four months, beginning sixty days after termination of employment, and continuing health insurance benefits for himself and his covered spouse and dependents, with the employer portion of such premiums paid by SONA, for twenty-four months. These payments and benefits are conditioned upon Mr. Sothen’s execution, delivery and non-revocation of a release of claims, and will cease in the event Mr. Sothen violates the confidentiality provision or any applicable covenants not to compete and not to solicit customers or employees set forth under the agreement. If Mr. Sothen resigns for good reason or his employment is terminated without cause after the end of the term of the employment agreement and Mr. Sothen is subject to the covenant not to compete, then Mr. Sothen is entitled to receive a monthly payment equal to one-twelfth his rate of annual base salary in effect immediately preceding such termination for twelve months, beginning sixty days after termination of employment. These payments and benefits are conditioned upon his execution, delivery and non-revocation of a release of claims, and will cease in the event Mr. Sothen violates the confidentiality provision or any applicable covenants not to compete and not to solicit customers or employees set forth under the agreement.
If Mr. Sothen resigns for good reason or his employment is terminated without cause within one year after a change in control (as defined in Mr. Sothen’s employment agreement, which does not include the Merger), then he is entitled to receive the above-described benefits, plus an additional amount equal to two times the highest annual bonus compensation earned for the three immediately preceding years (or such fewer number of years for which he may have been employed), payable in a lump sum. These payments and benefits are conditioned upon his
execution, delivery and non-revocation of a release of claims, and will cease in the event Mr. Sothen violates the confidentiality provision or any applicable covenants not to solicit customers or employees set forth under the agreement.
Mr. Sothen’s employment agreement contains a confidentiality provision that is in effect during his employment and for at least five years after the termination of his employment and covenants not to compete and not to solicit customers or employees that are in effect for twelve months after the termination of his employment, provided that the covenant not to compete does not apply following a change in control that occurs after the effective date of the employment agreement.
If the payments and benefits under the employment agreement, together with other payments and benefits Mr. Sothen may have the right to receive, on account of a change in control would exceed the maximum limit imposed on the total of such payments and benefits by Section 280G of the tax code (without triggering the excise tax imposed under Section 4999 of the tax code), the employment agreement provides for whichever of the following is more favorable to him on a net after-tax basis: (i) the payments and benefits reduced to the extent necessary so that none of the payments or benefits is subject to the excise tax or (ii) the full amount of the payments and benefits, which is subject to the excise tax, with Mr. Sothen being responsible for paying any excise tax imposed.
Base Salaries . Each of the above-described agreements provides that the Compensation Committee of the Board will review the executive’s base salary at its first meeting following June 23, 2017 and may increase, but not decrease, such base salary in connection with such review.
SERP . Mr. Shearin will continue to participate in the EVBS supplemental executive retirement plan, which was assumed by SONA following the Merger and re-named the Southern National Bancorp of Virginia, Inc. Supplemental Executive Retirement Plan (the “ SONA SERP ”). Under the SONA SERP, the normal retirement benefit for Mr. Shearin consists of an annual benefit of $155,000, payable monthly for 15 years. The normal retirement benefit for Mr. Shearin became fully vested as a result of the Merger. The completion of the Merger, however, did not accelerate the time of payment under the SONA SERP. If Mr. Shearin’s employment terminates on or after the date he attains the normal retirement age of 67, the payments described above will begin on the first day of the month following termination of employment. If Mr. Shearin’s employment terminates before the date he attains the normal retirement age of 67, the payments described above will begin on the first day of the month following the later of termination of employment or the date he attains the age of 62. In all events, payments to Mr. Shearin under the SONA SERP may be delayed for six months if required to comply with Section 409A of the Internal Revenue Code. The foregoing description of the SONA SERP is qualified in its entirety by reference to the text of SONA SERP, which is filed as Exhibit 10.9 to this Current Report on Form 8-K and incorporated herein by reference.
Executive Severance Plan . The EVBS Executive Severance Plan was assumed by SONA following the Merger and re-named the Southern National Bancorp of Virginia, Inc. Executive Severance Plan (the “ SONA Executive Severance Plan ”). The SONA Executive Severance Plan covers officers at the Executive Vice President level or above who do not have an employment agreement. Mr. Taylor is a current participant in the SONA Executive Severance Plan, and the Compensation Committee of the Board may designate additional SONA executives to participate in the SONA Executive Severance Plan, including but not limited to Messrs. Lagos and Stevens. Subject to execution, delivery and non-revocation of a release of claims, if a participant’s employment is terminated other than for cause or if a participant experiences a constructive discharge (as such terms are defined in the SONA Executive Severance Plan), then he or she will be eligible to receive base salary continuation at the rate in effect on the date of termination and continued payment of an amount equal to the employer-paid portion of the monthly medical premium for the participant and his or her covered spouse and dependents on the date of termination, if the participant elects and receives medical insurance coverage under COBRA following termination of employment,
for six months following termination of employment or, if such termination occurs within one year following a change in control, for twelve months following termination of employment. The foregoing description of the SONA Executive Severance Plan is qualified in its entirety by reference to the text of SONA Executive Severance Plan, which is filed as Exhibit 10.10 to this Current Report on Form 8-K and incorporated herein by reference.
Item 5.07 Submission of Matters to a Vote of Security Holders.
Annual Meeting of Shareholders
On June 21, 2017, SONA held its annual meeting of shareholders (the “ Annual Meeting ”) in Fairfax, Virginia. The following is a summary of the voting results for each proposal presented at the Annual Meeting.
Proposal 1 . SONA’s shareholders approved the re-election of one Class II director, Neil J. Call, as set forth below:
For | Withhold | Broker Non-Votes | ||||||||
7,736,941 | 242,456 | 2,656,282 |
Proposal 2 . SONA’s shareholders ratified the appointment of Dixon Hughes Goodman LLP as SONA’s independent registered public accounting for the fiscal year ending December 31, 2017, as set forth below:
For | Against | Abstain | Broker Non-Votes | |||||||||||
10,611,384 | 18,650 | 5,645 | 0 |
Proposal 3 . SONA’s shareholders approved, in a non-binding advisory vote, the compensation payable to SONA’s named executive officers, as set forth below:
For | Against | Abstain | Broker Non-Votes | |||||||||||
6,926,171 | 791,057 | 262,169 | 2,656,282 |
Proposal 4 . SONA’s shareholders approved, in a non-binding advisory vote, holding future advisory votes regarding the compensation of SONA’s named executive officers every 1 year, as set forth below:
1 Year | 2 Years | 3 Years | Abstain | Broker Non-Votes | ||||||||||||||
7,007,417 | 189,098 | 722,994 | 59,427 | 2,656,282 |
Based on the outcome of the vote on the frequency of future advisory votes to approve executive compensation and consistent with its recommendation, the Board has determined that SONA will continue to hold such votes to approve executive compensation every 1 year until the next required frequency vote. Accordingly, SONA will hold its next advisory vote to approve executive compensation at its 2018 annual meeting of shareholders.
Proposal 5 . SONA’s shareholders approved the Southern National Bancorp of Virginia, Inc. 2017 Equity Compensation Plan, as set forth below:
For | Against | Abstain | Broker Non-Votes | |||||||||||
7,791,343 | 163,685 | 24,369 | 2,656,282 |
Special Meeting of Shareholders
On June 21, 2017, following the Annual Meeting, SONA held a special meeting of shareholders (the “ Special Meeting ”) in Fairfax, Virginia, related to the Merger. The following is a summary of the voting results for each proposal presented at the Special Meeting.
Proposal 1 . SONA’s shareholders approved the Merger Agreement pursuant to which EVBS will merge with and into SONA, as set forth below:
For | Against | Abstain | Broker Non-Votes | |||||||||||
9,961,756 | 4,710 | 9,127 | 1,100 |
Proposal 2 . A proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies to approve the merger proposal was not submitted to a vote of shareholders at the Special Meeting, as sufficient votes were cast at the Special Meeting to approve the Merger Agreement.
Proposal 3 . SONA’s shareholders approved, in a non-binding advisory vote, certain compensation that may become payable to SONA’s named executive officers in connection with the Merger, as set forth below:
For | Against | Abstain | Broker Non-Votes | |||||||||||
5,331,427 | 4,244,318 | 400,948 | 0 |
Item 8.01 Other Events.
On June 23, 2017, SONA and EVBS issued a joint press release announcing the closing of the Merger. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K, and is incorporated by reference herein.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
SONA intends to file the financial statements of the business acquired under cover of Form 8-K/A no later than 71 calendar days after the date this Report was required to be filed.
(b) Pro forma financial information.
SONA intends to file pro forma financial information under cover of Form 8-K/A no later than 71 calendar days after the date this Report was required to be filed.
(d) Exhibits.
Exhibit No. | Description | |
2.1 | Agreement and Plan of Merger, dated as of December 13, 2016, between Southern National Bancorp of Virginia, Inc. and Eastern Virginia Bankshares, Inc. (incorporated by reference to Exhibit 2.1 to SONA’s Form 8-K, as filed on December 14, 2016), as amended by Amendment No. 1 to the Agreement and Plan of Merger, dated March 8, 2017 (incorporated by reference to Exhibit 2.1 to SONA’s Form 8-K, as filed on March 9, 2017), and Amendment No. 2 to the Agreement and Plan of |
Merger, dated as of April 5, 2017 (incorporated by reference to Exhibit 2.1 to SONA’s Form 8-K, as filed on April 5, 2017). | ||
10.1 | Termination Agreement between Southern National Bancorp of Virginia, Inc., Sonabank and Georgia S. Derrico, dated as of June 23, 2017. | |
10.2 | Termination Agreement between Southern National Bancorp of Virginia, Inc., Sonabank and R. Roderick Porter, dated as of June 23, 2017. | |
10.3 | Termination Agreement between Southern National Bancorp of Virginia, Inc., Sonabank and Thomas P. Baker, dated as of June 23, 2017. | |
10.4 | Employment Agreement, dated as of June 23, 2017, by and between Georgia S. Derrico and Southern National Bancorp of Virginia, Inc. | |
10.5 | Employment Agreement, dated as of June 23, 2017, by and between R. Roderick Porter and Southern National Bancorp of Virginia, Inc. | |
10.6 | Employment Agreement, dated as of June 23, 2017, by and between Thomas P. Baker and Southern National Bancorp of Virginia, Inc. | |
10.7 | Employment Agreement, dated as of June 23, 2017, by and between Joe A. Shearin, Southern National Bancorp of Virginia, Inc. and Sonabank. | |
10.8 | Employment Agreement, dated as of June 23, 2017, by and between J. Adam Sothen, Southern National Bancorp of Virginia, Inc. and Sonabank. | |
10.9 | Southern National Bancorp of Virginia, Inc. Supplemental Executive Retirement Plan. | |
10.10 | Southern National Bancorp of Virginia, Inc. Executive Severance Plan. | |
99.1 | Joint Press Release of Southern National Bancorp of Virginia, Inc. and Eastern Virginia Bankshares, Inc., dated June 23, 2017. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SOUTHERN NATIONAL BANCORP OF VIRGINIA, INC. | ||
Date: June 26, 2017 | By: | /s/ J. Adam Sothen |
J. Adam Sothen | ||
Chief Financial Officer |
EXHIBIT INDEX
Exhibit No. | Description | |
2.1 | Agreement and Plan of Merger, dated as of December 13, 2016, between Southern National Bancorp of Virginia, Inc. and Eastern Virginia Bankshares, Inc. (incorporated by reference to Exhibit 2.1 to SONA’s Form 8-K, as filed on December 14, 2016), as amended by Amendment No. 1 to the Agreement and Plan of Merger, dated March 8, 2017 (incorporated by reference to Exhibit 2.1 to SONA’s Form 8-K, as filed on March 9, 2017), and Amendment No. 2 to the Agreement and Plan of Merger, dated as of April 5, 2017 (incorporated by reference to SONA’s Form 8-K, as filed on April 5, 2017). | |
10.1 | Termination Agreement between Southern National Bancorp of Virginia, Inc., Sonabank and Georgia S. Derrico, dated as of June 23, 2017. | |
10.2 | Termination Agreement between Southern National Bancorp of Virginia, Inc., Sonabank and R. Roderick Porter, dated as of June 23, 2017. | |
10.3 | Termination Agreement between Southern National Bancorp of Virginia, Inc., Sonabank and Thomas P. Baker, dated as of June 23, 2017. | |
10.4 | Employment Agreement, dated as of June 23, 2017, by and between Georgia S. Derrico and Southern National Bancorp of Virginia, Inc. | |
10.5 | Employment Agreement, dated as of June 23, 2017, by and between R. Roderick Porter and Southern National Bancorp of Virginia, Inc. | |
10.6 | Employment Agreement, dated as of June 23, 2017, by and between Thomas P. Baker and Southern National Bancorp of Virginia, Inc. | |
10.7 | Employment Agreement, dated as of June 23, 2017, by and between Joe A. Shearin, Southern National Bancorp of Virginia, Inc. and Sonabank. | |
10.8 | Employment Agreement, dated as of June 23, 2017, by and between J. Adam Sothen, Southern National Bancorp of Virginia, Inc. and Sonabank. | |
10.9 | Southern National Bancorp of Virginia, Inc. Supplemental Executive Retirement Plan. | |
10.10 | Southern National Bancorp of Virginia, Inc. Executive Severance Plan. | |
99.1 | Joint Press Release of Southern National Bancorp of Virginia, Inc. and Eastern Virginia Bankshares, Inc., dated June 23, 2017. |
Exhibit 10.1
AGREEMENT TO TERMINATE CHANGE IN CONTROL AGREEMENT
This Termination Agreement (this “ Agreement ”), is hereby entered into between Southern National Bancorp of Virginia , INC., a Virginia corporation (“ SONA ”), Sonabank , a national bank and wholly-owned subsidiary of SONA (“ Sonabank ”) and Georgia S. Derrico (“ Executive ”).
WHEREAS, SONA, Sonabank and Executive are parties to that certain Change in Control Agreement dated August 1, 2006 (the “ CIC Agreement ”);
WHEREAS, pursuant to Section 5.12(e) of the Agreement and Plan of Merger by and between SONA and Eastern Virginia Bankshares, Inc. dated as of December 13, 2016, as amended (the “ Merger Agreement ”), SONA shall irrevocably terminate and liquidate the CIC Agreement, subject to the effectiveness of a general release of claims as of the Effective Date (as defined in the Merger Agreement) in favor of SONA and its related entities, in exchange for payment to Executive of an amount representing the cash severance that would have been due her pursuant to the CIC Agreement, determined as if Executive had been terminated in a Qualifying Termination (as defined in the CIC Agreement), and contingent on the closing of the transactions contemplated by the Merger Agreement;
WHEREAS, the Board of Directors of SONA has previously approved the termination and liquidation of the CIC Agreement; and
WHEREAS, SONA hereby desires to terminate and liquidate the CIC Agreement as provided by the Merger Agreement.
NOW THEREFORE, it is agreed as follows:
1. Termination of CIC Agreement .
(a) Effective as of the Effective Time, the CIC Agreement shall hereby be terminated and shall be of no further force and effect; provided, however, that such termination shall be contingent on the closing of the Merger.
(b) Within ten (10) business days following the Effective Time, Sonabank shall pay to Executive Two Million Two Hundred Thirteen Thousand Seven Hundred and Twenty Dollars and Zero Cents ($2,213,720.00), less required tax withholdings and any other amounts required to be withheld, which amount represents the cash severance that would have been due her pursuant to the CIC Agreement, determined as if Executive had been terminated in a Qualifying Termination. Executive acknowledges that the payment set forth in this Paragraph is in addition to anything to which she was already entitled.
2. Executive’s Acknowledgement, General Release of Claims, and Covenant Not To Sue .
(a) Acknowledgement regarding CIC Agreement . Executive expressly acknowledges that, upon the payment of the amount specified in paragraph 1(b) hereof, and except as may be set otherwise forth in this Agreement, any right or claim arising under the CIC Agreement shall be extinguished and cancelled, and she shall not be eligible to receive from SONA or Sonabank any further amount, benefit or payment in consideration of the termination of the CIC Agreement.
(b) General Release of Claims . In consideration of the payments made to her by Sonabank and the promises contained in this Agreement, Executive, on behalf of herself and her agents and successors in interest, hereby UNCONDITIONALLY RELEASES AND DISCHARGES SONA and
Sonabank, and their respective successors, subsidiaries, parent companies, assigns, joint ventures, and affiliated companies and their respective agents, legal representatives, shareholders, attorneys, employees, members, managers, officers and directors, (collectively, the “ Releasees ”) from ALL CLAIMS, LIABILITIES, DEMANDS AND CAUSES OF ACTION which she may by law release, whether known or unknown, fixed or contingent, that she may have or claim to have against any Releasee for any reason as of the date of execution of this Agreement. This Release and Covenant Not To Sue includes, but is not limited to, claims arising under federal, state or local laws prohibiting employment discrimination; claims arising under severance plans and contracts; and claims growing out of any legal restrictions on the Employer’s rights to terminate its employees or to take any other employment action, whether statutory, contractual or arising under common law or case law. Executive specifically acknowledges and agrees that she is releasing any and all rights under federal, state and local employment laws including without limitation the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 1981, the Americans With Disabilities Act, the Family and Medical Leave Act, the Genetic Information Nondiscrimination Act, the anti-retaliation provisions of the Fair Labor Standards Act, the Employee Retirement Income Security Act, the Equal Pay Act, the Occupational Safety and Health Act, the Worker Adjustment and Retraining Notification Act, the Employee Polygraph Protection Act, the Fair Credit Reporting Act, and any and all other local, state, and federal law claims arising under statute or common law. It is agreed that this is a general release and it is to be broadly construed as a release of all claims, except those that cannot be released by law.
(c) Covenant Not to Sue . Except as expressly set forth in Paragraph 2(f) below, Executive further hereby AGREES NOT TO FILE A LAWSUIT or other legal claim or charge to assert against any of the Releasees any claim released by this Agreement.
(d) Acknowledgement Regarding Payments and Benefits . Executive acknowledges and agrees that she has received all wages and benefits to which she is entitled as a result of her employment with Sonabank through the date of execution of this Agreement. Other than the payments set forth in this Agreement, the parties agree that the Sonabank owes no additional amounts to Executive for wages, back pay, severance pay, bonuses, damages, accrued vacation, benefits, insurance, sick leave, other leave, or any other reason as a result of her employment with Sonabank through the date of execution of this Agreement.
(e) Other Representations and Acknowledgements . This Agreement is intended to and does settle and resolve all claims of any nature that Executive might have against Sonabank, SONA, and the Releasees arising out of their employment relationship or relating to any other matter through the date of execution of this Agreement, except those that cannot be released by law. By signing this Agreement, Executive acknowledges that she is doing so knowingly and voluntarily, that she understands that she may be releasing claims she may not know about, and that she is waiving all rights she may have had under any law that is intended to protect her from waiving unknown claims. This Agreement shall not in any way be construed as an admission by Sonabank, SONA, or any of the Releasees of wrongdoing or liability or that Executive has any rights against Sonabank, SONA, or any of the Releasees. Executive represents and agrees that she has not transferred or assigned, to any person or entity, any claim that she is releasing in this Agreement.
(f) Protected Rights . Executive understands that nothing contained in this Agreement limits her ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Securities and Exchange Commission, or any other federal, state or local governmental agency or commission (“ Government Agencies ”). Executive further understands that this Agreement does not limit her ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agencies in connection with any charge or complaint, whether filed by Executive, on her behalf, or by any other individual. However, based on Executive’s release of claims set forth in this Agreement, Executive
understands that she is releasing all claims that she may have, as well as, to the extent permitted by applicable law, her right to recover monetary damages or obtain other relief that is personal to Executive in connection with any claim she is releasing under this Agreement.
(g) Additional Acknowledgments . Sonabank and SONA hereby advise Executive to consult with an attorney prior to executing this Agreement, and Executive acknowledges and agrees that Sonabank and SONA have advised, and hereby do advise, her of her opportunity to consult an attorney or other advisor and have not in any way discouraged her from doing so. Executive expressly acknowledges and agrees that she has been offered at least twenty-one (21) days to consider this Agreement before signing it, that she has read this Agreement carefully, that she has had sufficient time and opportunity to consult with an attorney or other advisor of her choosing concerning the execution of this Agreement. Executive acknowledges and agrees that she fully understands that the Agreement is final and binding, that it contains a full release of all claims and potential claims, and that the only promises or representations she has relied upon in signing this Agreement are those specifically contained in the Agreement itself. Executive acknowledges and agrees that she is signing this Agreement voluntarily, with the full intent of releasing Sonabank, SONA, and the Releasees from all claims covered by this Agreement.
(h) Revocation . The parties agree Executive may revoke the Agreement at will within seven (7) days after she executes the Agreement by giving written notice of revocation to Sonabank. Such notice must be delivered to Joe A. Shearin , and must actually be received by him at or before the above-referenced seven-day deadline. The Agreement may not be revoked after the expiration of the seven-day deadline. In the event that Executive revokes the Agreement within the revocation period described in this Paragraph, this Agreement shall not be effective or enforceable, and all rights and obligations hereunder shall be void and of no effect.
2. Miscellaneous .
(a) This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Virginia, without giving effect to its conflicts of law principles.
(b) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
(c) Failure of either party to insist, in one or more instances, on performance by the other in strict accordance with the terms and conditions of this Agreement shall not be deemed a waiver or relinquishment of any right granted in this Agreement or of the future performance of any such term or condition or of any other term or condition of this Agreement, unless such waiver is contained in a writing signed by the party making the waiver.
(d) The parties understand and agree that because each of them has been given the opportunity to have counsel review and revise this Agreement, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. Instead, the language of all parts of this Agreement shall be construed as a whole, and according to its fair meaning, and not strictly for or against any of the parties.
(e) This Agreement may be executed in two or more counterparts, and it shall not be necessary that the signatures of the parties hereto be contained on any one counterpart hereof. Each counterpart shall be deemed an original but all counterparts together shall constitute one and the same instrument. Any signature page of any such counterpart, or any electronic facsimile thereof, may be attached or appended to any other counterpart to complete a fully executed counterpart of this Agreement,
and any telecopy or other electronic transmission of any signature shall be deemed an original and shall bind such party.
(f) This Agreement shall be effective as of the Effective Time. In the event the transactions contemplated under the Merger Agreement shall not be consummated as provided therein, this Agreement shall be void and of no effect.
In witness whereof , the parties have executed this Agreement on the dates indicated.
SOUTHERN NATIONAL BANCORP OF VIRGINIA, INC.
By: | /s/ Joe A. Shearin | |
Joe A. Shearin | ||
Its: | President and Chief Executive Officer | |
Date: | June 23, 2017 | |
SONABANK | ||
By: | /s/ Joe A. Shearin | |
Joe A. Shearin | ||
Its: | President and Chief Executive Officer | |
Date: | June 23, 2017 | |
EXECUTIVE | ||
/s/ Georgia S. Derrico | ||
Georgia S. Derrico | ||
Date: | June 23, 2017 |
[Derrico Change in Control Termination Agreement]
Exhibit 10.2
AGREEMENT TO TERMINATE CHANGE IN CONTROL AGREEMENT
This Termination Agreement (this “ Agreement ”), is hereby entered into between Southern National Bancorp of Virginia , INC., a Virginia corporation (“ SONA ”), Sonabank , a national bank and wholly-owned subsidiary of SONA (“ Sonabank ”) and R. RODERICK PORTER (“ Executive ”).
WHEREAS, SONA, Sonabank and Executive are parties to that certain Change in Control Agreement dated August 1, 2006 (the “ CIC Agreement ”);
WHEREAS, pursuant to Section 5.12(e) of the Agreement and Plan of Merger by and between SONA and Eastern Virginia Bankshares, Inc. dated as of December 13, 2016, as amended (the “ Merger Agreement ”), SONA shall irrevocably terminate and liquidate the CIC Agreement, subject to the effectiveness of a general release of claims as of the Effective Date (as defined in the Merger Agreement) in favor of SONA and its related entities, in exchange for payment to Executive of an amount representing the cash severance that would have been due him pursuant to the CIC Agreement, determined as if Executive had been terminated in a Qualifying Termination (as defined in the CIC Agreement), and contingent on the closing of the transactions contemplated by the Merger Agreement;
WHEREAS, the Board of Directors of SONA has previously approved the termination and liquidation of the CIC Agreement; and
WHEREAS, SONA hereby desires to terminate and liquidate the CIC Agreement as provided by the Merger Agreement.
NOW THEREFORE, it is agreed as follows:
1. Termination of CIC Agreement .
(a) Effective as of the Effective Time, the CIC Agreement shall hereby be terminated and shall be of no further force and effect; provided, however, that such termination shall be contingent on the closing of the Merger.
(b) Within ten (10) business days following the Effective Time, Sonabank shall pay to Executive One Million One Thousand Five Hundred and Fifty Dollars and Zero Cents ($1,001,550), less required tax withholdings and any other amounts required to be withheld, which amount represents the cash severance that would have been due him pursuant to the CIC Agreement, determined as if Executive had been terminated in a Qualifying Termination. Executive acknowledges that the payment set forth in this Paragraph is in addition to anything to which he was already entitled.
2. Executive’s Acknowledgement, General Release of Claims, and Covenant Not To Sue .
(a) Acknowledgement regarding CIC Agreement . Executive expressly acknowledges that, upon the payment of the amount specified in paragraph 1(b) hereof, and except as may be set otherwise forth in this Agreement, any right or claim arising under the CIC Agreement shall be extinguished and cancelled, and he shall not be eligible to receive from SONA or Sonabank any further amount, benefit or payment in consideration of the termination of the CIC Agreement.
(b) General Release of Claims . In consideration of the payments made to him by Sonabank and the promises contained in this Agreement, Executive, on behalf of himself and his agents and successors in interest, hereby UNCONDITIONALLY RELEASES AND DISCHARGES SONA and
Sonabank, and their respective successors, subsidiaries, parent companies, assigns, joint ventures, and affiliated companies and their respective agents, legal representatives, shareholders, attorneys, employees, members, managers, officers and directors, (collectively, the “ Releasees ”) from ALL CLAIMS, LIABILITIES, DEMANDS AND CAUSES OF ACTION which he may by law release, whether known or unknown, fixed or contingent, that he may have or claim to have against any Releasee for any reason as of the date of execution of this Agreement. This Release and Covenant Not To Sue includes, but is not limited to, claims arising under federal, state or local laws prohibiting employment discrimination; claims arising under severance plans and contracts; and claims growing out of any legal restrictions on the Employer’s rights to terminate its employees or to take any other employment action, whether statutory, contractual or arising under common law or case law. Executive specifically acknowledges and agrees that he is releasing any and all rights under federal, state and local employment laws including without limitation the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 1981, the Americans With Disabilities Act, the Family and Medical Leave Act, the Genetic Information Nondiscrimination Act, the anti-retaliation provisions of the Fair Labor Standards Act, the Employee Retirement Income Security Act, the Equal Pay Act, the Occupational Safety and Health Act, the Worker Adjustment and Retraining Notification Act, the Employee Polygraph Protection Act, the Fair Credit Reporting Act, and any and all other local, state, and federal law claims arising under statute or common law. It is agreed that this is a general release and it is to be broadly construed as a release of all claims, except those that cannot be released by law.
(c) Covenant Not to Sue . Except as expressly set forth in Paragraph 2(f) below, Executive further hereby AGREES NOT TO FILE A LAWSUIT or other legal claim or charge to assert against any of the Releasees any claim released by this Agreement.
(d) Acknowledgement Regarding Payments and Benefits . Executive acknowledges and agrees that he has received all wages and benefits to which he is entitled as a result of his employment with Sonabank through the date of execution of this Agreement. Other than the payments set forth in this Agreement, the parties agree that the Sonabank owes no additional amounts to Executive for wages, back pay, severance pay, bonuses, damages, accrued vacation, benefits, insurance, sick leave, other leave, or any other reason as a result of his employment with Sonabank through the date of execution of this Agreement.
(e) Other Representations and Acknowledgements . This Agreement is intended to and does settle and resolve all claims of any nature that Executive might have against Sonabank, SONA, and the Releasees arising out of their employment relationship or relating to any other matter through the date of execution of this Agreement, except those that cannot be released by law. By signing this Agreement, Executive acknowledges that he is doing so knowingly and voluntarily, that he understands that he may be releasing claims he may not know about, and that he is waiving all rights he may have had under any law that is intended to protect him from waiving unknown claims. This Agreement shall not in any way be construed as an admission by Sonabank, SONA, or any of the Releasees of wrongdoing or liability or that Executive has any rights against Sonabank, SONA, or any of the Releasees. Executive represents and agrees that he has not transferred or assigned, to any person or entity, any claim that he is releasing in this Agreement.
(f) Protected Rights . Executive understands that nothing contained in this Agreement limits his ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Securities and Exchange Commission, or any other federal, state or local governmental agency or commission (“ Government Agencies ”). Executive further understands that this Agreement does not limit his ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agencies in connection with any charge or complaint, whether filed by Executive, on his behalf, or by any other individual. However, based on Executive’s release of claims set forth in this Agreement, Executive
understands that he is releasing all claims that he may have, as well as, to the extent permitted by applicable law, his right to recover monetary damages or obtain other relief that is personal to Executive in connection with any claim he is releasing under this Agreement.
(g) Additional Acknowledgments . Sonabank and SONA hereby advise Executive to consult with an attorney prior to executing this Agreement, and Executive acknowledges and agrees that Sonabank and SONA have advised, and hereby do advise, him of his opportunity to consult an attorney or other advisor and have not in any way discouraged him from doing so. Executive expressly acknowledges and agrees that he has been offered at least twenty-one (21) days to consider this Agreement before signing it, that he has read this Agreement carefully, that he has had sufficient time and opportunity to consult with an attorney or other advisor of his choosing concerning the execution of this Agreement. Executive acknowledges and agrees that he fully understands that the Agreement is final and binding, that it contains a full release of all claims and potential claims, and that the only promises or representations he has relied upon in signing this Agreement are those specifically contained in the Agreement itself. Executive acknowledges and agrees that he is signing this Agreement voluntarily, with the full intent of releasing Sonabank, SONA, and the Releasees from all claims covered by this Agreement.
(h) Revocation . The parties agree Executive may revoke the Agreement at will within seven (7) days after he executes the Agreement by giving written notice of revocation to Sonabank. Such notice must be delivered to Joe A. Shearin , and must actually be received by him at or before the above-referenced seven-day deadline. The Agreement may not be revoked after the expiration of the seven-day deadline. In the event that Executive revokes the Agreement within the revocation period described in this Paragraph, this Agreement shall not be effective or enforceable, and all rights and obligations hereunder shall be void and of no effect.
2. Miscellaneous .
(a) This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Virginia, without giving effect to its conflicts of law principles.
(b) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
(c) Failure of either party to insist, in one or more instances, on performance by the other in strict accordance with the terms and conditions of this Agreement shall not be deemed a waiver or relinquishment of any right granted in this Agreement or of the future performance of any such term or condition or of any other term or condition of this Agreement, unless such waiver is contained in a writing signed by the party making the waiver.
(d) The parties understand and agree that because each of them has been given the opportunity to have counsel review and revise this Agreement, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. Instead, the language of all parts of this Agreement shall be construed as a whole, and according to its fair meaning, and not strictly for or against any of the parties.
(e) This Agreement may be executed in two or more counterparts, and it shall not be necessary that the signatures of the parties hereto be contained on any one counterpart hereof. Each counterpart shall be deemed an original but all counterparts together shall constitute one and the same instrument. Any signature page of any such counterpart, or any electronic facsimile thereof, may be attached or appended to any other counterpart to complete a fully executed counterpart of this Agreement,
and any telecopy or other electronic transmission of any signature shall be deemed an original and shall bind such party.
(f) This Agreement shall be effective as of the Effective Time. In the event the transactions contemplated under the Merger Agreement shall not be consummated as provided therein, this Agreement shall be void and of no effect.
In witness whereof , the parties have executed this Agreement on the dates indicated.
SOUTHERN NATIONAL BANCORP OF VIRGINIA, INC.
By: | /s/ Joe A. Shearin | |
Joe A. Shearin | ||
Its: | President and Chief Executive Officer | |
Date: | June 23, 2017 | |
SONABANK | ||
By: | /s/ Joe A. Shearin | |
Joe A. Shearin | ||
Its: | President and Chief Executive Officer | |
Date: | June 23, 2017 | |
EXECUTIVE | ||
/s/ R. Roderick Porter | ||
R. Roderick Porter | ||
Date: | June 23, 2017 |
[Porter Change in Control Termination Agreement]
Exhibit 10.3
AGREEMENT TO TERMINATE CHANGE IN CONTROL AGREEMENT
This Termination Agreement (this “ Agreement ”), is hereby entered into between Southern National Bancorp of Virginia , INC., a Virginia corporation (“ SONA ”), Sonabank , a national bank and wholly-owned subsidiary of SONA (“ Sonabank ”) and THOMAS BAKER (“ Executive ”).
WHEREAS, SONA, Sonabank and Executive are parties to that certain Change in Control Agreement dated August 1, 2006 (the “ CIC Agreement ”);
WHEREAS, pursuant to Section 5.12(e) of the Agreement and Plan of Merger by and between SONA and Eastern Virginia Bankshares, Inc. dated as of December 13, 2016, as amended (the “ Merger Agreement ”), SONA shall irrevocably terminate and liquidate the CIC Agreement, subject to the effectiveness of a general release of claims as of the Effective Date (as defined in the Merger Agreement) in favor of SONA and its related entities, in exchange for payment to Executive of an amount representing the cash severance that would have been due him pursuant to the CIC Agreement, determined as if Executive had been terminated in a Qualifying Termination (as defined in the CIC Agreement), and contingent on the closing of the transactions contemplated by the Merger Agreement;
WHEREAS, the Board of Directors of SONA has previously approved the termination and liquidation of the CIC Agreement; and
WHEREAS, SONA hereby desires to terminate and liquidate the CIC Agreement as provided by the Merger Agreement.
NOW THEREFORE, it is agreed as follows:
1. Termination of CIC Agreement .
(a) Effective as of the Effective Time, the CIC Agreement shall hereby be terminated and shall be of no further force and effect; provided, however, that such termination shall be contingent on the closing of the Merger.
(b) Within ten (10) business days following the Effective Time, Sonabank shall pay to Executive Three Hundred Thirty Five Thousand and Forty Dollars and Zero Cents ($335,040.00), less required tax withholdings and any other amounts required to be withheld, which amount represents the cash severance that would have been due him pursuant to the CIC Agreement, determined as if Executive had been terminated in a Qualifying Termination. Executive acknowledges that the payment set forth in this Paragraph is in addition to anything to which he was already entitled.
2. Executive’s Acknowledgement, General Release of Claims, and Covenant Not To Sue .
(a) Acknowledgement regarding CIC Agreement . Executive expressly acknowledges that, upon the payment of the amount specified in paragraph 1(b) hereof, and except as may be set otherwise forth in this Agreement, any right or claim arising under the CIC Agreement shall be extinguished and cancelled, and he shall not be eligible to receive from SONA or Sonabank any further amount, benefit or payment in consideration of the termination of the CIC Agreement.
(b) General Release of Claims . In consideration of the payments made to him by Sonabank and the promises contained in this Agreement, Executive, on behalf of himself and his agents and successors in interest, hereby UNCONDITIONALLY RELEASES AND DISCHARGES SONA and Sonabank, and their respective successors, subsidiaries, parent companies, assigns, joint ventures, and
affiliated companies and their respective agents, legal representatives, shareholders, attorneys, employees, members, managers, officers and directors, (collectively, the “ Releasees ”) from ALL CLAIMS, LIABILITIES, DEMANDS AND CAUSES OF ACTION which he may by law release, whether known or unknown, fixed or contingent, that he may have or claim to have against any Releasee for any reason as of the date of execution of this Agreement. This Release and Covenant Not To Sue includes, but is not limited to, claims arising under federal, state or local laws prohibiting employment discrimination; claims arising under severance plans and contracts; and claims growing out of any legal restrictions on the Employer’s rights to terminate its employees or to take any other employment action, whether statutory, contractual or arising under common law or case law. Executive specifically acknowledges and agrees that he is releasing any and all rights under federal, state and local employment laws including without limitation the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 1981, the Americans With Disabilities Act, the Family and Medical Leave Act, the Genetic Information Nondiscrimination Act, the anti-retaliation provisions of the Fair Labor Standards Act, the Employee Retirement Income Security Act, the Equal Pay Act, the Occupational Safety and Health Act, the Worker Adjustment and Retraining Notification Act, the Employee Polygraph Protection Act, the Fair Credit Reporting Act, and any and all other local, state, and federal law claims arising under statute or common law. It is agreed that this is a general release and it is to be broadly construed as a release of all claims, except those that cannot be released by law.
(c) Covenant Not to Sue . Except as expressly set forth in Paragraph 2(f) below, Executive further hereby AGREES NOT TO FILE A LAWSUIT or other legal claim or charge to assert against any of the Releasees any claim released by this Agreement.
(d) Acknowledgement Regarding Payments and Benefits . Executive acknowledges and agrees that he has received all wages and benefits to which he is entitled as a result of his employment with Sonabank through the date of execution of this Agreement. Other than the payments set forth in this Agreement, the parties agree that the Sonabank owes no additional amounts to Executive for wages, back pay, severance pay, bonuses, damages, accrued vacation, benefits, insurance, sick leave, other leave, or any other reason as a result of his employment with Sonabank through the date of execution of this Agreement.
(e) Other Representations and Acknowledgements . This Agreement is intended to and does settle and resolve all claims of any nature that Executive might have against Sonabank, SONA, and the Releasees arising out of their employment relationship or relating to any other matter through the date of execution of this Agreement, except those that cannot be released by law. By signing this Agreement, Executive acknowledges that he is doing so knowingly and voluntarily, that he understands that he may be releasing claims he may not know about, and that he is waiving all rights he may have had under any law that is intended to protect him from waiving unknown claims. This Agreement shall not in any way be construed as an admission by Sonabank, SONA, or any of the Releasees of wrongdoing or liability or that Executive has any rights against Sonabank, SONA, or any of the Releasees. Executive represents and agrees that he has not transferred or assigned, to any person or entity, any claim that he is releasing in this Agreement.
(f) Protected Rights . Executive understands that nothing contained in this Agreement limits his ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Securities and Exchange Commission, or any other federal, state or local governmental agency or commission (“ Government Agencies ”). Executive further understands that this Agreement does not limit his ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agencies in connection with any charge or complaint, whether filed by Executive, on his behalf, or by any other individual. However, based on Executive’s release of claims set forth in this Agreement, Executive understands that he is releasing all claims that he may have, as well as, to the extent permitted by applicable
law, his right to recover monetary damages or obtain other relief that is personal to Executive in connection with any claim he is releasing under this Agreement.
(g) Additional Acknowledgments . Sonabank and SONA hereby advise Executive to consult with an attorney prior to executing this Agreement, and Executive acknowledges and agrees that Sonabank and SONA have advised, and hereby do advise, him of his opportunity to consult an attorney or other advisor and have not in any way discouraged him from doing so. Executive expressly acknowledges and agrees that he has been offered at least twenty-one (21) days to consider this Agreement before signing it, that he has read this Agreement carefully, that he has had sufficient time and opportunity to consult with an attorney or other advisor of his choosing concerning the execution of this Agreement. Executive acknowledges and agrees that he fully understands that the Agreement is final and binding, that it contains a full release of all claims and potential claims, and that the only promises or representations he has relied upon in signing this Agreement are those specifically contained in the Agreement itself. Executive acknowledges and agrees that he is signing this Agreement voluntarily, with the full intent of releasing Sonabank, SONA, and the Releasees from all claims covered by this Agreement.
(h) Revocation . The parties agree Executive may revoke the Agreement at will within seven (7) days after he executes the Agreement by giving written notice of revocation to Sonabank. Such notice must be delivered to Joe A. Shearin , and must actually be received by him at or before the above-referenced seven-day deadline. The Agreement may not be revoked after the expiration of the seven-day deadline. In the event that Executive revokes the Agreement within the revocation period described in this Paragraph, this Agreement shall not be effective or enforceable, and all rights and obligations hereunder shall be void and of no effect.
2. Miscellaneous .
(a) This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Virginia, without giving effect to its conflicts of law principles.
(b) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
(c) Failure of either party to insist, in one or more instances, on performance by the other in strict accordance with the terms and conditions of this Agreement shall not be deemed a waiver or relinquishment of any right granted in this Agreement or of the future performance of any such term or condition or of any other term or condition of this Agreement, unless such waiver is contained in a writing signed by the party making the waiver.
(d) The parties understand and agree that because each of them has been given the opportunity to have counsel review and revise this Agreement, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. Instead, the language of all parts of this Agreement shall be construed as a whole, and according to its fair meaning, and not strictly for or against any of the parties.
(e) This Agreement may be executed in two or more counterparts, and it shall not be necessary that the signatures of the parties hereto be contained on any one counterpart hereof. Each counterpart shall be deemed an original but all counterparts together shall constitute one and the same instrument. Any signature page of any such counterpart, or any electronic facsimile thereof, may be attached or appended to any other counterpart to complete a fully executed counterpart of this Agreement, and any telecopy or other electronic transmission of any signature shall be deemed an original and shall bind such party.
(f) This Agreement shall be effective as of the Effective Time. In the event the transactions contemplated under the Merger Agreement shall not be consummated as provided therein, this Agreement shall be void and of no effect.
In witness whereof , the parties have executed this Agreement on the dates indicated.
SOUTHERN NATIONAL BANCORP OF VIRGINIA, INC.
By: | /s/ Joe A. Shearin | |
Joe A. Shearin | ||
Its: | President and Chief Executive Officer | |
Date: | June 23, 2017 | |
SONABANK | ||
By: | /s/ Joe A. Shearin | |
Joe A. Shearin | ||
Its: | President and Chief Executive Officer | |
Date: | June 23, 2017 | |
EXECUTIVE | ||
/s/ Thomas Baker | ||
Thomas Baker | ||
Date: | June 23, 2017 |
[Baker Change in Control Termination Agreement]
Exhibit 10.4
Employment AGREEMENT
This EMPLOYMENT Agreement (this “ Agreement ”) is made and entered into this 23rd day of June, 2017 by and between Southern National Bancorp of Virginia, Inc., and Georgia S. Derrico (“ Executive ”), to be effective as of the Effective Date (as defined below).
BACKGROUND
WHEREAS, Executive is currently employed by Southern National Bancorp of Virginia, Inc. as its Chief Executive Officer and Chairman;
WHEREAS, following, and contingent upon the closing of, the merger of Eastern Virginia Bankshares, Inc. with and into Southern National Bancorp of Virginia, Inc. (the “ Merger ”), Executive shall serve as the Executive Chairman of the Board of Directors (the “ Board ”) of Southern National Bancorp of Virginia, Inc., the surviving corporation in the Merger (the “ Company ”); and
WHEREAS, the Company desires to employ Executive and Executive desires to accept employment subject to the agreements and covenants of this Agreement.
NOW, THEREFORE, in consideration of the payments, consents and acknowledgements described below, in consideration of Executive’s employment with the Company, and in consideration of other good and valuable consideration, the receipt and sufficiency of all of which is hereby acknowledged, the parties agree as follows:
1. Effective Date; Term; Prior Agreement .
(a) Effective Date . This Agreement shall be effective as of the effective date (the “ Effective Date ”) of the Merger, as defined in the Agreement and Plan of Merger between the Company and Eastern Virginia Bankshares, Inc. (the “ Merger Agreement ”). If the Effective Date shall not occur as contemplated under the Merger Agreement, this Agreement shall be deemed void and of no force and effect.
(b) Term . Upon the terms and subject to the conditions set forth in this Agreement, the Company hereby employs Executive, and Executive hereby accepts such employment, for the term commencing on the Effective Date and, unless otherwise earlier terminated pursuant to Section 4 hereof, expiring on the close of business on the second (2 nd ) anniversary of the Effective Date (the “ Term ”). If the Term expires and the parties agree that Executive will remain employed by the Company but do not enter into a new employment agreement, then such employment shall be at-will and this Agreement will be of no further force and effect, except that Section 6 hereof, as well as any other provisions of this Agreement necessary to interpret or enforce Section 6 hereof, shall survive and continue to be in full force and effect in accordance with their terms.
(c) Prior Agreement . The Company and Executive agree that, as of the Effective Date, the Change in Control Agreement (the “ Prior CIC Agreement ”) by and between Executive, the Company and Sonabank (the “ Bank ”) dated as of August 1, 2006 shall be terminated and be null and void pursuant to an agreement to terminate employment agreement, by and between Executive and the Company (the “ Termination Agreement ”), which Termination Agreement will provide for payment to Executive of $2,213,720, less normal withholdings, representing the cash severance that would have been due to Executive under the Prior CIC Agreement, determined as if Executive had been terminated in a Qualifying Termination (as defined in the Prior CIC Agreement), provided that Executive shall have executed a general release (the “ General Release ”) in favor of the Company and its related entities in a
form provided by the Company and effective on the Effective Date and the General Release shall not have been revoked within the revocation period specified in the General Release.
2. Employment . Executive is hereby employed on the Effective Date as the Executive Chairman of the Board. In her capacity as Executive Chairman of the Board, Executive shall have the duties, responsibilities and authority commensurate with such position. During her employment with the Company, and excluding any periods of vacation or sick leave to which Executive is entitled, Executive agrees to (i) devote all of her business effort, time, energy, and skill to fulfill her employment duties; and (ii) faithfully, loyally and diligently perform such duties. During her employment with the Company, Executive shall not be engaged in or provide services to any other business or enterprise (whether engaged in for profit or not) which interferes with her obligations to the Company. In her capacity as the Executive Chairman of the Board, Executive will report directly to the Board. Notwithstanding anything in this Agreement to the contrary, Executive’s management role with respect to MGS Foundation or Port Kinsale Marina LLC and/or ownership thereof shall not be a violation of this Section 2.
3. Compensation and Benefits .
(a) Base Salary . During the Term, the Company shall pay to Executive base salary at the rate equal to $469,577 (“ Base Salary ”), less normal withholdings, payable in approximately equal bi-weekly or other installments as are or become customary under the Company’s payroll practices for its Executives from time to time. The Compensation Committee of the Board (the “ Compensation Committee ”) shall review Executive’s Base Salary at its first meeting immediately following the Effective Date and may increase, but not decrease, such Base Salary in connection with such review.
(b) Benefit Plans . During the Term, Executive shall be entitled to participate in or become a participant in any employee benefit plan maintained by the Company for which Executive is or will become eligible on such terms as the Board, or committee thereof, may, in its discretion, establish, modify or otherwise change; provided, however, that Executive shall not be eligible to participate in the Eastern Virginia Bankshares, Inc. Supplemental Executive Retirement Plan; and provided further that nothing herein shall limit the ability of the Company to amend, modify or terminate any such plans at any time and from time to time.
(c) Incentive Compensation . Executive shall receive such incentive awards, including but not limited to equity awards, in such manner and subject to such terms and conditions as the Board, or a committee thereof, in its sole discretion, may determine.
(d) Clawback . Executive agrees that any incentive compensation (including both equity and cash incentive compensation) that Executive receives from the Company or a related entity is subject to repayment (i.e., clawback) to the Company or such related entity as determined by the Board or its Compensation Committee in the event (i) of a restatement of the Company’s financial results (other than a restatement caused by a change in applicable accounting rules or interpretations) the result of which is that the financial statements were materially inaccurate and any incentive compensation paid would have been a materially lower amount had it been calculated based on such restated results or (ii) the repayment is otherwise required by applicable state or federal law or regulation or stock exchange requirement, or by a separate “clawback” policy, as may be adopted from time to time by the Board. Except where offset of, or recoupment from, incentive compensation covered by Section 409A of the Code (as defined below) is prohibited by Section 409A of the Code, to the extent allowed by law and as determined by the Compensation Committee, Executive agrees that such repayment may, in the discretion of the Compensation Committee, be accomplished by withholding of future compensation to be paid to Executive by the Company. Any recovery of incentive compensation covered by Section 409A of the Code shall be implemented in a manner which complies with Section 409A of the Code.
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(e) Expenses . During the Term, and subject to Section 10 hereof, Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by Executive in the course of performing her duties and responsibilities under this Agreement, in accordance with the policies, practices and procedures of the Company to the extent available to other Peer Executives with respect to travel and other business expenses.
(f) Club Dues . During the Term, the Company shall pay (or reimburse Executive for) Executive’s membership dues at The New York Yacht Club. To the extent the Company reimburses Executive for any such dues, such reimbursements shall be made no later than the last day of the calendar month following the calendar month in which Executive submits the request for payment of the reimbursable expense, which shall be submitted no later than sixty (60) days after the expense is incurred.
(g) Automobile Allowance . During the Term, the Company shall pay Executive a monthly automobile allowance in an amount equal to the monthly automobile allowance in effect for Executive immediately prior to the Effective Date.
(h) Tax Assistance . During calendar year 2017, the Company shall reimburse Executive for reasonable costs incurred for tax and estate planning advice.
4. Termination of Employment .
(a) Death . Executive’s employment shall terminate automatically upon her death.
(b) Termination by the Company . The Company may terminate Executive’s employment during the Term with or without Cause (as defined herein), in each case immediately on written notice to Executive. For purposes of this Agreement, a termination shall be considered to be for “ Cause ” if the Company determines that any of the following has occurred: (i) Executive’s willful violation of any laws, rules or regulations applicable to banks or the banking industry generally; (ii) Executive’s material failure to comply with the Company’s policies or guidelines of employment or corporate governance policies or guidelines, including, without limitation, any business code of ethics adopted by the Company, that, if capable of being cured, is not cured by Executive within ten (10) days of written notice by the Company of the failure; (iii) any act of fraud, misappropriation or embezzlement by Executive; (iv) a material breach of this Agreement that, if such breach is capable of being cured, is not cured by Executive within ten (10) days of written notice by the Company of the breach; or (v) Executive’s conviction of, or Executive’s pleading guilty or nolo contendere to, a felony or a crime involving moral turpitude (including pleading guilty or nolo contendere to a felony or lesser charge which results from plea bargaining).
(c) Termination by Executive . Executive’s employment may be terminated by Executive for any reason or no reason by delivering a notice of termination to the Company thirty (30) days prior to the desired date of termination.
5. Obligations of the Company upon Termination .
(a) Termination by the Company Other Than for Cause . During the Term, if the Company terminates Executive’s employment other than for Cause, then the Company shall pay to Executive in a lump sum in cash within thirty (30) days after the date of termination, with the exact payment date to be determined by the Company, Executive’s Base Salary through the date of termination to the extent not theretofore paid (the “ Accrued Salary ”) and the following severance benefits (the
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benefits provided in Section 5(a)(i), (ii), (iii) and (iv) being collectively referred to as the “ Severance Benefits ”):
(i) subject to Section 10 hereof, the Company shall pay to Executive an amount equal to the Base Salary that would have been payable to her through the remainder of the Term had her employment not terminated (the “ Severance Amount ”), payable in a single lump sum on the first payroll date to occur after the sixtieth (60 th ) day after the date of termination;
(ii) if Executive elects to continue participation in any group medical, dental, vision and/or prescription drug plan benefits to which Executive and/or Executive’s eligible dependents would be entitled under Section 4980B of the Code (COBRA), then for a period of twenty-four (24) months after the Date of Termination (the “Group Health Benefits Continuation Period”), the Company shall pay the excess of (1) the COBRA cost of such coverage over (2) the amount that Executive would have had to pay for such coverage if she had remained employed during the Group Health Benefits Continuation Period and paid the active employee rate for such coverage, provided, however, that (A) if Executive becomes eligible to receive group health benefits under a program of a subsequent employer or otherwise, the Company’s obligation to pay any portion of the cost of health coverage as described herein shall cease, except as otherwise provided by law; (B) the Group Health Benefits Continuation Period shall run concurrently with any period for which Executive is eligible to elect health coverage under COBRA; (C) for all months after the initial eighteen (18) months of the Group Health Benefits Continuation Period, the Company-paid portion of the monthly premium for such group health benefits, determined in accordance with Code Section 4980B and the regulations thereunder, shall be treated as taxable compensation by including such amount in Executive’s income in accordance with applicable rules and regulations; (D) during the Group Health Benefits Continuation Period, the benefits provided in any one calendar year shall not affect the amount of benefits provided in any other calendar year (other than the effect of any overall coverage benefits under the applicable plans); (E) the reimbursement of an eligible taxable expense shall be made as soon as practicable but not later than December 31 of the year following the year in which the expense was incurred; and (F) Executive’s rights pursuant to this Section 5(a)(ii) shall not be subject to liquidation or exchange for another benefit. During the nineteenth (19th) month after the Date of Termination, the Company shall pay to Executive a lump sum cash payment equal to the applicable monthly premium under COBRA (less the 2% administrative fee and less the active-employee rate for such coverage), multiplied by the number of months remaining in the Group Health Benefits Continuation Period;
(iii) Executive’s unvested stock options outstanding on the Date of Termination, shall become fully vested and exercisable on the Date of Termination and shall otherwise remain subject to the terms and conditions of the equity plan pursuant to which they were granted and the award agreements evidencing the grant thereof; and
(iv) Executive shall continue to have the use of personal assistant provided by the Company for two (2) years following the Date of Termination, with such personal assistant having a base salary at a rate not to exceed $60,000.
Notwithstanding the foregoing, the Company shall be obligated to provide the Severance Benefits only if (A) within forty-five (45) days after the date of termination Executive shall have executed a separation and full release of claims/covenant not to sue agreement in the form provided by the Company (the “ Release Agreement ”) and such Release Agreement shall not have been revoked within the revocation period specified in the Release Agreement, and (B) Executive fully complies with the obligations set forth in Section 6 hereof. For the avoidance of doubt, if
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Executive does not comply with the obligations set forth in Section 6 hereof, then any obligation of the Company to pay the Severance Benefits shall cease immediately upon Executive’s breach thereof.
(b) Termination by the Company for Cause or Resignation by Executive; Death . If during the Term Executive’s employment is terminated by the Company for Cause or by Executive for any reason, or in the event of Executive’s death, then the Company shall have no further obligations to Executive or Executive’s legal representatives under this Agreement, other than for payment of Accrued Salary, which shall be paid to Executive or Executive’s estate or beneficiary, as applicable, in a lump sum in cash within thirty (30) days after the date of termination.
(c) Expiration of Term . If Executive’s employment terminates due to the expiration of the Term, then the Company shall have no further obligations to Executive or Executive’s legal representatives under this Agreement, other than for payment of Accrued Salary, which shall be paid to Executive in a lump sum in cash within thirty (30) days after the date of termination.
6. Restrictions on Competition and Disclosure and Use of Confidential Information .
(a) Confidential Information . Executive agrees that Executive shall not, directly or indirectly, use any Confidential Information (as defined herein) on Executive’s own behalf or on behalf of any Person (as defined herein) other than the Company, or reveal, divulge, or disclose any Confidential Information to any Person not expressly authorized by the Company to receive such Confidential Information. This obligation shall remain in effect for as long as the information or materials in question retain their status as Confidential Information. Executive further agrees that she shall fully cooperate with the Company in maintaining the Confidential Information to the extent permitted by law. The parties acknowledge and agree that this Agreement is not intended to, and does not, alter either the Company’s rights or Executive’s obligations under any state or federal statutory or common law regarding trade secrets and unfair trade practices. Anything herein to the contrary notwithstanding, Executive shall not be restricted from disclosing information that is required to be disclosed by law, court order or other valid and appropriate legal process; provided, however, that in the event such disclosure is required by law, Executive shall provide the Company with prompt notice of such requirement so that the Company may seek an appropriate protective order prior to any such required disclosure by Executive.
Executive understands and acknowledges that nothing in this section limits her ability to initiate communications directly with, respond to any inquiry from, volunteer information to, or provide testimony before any government agency or otherwise participate in any reporting of, investigation into, or proceeding regarding suspected violations of law, or from making other disclosures that are protected under, or from receiving an award for information provided under, the whistleblower provisions of state or federal law or regulation. Executive does not need the prior authorization of the Company to engage in such communications with any government agency, respond to such inquiries from any government agency, provide Confidential Information or documents containing Confidential Information to any government agency, or make any such reports or disclosures to any government agency. Executive is not required to notify the Company that Executive has engaged in such communications with a government agency. Executive recognizes and agrees that, in connection with any such activity outlined above, Executive must inform the government agency that the information Executive is providing is confidential.
Federal law provides certain protections to individuals who disclose a trade secret to their attorney, a court, or a government official in certain, confidential circumstances. Specifically, federal law provides that an individual shall not be held criminally or civilly liable under any state or federal trade secret law for the disclosure of a trade secret under either of the following conditions:
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· | Where the disclosure is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney; and (B) solely for the purpose of reporting or investigating a suspected violation of law; or |
· | Where the disclosure is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. |
Federal law also provides that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.
For purposes of this Section 6, “Confidential Information” means any and all data and information relating to the Company or the Bank, their activities, business, or clients that (i) is disclosed to Executive or of which Executive becomes aware as a consequence of her employment with the Company; (ii) has value to the Company; and (iii) is not generally known outside of the Company or the Bank. “Confidential Information” shall include, but is not limited to the following types of information regarding, related to, or concerning the Company or the Bank: trade secrets (as defined by Virginia Uniform Trade Secrets Act); financial plans and data; management planning information; business plans; operational methods; market studies; marketing plans or strategies; pricing information; product development techniques or plans; customer lists; customer files, data and financial information; details of customer contracts; current and anticipated customer requirements; identifying and other information pertaining to business referral sources; past, current and planned research and development; computer aided systems, software, strategies and programs; business acquisition plans; management organization and related information (including, without limitation, data and other information concerning the compensation and benefits paid to officers, directors, employees and management); personnel and compensation policies; new personnel acquisition plans; and other similar information. “Confidential Information” also includes combinations of information or materials which individually may be generally known outside of the Company or the Bank, but for which the nature, method, or procedure for combining such information or materials is not generally known outside of the Company or the Bank. In addition to data and information relating to the Company or the Bank, “Confidential Information” also includes any and all data and information relating to or concerning a third party that otherwise meets the definition set forth above, that was provided or made available to the Company or the Bank by such third party, and that the Company or the Bank has a duty or obligation to keep confidential. This definition shall not limit any definition of “confidential information” or any equivalent term under state or federal law. “Confidential Information” shall not include information that has become generally available to the public by the act of one who has the right to disclose such information without violating any right or privilege of the Company or the Bank. For purposes of this Section 6, “Person” means any individual or any corporation, partnership, joint venture, limited liability company, association or other entity or enterprise.
(b) Non-competition . Beginning on the Effective Date and for a period continuing through the twelve (12) months following cessation of Executive’s employment with the Company (the “ Restricted Period ”), Executive shall not, directly or indirectly, within any State in the United States where the Company or the Bank has a retail bank branch at the time Executive’s employment ceases, own any interest in, control or participate in the ownership or control of, or perform services that are the same as or substantially similar to the services Executive performed for the Company pursuant to this Agreement for any company, person or entity engaged in a Competitive Business (as defined herein). A “Competitive Business” shall mean any person or entity that is providing deposits, money market accounts, certificates of deposit or other typical retail banking deposit-type services or loans on a retail level, to individuals, businesses or non-profit entities in any State in the United States in which the
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Company or the Bank has a retail bank branch at the time Executive’s employment ceases. Notwithstanding the foregoing, nothing in this Agreement shall prevent Executive from owning for passive investment purposes not intended to circumvent this Agreement, less than five percent (5%) of the publicly-traded voting securities of any company engaged in the banking, financial services, insurance, brokerage or other business similar to or competitive with the Company or the Bank (so long as Executive has no power to manage, operate or control the competing enterprise and no power, alone or in conjunction with other affiliated parties, to select a director, manager, general partner, or similar governing official of the competing enterprise other than in connection with the normal and customary voting powers afforded Executive in connection with any permissible equity ownership).
(c) Non-solicitation of Employees . During the Restricted Period, Executive shall not, directly or indirectly solicit, induce or hire, or attempt to solicit, induce or hire, any person who is an employee of the Company or the Bank at the time Executive’s employment ceases or within six (6) months prior thereto, to leave his or her employment with the Company or the Bank or join or become affiliated with any Competitive Business.
(d) Non-solicitation of Customers . During the Restricted Period, Executive shall not, directly or indirectly solicit or induce or attempt to solicit or induce, any customer, lender, supplier, licensee, licensor or other business relation of the Company or the Bank to terminate its relationship or contracts with the Company or the Bank, to cease doing business with the Company or the Bank, or in any way interfere with the relationship between any such customer, lender, supplier, licensee, licensor or business relation and the Company or the Bank.
(e) Rights and Remedies Upon Breach . The parties specifically acknowledge and agree that the remedy at law for any breach of the covenants in Section 6 will be inadequate, and that in the event Executive breaches any such covenant, the Company shall have the right and remedy, without the necessity of proving actual damage or posting any bond, to enjoin, preliminarily and permanently, Executive from violating the covenant and to have the covenant specifically enforced by any court of competent jurisdiction, it being agreed that any breach would cause irreparable injury to the Company and that money damages would not provide an adequate remedy to the Company. Such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to the Company at law or in equity. The Company and Executive understand and agree that, if the parties become involved in legal action regarding the enforcement of the covenants in Section 6, the prevailing party in such legal action will be entitled, in addition to any other remedy, to recover its reasonable costs and attorneys’ fees incurred in enforcing or defending action with respect to such covenants. The Company’s ability to enforce its rights under the covenants in Section 6 or applicable law against Executive shall not be impaired in any way by the existence of a claim or cause of action on the part of Executive based on, or arising out of, this Agreement or any other event or transaction.
7. Non-exclusivity of Rights . Nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in any employee benefit plan, program, policy or practice provided by the Company or its affiliated companies and for which Executive may qualify. Amounts that are vested benefits or which Executive is otherwise entitled to receive under any plan, policy, practice or program of the Company or any of its affiliated companies at or subsequent to the date of termination shall be payable in accordance with such plan, policy, practice or program.
8. Full Settlement; No Mitigation . The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against Executive or others. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the
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provisions of this Agreement and such amounts shall not be reduced whether or not Executive obtains other employment.
9. Successors . This Agreement is personal to Executive and shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives. This Agreement can be assigned by the Company and shall be binding and inure to the benefit of the Company, and their successors and assigns.
10. Code Section 409A .
(a) General . This Agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder (and any applicable transition relief under Section 409A of the Code) (“ Section 409A of the Code ”). Nevertheless, the tax treatment of the benefits provided under the Agreement is not warranted or guaranteed. Neither the Company nor its directors, officers, employees or advisers, shall be held liable for any taxes, interest, penalties or other monetary amounts owed by Executive as a result of the application of Section 409A of the Code.
(b) Definitional Restrictions . Notwithstanding anything in this Agreement to the contrary, to the extent that any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code (“ Non-Exempt Deferred Compensation ”) would otherwise be payable or distributable hereunder by reason of Executive’s termination of employment, such Non-Exempt Deferred Compensation will not be payable or distributable to Executive by reason of such circumstance unless the circumstances giving rise to such termination of employment meet any description or definition of “separation from service,” in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that may be available under such definition). If this provision prevents the payment or distribution of any Non-Exempt Deferred Compensation, then, subject to subsection (c) below, such payment or distribution shall be made at the time and in the form that would have applied absent the non-409A-conforming event.
(c) Six-Month Delay in Certain Circumstances . Notwithstanding anything in this Agreement to the contrary, if any amount or benefit that would constitute Non-Exempt Deferred Compensation would otherwise be payable or distributable under this Agreement by reason of Executive’s separation from service during a period in which she is a Specified Employee (as defined below), then, subject to any permissible acceleration of payment by the Company under Treas. Reg. Section 1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment of employment taxes): (i) the amount of such Non-Exempt Deferred Compensation that would otherwise be payable during the six-month period immediately following Executive’s separation from service will be accumulated through and paid or provided on the first day of the seventh month following Executive’s separation from service (or, if Executive dies during such period, within 30 days after Executive’s death) (in either case, the “ Required Delay Period ”); and (ii) the normal payment or distribution schedule for any remaining payments or distributions will resume at the end of the Required Delay Period.
(d) Timing of Release of Claims . Whenever in this Agreement a payment or benefit is conditioned on Executive’s execution of a release of claims, such release must be executed and all revocation periods shall have expired within 60 days after the date of termination; failing which such payment or benefit shall be forfeited. If such payment or benefit constitutes Non-Exempt Deferred
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Compensation, then such payment or benefit (including any installment payments) that would have otherwise been payable during such 60-day period shall be accumulated and paid on the 60 th day after the date of termination provided such release shall have been executed and such revocation periods shall have expired. If such payment or benefit is exempt from Section 409A of the Code, the Company may elect to make or commence payment at any time during such period.
(e) Timing of Reimbursements and In-kind Benefits. If Executive is entitled to be paid or reimbursed for any taxable expenses under this Agreement, and such payments or reimbursements are includible in Executive’s federal gross taxable income, the amount of such expenses reimbursable in any one calendar year shall not affect the amount reimbursable in any other calendar year, and the reimbursement of an eligible expense must be made no later than December 31 of the year after the year in which the expense was incurred. No right of Executive to reimbursement of expenses under this Agreement shall be subject to liquidation or exchange for another benefit.
11. Modified Cutback of Compensation Deemed to be Contingent on a Change of Control . If any benefits or payments are to be made under the terms of this Agreement or any other agreement between Executive and the Company or the Bank following a transaction that constitutes a change in the ownership or effective control of the Company or the Bank or in the ownership of a substantial portion of the assets of the Company or the Bank such that the provisions of Section 280G of the Internal Revenue Code of 1986, as amended, and any regulations thereunder (“Code Section 280G”) or Section 4999 of the Internal Revenue Code and any regulations thereunder could potentially apply to such compensation, then the following provisions shall be applicable:
(a) In the event the independent accountants serving as auditors for the Company on the date of a change of control within the meaning of Code Section 280G (or any other accounting firm designated by the Company) determine that some or all of the payments or benefits scheduled under this Agreement, as well as any other payments or benefits on such change of control, would be nondeductible by the Company or the Bank under Code Section 280G, then the payments scheduled under this Agreement and all other agreements between Executive and the Company will be reduced to one dollar less than the maximum amount which may be paid without causing any such payment or benefit to be nondeductible. Any reduction of benefits or payments required to be made under this Section 11(a) shall be taken in the following order: first from cash compensation and then from payments or benefits not payable in cash, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the date of determination.
(b) Notwithstanding the foregoing Section 11(a), in the event the independent accountants serving as auditors for the Company on the date of a change of control within the meaning of Code Section 280G (or any other accounting firm designated by the Company) determine that the net economic benefit to Executive after payment of all income and excise taxes is greater without giving effect to Section 11(a) than Executive’s net economic benefit after a reduction by reason of the application of Section 11(a), then Section 11(a) shall be a nullity and without any force or effect. Any decisions regarding the requirement or implementation of the reductions to compensation described in Section 11(a) shall be made by the independent accountants serving as auditors for the Company on the date of a change of control within the meaning of Code Section 280G (or any other accounting firm designated by the Company), shall be made at the Company’s expense and shall be binding on the parties.
12. Regulatory Action .
(a) If Executive is removed and/or permanently prohibited from participating in the conduct of the Company’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal
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Deposit Insurance Act (“ FDIA ”) (12 U.S.C. 1818(e)(4) and (g)(1)), all obligations of the Company under this Agreement shall terminate, as of the effective date of such order.
(b) If Executive is suspended and/or temporarily prohibited from participating in the conduct of the Company’s affairs by a notice served under Section 8(e)(3) or 8(g)(1) of the FDIA (12 U.S.C. 1818(e)(3) and (g)(1)), all obligations of the Company under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Company shall reinstate (in whole or in part) any of its obligations which were suspended.
(c) If the Company is in default (as defined in Section 3(x)(1) of the FDIA), all obligations under this Agreement shall terminate as of the date of default.
(d) All obligations under this Agreement shall be terminated, except to the extent a determination is made that continuation of the Agreement is necessary for the continued operation of the Company (1) by the director of the FDIC or his or her designee (the “ Director ”), at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Company under the authority contained in 13(c) of the FDIA; or (2) by the Director, at the time the Director approves a supervisory merger to resolve problems related to operation of the Company when the Company is determined by the Director to be in an unsafe and unsound condition.
(e) Notwithstanding anything contained in this Agreement to the contrary, no payments shall be made pursuant to any provision herein in contravention of the requirements of Section 2[18(k)] of the FDIA (12 U.S.C. 1828(k)). In particular, the provisions pertaining to the potential for payments shall have no force or effect as long as either the agreement concerning the potential for payments or the actual payment of such amounts would be considered a “golden parachute payment,” with the meaning of 12 C.F.R. Section 359.1(f).
13. Miscellaneous .
(a) Applicable Law; Forum Selection; Consent to Jurisdiction . The Company and Executive agree that this Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Virginia without giving effect to its conflicts of law principles. Executive agrees that the exclusive forum for any action to enforce this Agreement, as well as any action relating to or arising out of this Agreement, shall be the Circuit Court of Fairfax County or the federal court encompassing that jurisdiction, at the option of the Company. With respect to any such court action, Executive hereby irrevocably submits to the personal jurisdiction of such courts. The parties hereto further agree that the courts listed above are convenient forums for any dispute that may arise herefrom and that neither party shall raise as a defense that such courts are not convenient forums.
(b) Non-Duplication . Notwithstanding anything to the contrary in this Agreement, and except as specifically provided below, any severance payments or benefits received by Executive pursuant to this Agreement shall be in lieu of any general severance policy or other severance plan maintained by the Company (other than a stock option, restricted stock, share or unit, performance share or unit, supplemental retirement, deferred compensation or similar plan or agreement which may contain provisions operative on a termination of Executive’s employment or may incidentally refer to accelerated vesting or accelerated payment upon a termination of employment).
(c) Captions . The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.
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(d) Amendments . This Agreement may not be amended or modified otherwise than-by a written agreement executed by the parties hereto or their respective successors and legal representatives.
(e) Notices . All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
If to Executive : On file with the Company |
If to the Company : 6830 Old Dominion Drive McLean, Virginia 22101 Attention : CEO |
or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.
(f) Severability . The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
(g) Withholding . The Company may withhold from any amounts payable under this Agreement such federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.
(h) Waivers . Failure of either party to insist, in one or more instances, on performance by the other in strict accordance with the terms and conditions of this Agreement shall not be deemed a waiver or relinquishment of any right granted in this Agreement or of the future performance of any such term or condition or of any other term or condition of this Agreement, unless such waiver is contained in a writing signed by the party making the waiver.
(i) Entire Agreement . This Agreement contains the entire agreement between the Company and Executive with respect to the subject matter hereof and, from and after the date hereof, this Agreement shall supersede any other agreement, written or oral, between the parties relating to the subject matter of this Agreement, including but not limited to any prior discussions, understandings, and/or agreements between the parties, written or oral, at any time.
(j) Construction . The parties understand and agree that because they both have been given the opportunity to have counsel review and revise this Agreement, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. Instead, the language of all parts of this Agreement shall be construed as a whole, and according to its fair meaning, and not strictly for or against either of the parties.
(k) Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.
(Signatures on following page)
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IN WITNESS WHEREOF, Executive has hereunto set Executive’s hand and the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.
/s/ Georgia S. Derrico | |
Georgia S. Derrico | |
/s/ Joe A. Shearin | |
SOUTHERN NATIONAL | |
BANCORP OF VIRGINIA, INC. | |
By: Joe A. Shearin | |
Its: President and Chief Executive Officer |
[Derrico Employment Agreement]
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Exhibit 10.5
Employment AGREEMENT
This EMPLOYMENT Agreement (this “ Agreement ”) is made and entered into this 23rd day of June, 2017 by and between Southern National Bancorp of Virginia, Inc., and R. Roderick Porter (“ Executive ”), to be effective as of the Effective Date (as defined below).
BACKGROUND
WHEREAS, Executive is currently employed by Southern National Bancorp of Virginia, Inc. as its President and Chief Operating Officer;
WHEREAS, following, and contingent upon the closing of, the merger of Eastern Virginia Bankshares, Inc. with and into Southern National Bancorp of Virginia, Inc. (the “ Merger ”), Executive shall serve as the Executive Vice Chairman of the Board of Directors (the “ Board ”) of Southern National Bancorp of Virginia, Inc., the surviving corporation in the Merger (the “ Company ”); and
WHEREAS, the Company desires to employ Executive and Executive desires to accept employment subject to the agreements and covenants of this Agreement.
NOW, THEREFORE, in consideration of the payments, consents and acknowledgements described below, in consideration of Executive’s employment with the Company, and in consideration of other good and valuable consideration, the receipt and sufficiency of all of which is hereby acknowledged, the parties agree as follows:
1. Effective Date; Term; Prior Agreement .
(a) Effective Date . This Agreement shall be effective as of the effective date (the “ Effective Date ”) of the Merger, as defined in the Agreement and Plan of Merger between the Company and Eastern Virginia Bankshares, Inc. (the “ Merger Agreement ”). If the Effective Date shall not occur as contemplated under the Merger Agreement, this Agreement shall be deemed void and of no force and effect.
(b) Term . Upon the terms and subject to the conditions set forth in this Agreement, the Company hereby employs Executive, and Executive hereby accepts such employment, for the term commencing on the Effective Date and, unless otherwise earlier terminated pursuant to Section 4 hereof, expiring on the close of business on the second (2 nd ) anniversary of the Effective Date (the “ Term ”). If the Term expires and the parties agree that Executive will remain employed by the Company but do not enter into a new employment agreement, then such employment shall be at-will and this Agreement will be of no further force and effect, except that Section 6 hereof, as well as any other provisions of this Agreement necessary to interpret or enforce Section 6 hereof, shall survive and continue to be in full force and effect in accordance with their terms.
(c) Prior Agreement . The Company and Executive agree that, as of the Effective Date, the Change in Control Agreement (the “ Prior CIC Agreement ”) by and between Executive, the Company and Sonabank (the “ Bank ”) dated as of August 1, 2006 shall be terminated and be null and void pursuant to an agreement to terminate employment agreement, by and between Executive and the Company (the “ Termination Agreement ”), which Termination Agreement will provide for payment to Executive of $1,001,550, less normal withholdings, representing the cash severance that would have been due to Executive under the Prior CIC Agreement, determined as if Executive had been terminated in a Qualifying Termination (as defined in the Prior CIC Agreement), provided that Executive shall have executed a general release (the “ General Release ”) in favor of the Company and its related entities in a
form provided by the Company and effective on the Effective Date and the General Release shall not have been revoked within the revocation period specified in the General Release.
2. Employment . Executive is hereby employed on the Effective Date as the Executive Vice Chairman of the Board. In his capacity as Executive Vice Chairman of the Board, Executive shall have the duties, responsibilities and authority commensurate with such position. During his employment with the Company, and excluding any periods of vacation or sick leave to which Executive is entitled, Executive agrees to (i) devote all of his business effort, time, energy, and skill to fulfill his employment duties; and (ii) faithfully, loyally and diligently perform such duties. During his employment with the Company, Executive shall not be engaged in or provide services to any other business or enterprise (whether engaged in for profit or not) which interferes with his obligations to the Company . In his capacity as the Executive Vice Chairman of the Board, Executive will report directly to the Board. Notwithstanding anything in this Agreement to the contrary, Executive’s management role with respect to MGS Foundation or Port Kinsale Marina LLC and/or ownership thereof shall not be a violation of this Section 2.
3. Compensation and Benefits .
(a) Base Salary . During the Term, the Company shall pay to Executive base salary at the rate equal to $318,675 (“ Base Salary ”), less normal withholdings, payable in approximately equal bi-weekly or other installments as are or become customary under the Company’s payroll practices for its Executives from time to time. The Compensation Committee of the Board (the “ Compensation Committee ”) shall review Executive’s Base Salary at its first meeting immediately following the Effective Date and may increase, but not decrease, such Base Salary in connection with such review.
(b) Benefit Plans . During the Term, Executive shall be entitled to participate in or become a participant in any employee benefit plan maintained by the Company for which Executive is or will become eligible on such terms as the Board, or committee thereof, may, in its discretion, establish, modify or otherwise change; provided, however, that Executive shall not be eligible to participate in the Eastern Virginia Bankshares, Inc. Supplemental Executive Retirement Plan; and provided further that nothing herein shall limit the ability of the Company to amend, modify or terminate any such plans at any time and from time to time.
(c) Incentive Compensation . Executive shall receive such incentive awards, including but not limited to equity awards, in such manner and subject to such terms and conditions as the Board, or a committee thereof, in its sole discretion, may determine.
(d) Clawback . Executive agrees that any incentive compensation (including both equity and cash incentive compensation) that Executive receives from the Company or a related entity is subject to repayment (i.e., clawback) to the Company or such related entity as determined by the Board or its Compensation Committee in the event (i) of a restatement of the Company’s financial results (other than a restatement caused by a change in applicable accounting rules or interpretations) the result of which is that the financial statements were materially inaccurate and any incentive compensation paid would have been a materially lower amount had it been calculated based on such restated results or (ii) the repayment is otherwise required by applicable state or federal law or regulation or stock exchange requirement, or by a separate “clawback” policy, as may be adopted from time to time by the Board. Except where offset of, or recoupment from, incentive compensation covered by Section 409A of the Code (as defined below) is prohibited by Section 409A of the Code, to the extent allowed by law and as determined by the Compensation Committee, Executive agrees that such repayment may, in the discretion of the Compensation Committee, be accomplished by withholding of future compensation to be paid to
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Executive by the Company. Any recovery of incentive compensation covered by Section 409A of the Code shall be implemented in a manner which complies with Section 409A of the Code.
(e) Expenses . During the Term, and subject to Section 10 hereof, Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by Executive in the course of performing his duties and responsibilities under this Agreement, in accordance with the policies, practices and procedures of the Company to the extent available to other Peer Executives with respect to travel and other business expenses.
(f) Club Dues . During the Term, the Company shall pay (or reimburse Executive for) Executive’s membership dues at The New York Yacht Club. To the extent the Company reimburses Executive for any such dues, such reimbursements shall be made no later than the last day of the calendar month following the calendar month in which Executive submits the request for payment of the reimbursable expense, which shall be submitted no later than sixty (60) days after the expense is incurred.
(g) Automobile Allowance . During the Term, the Company shall pay Executive a monthly automobile allowance in an amount equal to the monthly automobile allowance in effect for Executive immediately prior to the Effective Date.
(h) Tax Assistance . During calendar year 2017, the Company shall reimburse Executive for reasonable costs incurred for tax and estate planning advice.
4. Termination of Employment .
(a) Death . Executive’s employment shall terminate automatically upon his death.
(b) Termination by the Company . The Company may terminate Executive’s employment during the Term with or without Cause (as defined herein), in each case immediately on written notice to Executive. For purposes of this Agreement, a termination shall be considered to be for “ Cause ” if the Company determines that any of the following has occurred: (i) Executive’s willful violation of any laws, rules or regulations applicable to banks or the banking industry generally; (ii) Executive’s material failure to comply with the Company’s policies or guidelines of employment or corporate governance policies or guidelines, including, without limitation, any business code of ethics adopted by the Company, that, if capable of being cured, is not cured by Executive within ten (10) days of written notice by the Company of the failure; (iii) any act of fraud, misappropriation or embezzlement by Executive; (iv) a material breach of this Agreement that, if such breach is capable of being cured, is not cured by Executive within ten (10) days of written notice by the Company of the breach; or (v) Executive’s conviction of, or Executive’s pleading guilty or nolo contendere to, a felony or a crime involving moral turpitude (including pleading guilty or nolo contendere to a felony or lesser charge which results from plea bargaining).
(c) Termination by Executive . Executive’s employment may be terminated by Executive for any reason or no reason by delivering a notice of termination to the Company thirty (30) days prior to the desired date of termination.
5. Obligations of the Company upon Termination .
(a) Termination by the Company Other Than for Cause . During the Term, if the Company terminates Executive’s employment other than for Cause, then the Company shall pay to Executive in a lump sum in cash within thirty (30) days after the date of termination, with the exact payment date to be determined by the Company, Executive’s Base Salary through the date of termination
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to the extent not theretofore paid (the “ Accrued Salary ”) and the following severance benefits (the benefits provided in Section 5(a)(i), (ii), (iii) and (iv) being collectively referred to as the “ Severance Benefits ”):
(i) subject to Section 10 hereof, the Company shall pay to Executive an amount equal to the Base Salary that would have been payable to him through the remainder of the Term had his employment not terminated (the “ Severance Amount ”), payable in a single lump sum on the first payroll date to occur after the sixtieth (60 th ) day after the date of termination;
(ii) if Executive elects to continue participation in any group medical, dental, vision and/or prescription drug plan benefits to which Executive and/or Executive’s eligible dependents would be entitled under Section 4980B of the Code (COBRA), then for a period of twenty-four (24) months after the Date of Termination (the “Group Health Benefits Continuation Period”), the Company shall pay the excess of (1) the COBRA cost of such coverage over (2) the amount that Executive would have had to pay for such coverage if he had remained employed during the Group Health Benefits Continuation Period and paid the active employee rate for such coverage, provided, however, that (A) if Executive becomes eligible to receive group health benefits under a program of a subsequent employer or otherwise, the Company’s obligation to pay any portion of the cost of health coverage as described herein shall cease, except as otherwise provided by law; (B) the Group Health Benefits Continuation Period shall run concurrently with any period for which Executive is eligible to elect health coverage under COBRA; (C) for all months after the initial eighteen (18) months of the Group Health Benefits Continuation Period, the Company-paid portion of the monthly premium for such group health benefits, determined in accordance with Code Section 4980B and the regulations thereunder, shall be treated as taxable compensation by including such amount in Executive’s income in accordance with applicable rules and regulations; (D) during the Group Health Benefits Continuation Period, the benefits provided in any one calendar year shall not affect the amount of benefits provided in any other calendar year (other than the effect of any overall coverage benefits under the applicable plans); (E) the reimbursement of an eligible taxable expense shall be made as soon as practicable but not later than December 31 of the year following the year in which the expense was incurred; and (F) Executive’s rights pursuant to this Section 5(a)(ii) shall not be subject to liquidation or exchange for another benefit. During the nineteenth (19th) month after the Date of Termination, the Company shall pay to Executive a lump sum cash payment equal to the applicable monthly premium under COBRA (less the 2% administrative fee and less the active-employee rate for such coverage), multiplied by the number of months remaining in the Group Health Benefits Continuation Period;
(iii) Executive’s unvested stock options outstanding on the Date of Termination, shall become fully vested and exercisable on the Date of Termination and shall otherwise remain subject to the terms and conditions of the equity plan pursuant to which they were granted and the award agreements evidencing the grant thereof; and
(iv) Executive shall continue to have the use of personal assistant provided by the Company for two (2) years following the Date of Termination, with such personal assistant having a base salary at a rate not to exceed $60,000.
Notwithstanding the foregoing, the Company shall be obligated to provide the Severance Benefits only if (A) within forty-five (45) days after the date of termination Executive shall have executed a separation and full release of claims/covenant not to sue agreement in the form provided by the Company (the “ Release Agreement ”) and such Release Agreement shall not have been revoked within the revocation period specified in the Release Agreement, and (B) Executive
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fully complies with the obligations set forth in Section 6 hereof. For the avoidance of doubt, if Executive does not comply with the obligations set forth in Section 6 hereof, then any obligation of the Company to pay the Severance Benefits shall cease immediately upon Executive’s breach thereof.
(b) Termination by the Company for Cause or Resignation by Executive; Death . If during the Term Executive’s employment is terminated by the Company for Cause or by Executive for any reason, or in the event of Executive’s death, then the Company shall have no further obligations to Executive or Executive’s legal representatives under this Agreement, other than for payment of Accrued Salary, which shall be paid to Executive or Executive’s estate or beneficiary, as applicable, in a lump sum in cash within thirty (30) days after the date of termination.
(c) Expiration of Term . If Executive’s employment terminates due to the expiration of the Term, then the Company shall have no further obligations to Executive or Executive’s legal representatives under this Agreement, other than for payment of Accrued Salary, which shall be paid to Executive in a lump sum in cash within thirty (30) days after the date of termination.
6. Restrictions on Competition and Disclosure and Use of Confidential Information .
(a) Confidential Information . Executive agrees that Executive shall not, directly or indirectly, use any Confidential Information (as defined herein) on Executive’s own behalf or on behalf of any Person (as defined herein) other than the Company, or reveal, divulge, or disclose any Confidential Information to any Person not expressly authorized by the Company to receive such Confidential Information. This obligation shall remain in effect for as long as the information or materials in question retain their status as Confidential Information. Executive further agrees that he shall fully cooperate with the Company in maintaining the Confidential Information to the extent permitted by law. The parties acknowledge and agree that this Agreement is not intended to, and does not, alter either the Company’s rights or Executive’s obligations under any state or federal statutory or common law regarding trade secrets and unfair trade practices. Anything herein to the contrary notwithstanding, Executive shall not be restricted from disclosing information that is required to be disclosed by law, court order or other valid and appropriate legal process; provided, however, that in the event such disclosure is required by law, Executive shall provide the Company with prompt notice of such requirement so that the Company may seek an appropriate protective order prior to any such required disclosure by Executive.
Executive understands and acknowledges that nothing in this section limits his ability to initiate communications directly with, respond to any inquiry from, volunteer information to, or provide testimony before any government agency or otherwise participate in any reporting of, investigation into, or proceeding regarding suspected violations of law, or from making other disclosures that are protected under, or from receiving an award for information provided under, the whistleblower provisions of state or federal law or regulation. Executive does not need the prior authorization of the Company to engage in such communications with any government agency, respond to such inquiries from any government agency, provide Confidential Information or documents containing Confidential Information to any government agency, or make any such reports or disclosures to any government agency. Executive is not required to notify the Company that Executive has engaged in such communications with a government agency. Executive recognizes and agrees that, in connection with any such activity outlined above, Executive must inform the government agency that the information Executive is providing is confidential.
Federal law provides certain protections to individuals who disclose a trade secret to their attorney, a court, or a government official in certain, confidential circumstances. Specifically, federal law provides that an individual shall not be held criminally or civilly liable under any state or federal trade secret law for the disclosure of a trade secret under either of the following conditions:
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· | Where the disclosure is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney; and (B) solely for the purpose of reporting or investigating a suspected violation of law; or |
· | Where the disclosure is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. |
Federal law also provides that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.
For purposes of this Section 6, “Confidential Information” means any and all data and information relating to the Company or the Bank, their activities, business, or clients that (i) is disclosed to Executive or of which Executive becomes aware as a consequence of his employment with the Company; (ii) has value to the Company; and (iii) is not generally known outside of the Company or the Bank. “Confidential Information” shall include, but is not limited to the following types of information regarding, related to, or concerning the Company or the Bank: trade secrets (as defined by Virginia Uniform Trade Secrets Act); financial plans and data; management planning information; business plans; operational methods; market studies; marketing plans or strategies; pricing information; product development techniques or plans; customer lists; customer files, data and financial information; details of customer contracts; current and anticipated customer requirements; identifying and other information pertaining to business referral sources; past, current and planned research and development; computer aided systems, software, strategies and programs; business acquisition plans; management organization and related information (including, without limitation, data and other information concerning the compensation and benefits paid to officers, directors, employees and management); personnel and compensation policies; new personnel acquisition plans; and other similar information. “Confidential Information” also includes combinations of information or materials which individually may be generally known outside of the Company or the Bank, but for which the nature, method, or procedure for combining such information or materials is not generally known outside of the Company or the Bank. In addition to data and information relating to the Company or the Bank, “Confidential Information” also includes any and all data and information relating to or concerning a third party that otherwise meets the definition set forth above, that was provided or made available to the Company or the Bank by such third party, and that the Company or the Bank has a duty or obligation to keep confidential. This definition shall not limit any definition of “confidential information” or any equivalent term under state or federal law. “Confidential Information” shall not include information that has become generally available to the public by the act of one who has the right to disclose such information without violating any right or privilege of the Company or the Bank. For purposes of this Section 6, “Person” means any individual or any corporation, partnership, joint venture, limited liability company, association or other entity or enterprise.
(b) Non-competition . Beginning on the Effective Date and for a period continuing through the twelve (12) months following cessation of Executive’s employment with the Company (the “ Restricted Period ”), Executive shall not, directly or indirectly, within any State in the United States where the Company or the Bank has a retail bank branch at the time Executive’s employment ceases, own any interest in, control or participate in the ownership or control of, or perform services that are the same as or substantially similar to the services Executive performed for the Company pursuant to this Agreement for any company, person or entity engaged in a Competitive Business (as defined herein). A “Competitive Business” shall mean any person or entity that is providing deposits, money market accounts, certificates of deposit or other typical retail banking deposit-type services or loans on a retail
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level, to individuals, businesses or non-profit entities in any State in the United States in which the Company or the Bank has a retail bank branch at the time Executive’s employment ceases. Notwithstanding the foregoing, nothing in this Agreement shall prevent Executive from owning for passive investment purposes not intended to circumvent this Agreement, less than five percent (5%) of the publicly-traded voting securities of any company engaged in the banking, financial services, insurance, brokerage or other business similar to or competitive with the Company or the Bank (so long as Executive has no power to manage, operate or control the competing enterprise and no power, alone or in conjunction with other affiliated parties, to select a director, manager, general partner, or similar governing official of the competing enterprise other than in connection with the normal and customary voting powers afforded Executive in connection with any permissible equity ownership).
(c) Non-solicitation of Employees . During the Restricted Period, Executive shall not, directly or indirectly solicit, induce or hire, or attempt to solicit, induce or hire, any person who is an employee of the Company or the Bank at the time Executive’s employment ceases or within six (6) months prior thereto, to leave his or her employment with the Company or the Bank or join or become affiliated with any Competitive Business.
(d) Non-solicitation of Customers . During the Restricted Period, Executive shall not, directly or indirectly solicit or induce or attempt to solicit or induce, any customer, lender, supplier, licensee, licensor or other business relation of the Company or the Bank to terminate its relationship or contracts with the Company or the Bank, to cease doing business with the Company or the Bank, or in any way interfere with the relationship between any such customer, lender, supplier, licensee, licensor or business relation and the Company or the Bank.
(e) Rights and Remedies Upon Breach . The parties specifically acknowledge and agree that the remedy at law for any breach of the covenants in Section 6 will be inadequate, and that in the event Executive breaches any such covenant, the Company shall have the right and remedy, without the necessity of proving actual damage or posting any bond, to enjoin, preliminarily and permanently, Executive from violating the covenant and to have the covenant specifically enforced by any court of competent jurisdiction, it being agreed that any breach would cause irreparable injury to the Company and that money damages would not provide an adequate remedy to the Company. Such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to the Company at law or in equity. The Company and Executive understand and agree that, if the parties become involved in legal action regarding the enforcement of the covenants in Section 6, the prevailing party in such legal action will be entitled, in addition to any other remedy, to recover its reasonable costs and attorneys’ fees incurred in enforcing or defending action with respect to such covenants. The Company’s ability to enforce its rights under the covenants in Section 6 or applicable law against Executive shall not be impaired in any way by the existence of a claim or cause of action on the part of Executive based on, or arising out of, this Agreement or any other event or transaction.
7. Non-exclusivity of Rights . Nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in any employee benefit plan, program, policy or practice provided by the Company or its affiliated companies and for which Executive may qualify. Amounts that are vested benefits or which Executive is otherwise entitled to receive under any plan, policy, practice or program of the Company or any of its affiliated companies at or subsequent to the date of termination shall be payable in accordance with such plan, policy, practice or program.
8. Full Settlement; No Mitigation . The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against Executive or others. In no event shall Executive be obligated to seek other employment or
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take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not Executive obtains other employment.
9. Successors . This Agreement is personal to Executive and shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives. This Agreement can be assigned by the Company and shall be binding and inure to the benefit of the Company, and their successors and assigns.
10. Code Section 409A .
(a) General . This Agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder (and any applicable transition relief under Section 409A of the Code) (“ Section 409A of the Code ”). Nevertheless, the tax treatment of the benefits provided under the Agreement is not warranted or guaranteed. Neither the Company nor its directors, officers, employees or advisers, shall be held liable for any taxes, interest, penalties or other monetary amounts owed by Executive as a result of the application of Section 409A of the Code.
(b) Definitional Restrictions . Notwithstanding anything in this Agreement to the contrary, to the extent that any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code (“ Non-Exempt Deferred Compensation ”) would otherwise be payable or distributable hereunder by reason of Executive’s termination of employment, such Non-Exempt Deferred Compensation will not be payable or distributable to Executive by reason of such circumstance unless the circumstances giving rise to such termination of employment meet any description or definition of “separation from service,” in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that may be available under such definition). If this provision prevents the payment or distribution of any Non-Exempt Deferred Compensation, then, subject to subsection (c) below, such payment or distribution shall be made at the time and in the form that would have applied absent the non-409A-conforming event.
(c) Six-Month Delay in Certain Circumstances . Notwithstanding anything in this Agreement to the contrary, if any amount or benefit that would constitute Non-Exempt Deferred Compensation would otherwise be payable or distributable under this Agreement by reason of Executive’s separation from service during a period in which he is a Specified Employee (as defined below), then, subject to any permissible acceleration of payment by the Company under Treas. Reg. Section 1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment of employment taxes): (i) the amount of such Non-Exempt Deferred Compensation that would otherwise be payable during the six-month period immediately following Executive’s separation from service will be accumulated through and paid or provided on the first day of the seventh month following Executive’s separation from service (or, if Executive dies during such period, within 30 days after Executive’s death) (in either case, the “ Required Delay Period ”); and (ii) the normal payment or distribution schedule for any remaining payments or distributions will resume at the end of the Required Delay Period.
(d) Timing of Release of Claims . Whenever in this Agreement a payment or benefit is conditioned on Executive’s execution of a release of claims, such release must be executed and all revocation periods shall have expired within 60 days after the date of termination; failing which such
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payment or benefit shall be forfeited. If such payment or benefit constitutes Non-Exempt Deferred Compensation, then such payment or benefit (including any installment payments) that would have otherwise been payable during such 60-day period shall be accumulated and paid on the 60 th day after the date of termination provided such release shall have been executed and such revocation periods shall have expired. If such payment or benefit is exempt from Section 409A of the Code, the Company may elect to make or commence payment at any time during such period.
(e) Timing of Reimbursements and In-kind Benefits. If Executive is entitled to be paid or reimbursed for any taxable expenses under this Agreement, and such payments or reimbursements are includible in Executive’s federal gross taxable income, the amount of such expenses reimbursable in any one calendar year shall not affect the amount reimbursable in any other calendar year, and the reimbursement of an eligible expense must be made no later than December 31 of the year after the year in which the expense was incurred. No right of Executive to reimbursement of expenses under this Agreement shall be subject to liquidation or exchange for another benefit.
11. Modified Cutback of Compensation Deemed to be Contingent on a Change of Control . If any benefits or payments are to be made under the terms of this Agreement or any other agreement between Executive and the Company or the Bank following a transaction that constitutes a change in the ownership or effective control of the Company or the Bank or in the ownership of a substantial portion of the assets of the Company or the Bank such that the provisions of Section 280G of the Internal Revenue Code of 1986, as amended, and any regulations thereunder (“Code Section 280G”) or Section 4999 of the Internal Revenue Code and any regulations thereunder could potentially apply to such compensation, then the following provisions shall be applicable:
(a) In the event the independent accountants serving as auditors for the Company on the date of a change of control within the meaning of Code Section 280G (or any other accounting firm designated by the Company) determine that some or all of the payments or benefits scheduled under this Agreement, as well as any other payments or benefits on such change of control, would be nondeductible by the Company or the Bank under Code Section 280G, then the payments scheduled under this Agreement and all other agreements between Executive and the Company will be reduced to one dollar less than the maximum amount which may be paid without causing any such payment or benefit to be nondeductible. Any reduction of benefits or payments required to be made under this Section 11(a) shall be taken in the following order: first from cash compensation and then from payments or benefits not payable in cash, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the date of determination.
(b) Notwithstanding the foregoing Section 11(a), in the event the independent accountants serving as auditors for the Company on the date of a change of control within the meaning of Code Section 280G (or any other accounting firm designated by the Company) determine that the net economic benefit to Executive after payment of all income and excise taxes is greater without giving effect to Section 11(a) than Executive’s net economic benefit after a reduction by reason of the application of Section 11(a), then Section 11(a) shall be a nullity and without any force or effect. Any decisions regarding the requirement or implementation of the reductions to compensation described in Section 11(a) shall be made by the independent accountants serving as auditors for the Company on the date of a change of control within the meaning of Code Section 280G (or any other accounting firm designated by the Company), shall be made at the Company’s expense and shall be binding on the parties.
12. Regulatory Action .
(a) If Executive is removed and/or permanently prohibited from participating in the conduct of the Company’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal
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Deposit Insurance Act (“ FDIA ”) (12 U.S.C. 1818(e)(4) and (g)(1)), all obligations of the Company under this Agreement shall terminate, as of the effective date of such order.
(b) If Executive is suspended and/or temporarily prohibited from participating in the conduct of the Company’s affairs by a notice served under Section 8(e)(3) or 8(g)(1) of the FDIA (12 U.S.C. 1818(e)(3) and (g)(1)), all obligations of the Company under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Company shall reinstate (in whole or in part) any of its obligations which were suspended.
(c) If the Company is in default (as defined in Section 3(x)(1) of the FDIA), all obligations under this Agreement shall terminate as of the date of default.
(d) All obligations under this Agreement shall be terminated, except to the extent a determination is made that continuation of the Agreement is necessary for the continued operation of the Company (1) by the director of the FDIC or his or her designee (the “ Director ”), at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Company under the authority contained in 13(c) of the FDIA; or (2) by the Director, at the time the Director approves a supervisory merger to resolve problems related to operation of the Company when the Company is determined by the Director to be in an unsafe and unsound condition.
(e) Notwithstanding anything contained in this Agreement to the contrary, no payments shall be made pursuant to any provision herein in contravention of the requirements of Section 2[18(k)] of the FDIA (12 U.S.C. 1828(k)). In particular, the provisions pertaining to the potential for payments shall have no force or effect as long as either the agreement concerning the potential for payments or the actual payment of such amounts would be considered a “golden parachute payment,” with the meaning of 12 C.F.R. Section 359.1(f).
13. Miscellaneous .
(a) Applicable Law; Forum Selection; Consent to Jurisdiction . The Company and Executive agree that this Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Virginia without giving effect to its conflicts of law principles. Executive agrees that the exclusive forum for any action to enforce this Agreement, as well as any action relating to or arising out of this Agreement, shall be the Circuit Court of Fairfax County or the federal court encompassing that jurisdiction, at the option of the Company. With respect to any such court action, Executive hereby irrevocably submits to the personal jurisdiction of such courts. The parties hereto further agree that the courts listed above are convenient forums for any dispute that may arise herefrom and that neither party shall raise as a defense that such courts are not convenient forums.
(b) Non-Duplication . Notwithstanding anything to the contrary in this Agreement, and except as specifically provided below, any severance payments or benefits received by Executive pursuant to this Agreement shall be in lieu of any general severance policy or other severance plan maintained by the Company (other than a stock option, restricted stock, share or unit, performance share or unit, supplemental retirement, deferred compensation or similar plan or agreement which may contain provisions operative on a termination of Executive’s employment or may incidentally refer to accelerated vesting or accelerated payment upon a termination of employment).
(c) Captions . The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.
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(d) Amendments . This Agreement may not be amended or modified otherwise than-by a written agreement executed by the parties hereto or their respective successors and legal representatives.
(e) Notices . All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
If to Executive : On file with the Company |
If to the Company : 6830 Old Dominion Drive McLean, Virginia 22101 Attention : CEO |
or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.
(f) Severability . The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
(g) Withholding . The Company may withhold from any amounts payable under this Agreement such federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.
(h) Waivers . Failure of either party to insist, in one or more instances, on performance by the other in strict accordance with the terms and conditions of this Agreement shall not be deemed a waiver or relinquishment of any right granted in this Agreement or of the future performance of any such term or condition or of any other term or condition of this Agreement, unless such waiver is contained in a writing signed by the party making the waiver.
(i) Entire Agreement . This Agreement contains the entire agreement between the Company and Executive with respect to the subject matter hereof and, from and after the date hereof, this Agreement shall supersede any other agreement, written or oral, between the parties relating to the subject matter of this Agreement, including but not limited to any prior discussions, understandings, and/or agreements between the parties, written or oral, at any time.
(j) Construction . The parties understand and agree that because they both have been given the opportunity to have counsel review and revise this Agreement, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. Instead, the language of all parts of this Agreement shall be construed as a whole, and according to its fair meaning, and not strictly for or against either of the parties.
(k) Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.
(Signatures on following page)
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IN WITNESS WHEREOF, Executive has hereunto set Executive’s hand and the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.
/s/ R. Roderick Porter | |
R. Roderick Porter | |
/s/ Joe A. Shearin | |
SOUTHERN NATIONAL | |
BANCORP OF VIRGINIA, INC. | |
By: Joe A. Shearin | |
Its: President and Chief Executive Officer |
[Porter Employment Agreement]
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Exhibit 10.6
Employment AGREEMENT
This EMPLOYMENT Agreement (this “ Agreement ”) is made and entered into this 23rd day of June, 2017 by and between Southern National Bancorp of Virginia, Inc., and Thomas P. Baker (“ Executive ”), to be effective as of the Effective Date (as defined below).
BACKGROUND
WHEREAS, Executive is currently employed by Southern National Bancorp of Virginia, Inc. as its Senior Vice President and Chief Credit Officer;
WHEREAS, following, and contingent upon the closing of, the merger of Eastern Virginia Bankshares, Inc. with and into Southern National Bancorp of Virginia, Inc. (the “ Merger ”), Executive shall serve as the Chief Credit Officer of Southern National Bancorp of Virginia, Inc., the surviving corporation in the Merger (the “ Company ”); and
WHEREAS, the Company desires to employ Executive and Executive desires to accept employment subject to the agreements and covenants of this Agreement.
NOW, THEREFORE, in consideration of the payments, consents and acknowledgements described below, in consideration of Executive’s employment with the Company, and in consideration of other good and valuable consideration, the receipt and sufficiency of all of which is hereby acknowledged, the parties agree as follows:
1. Effective Date; Term; Prior Agreement .
(a) Effective Date . This Agreement shall be effective as of the effective date (the “ Effective Date ”) of the Merger, as defined in the Agreement and Plan of Merger between the Company and Eastern Virginia Bankshares, Inc. (the “ Merger Agreement ”). If the Effective Date shall not occur as contemplated under the Merger Agreement, this Agreement shall be deemed void and of no force and effect.
(b) Term . Upon the terms and subject to the conditions set forth in this Agreement, the Company hereby employs Executive, and Executive hereby accepts such employment, for the term commencing on the Effective Date and, unless otherwise earlier terminated pursuant to Section 4 hereof, expiring on the close of business on the second (2 nd ) anniversary of the Effective Date (the “ Term ”). If the Term expires and the parties agree that Executive will remain employed by the Company but do not enter into a new employment agreement, then such employment shall be at-will and this Agreement will be of no further force and effect, except that Section 6 hereof, as well as any other provisions of this Agreement necessary to interpret or enforce Section 6 hereof, shall survive and continue to be in full force and effect in accordance with their terms.
(c) Prior Agreement . The Company and Executive agree that, as of the Effective Date, the Change in Control Agreement (the “ Prior CIC Agreement ”) by and between Executive, the Company and Sonabank (the “ Bank ”) dated as of August 1, 2006 shall be terminated and be null and void pursuant to an agreement to terminate employment agreement, by and between Executive and the Company (the “ Termination Agreement ”), which Termination Agreement will provide for payment to Executive of $335,040, less normal withholdings, representing the cash severance that would have been due to Executive under the Prior CIC Agreement, determined as if Executive had been terminated in a Qualifying Termination (as defined in the Prior CIC Agreement) provided that Executive shall have executed a general release (the “ General Release ”) in favor of the Company and its related entities in a
form provided by the Company and effective on the Effective Date and the General Release shall not have been revoked within the revocation period specified in the General Release.
2. Employment . Executive is hereby employed on the Effective Date as the Chief Credit Officer. In his capacity as Chief Credit Officer, Executive shall have the duties, responsibilities and authority commensurate with such position. During his employment with the Company, and excluding any periods of vacation or sick leave to which Executive is entitled, Executive agrees to (i) devote all of his business effort, time, energy, and skill to fulfill his employment duties; and (ii) faithfully, loyally and diligently perform such duties. During his employment with the Company, Executive shall not be engaged in or provide services to any other business or enterprise (whether engaged in for profit or not) which interferes with his obligations to the Company. In his capacity as Chief Credit Officer, Executive will report directly to the Chief Executive Officer.
3. Compensation and Benefits .
(a) Base Salary . During the Term, the Company shall pay to Executive base salary at the rate equal to $217,360 (“ Base Salary ”), less normal withholdings, payable in approximately equal bi-weekly or other installments as are or become customary under the Company’s payroll practices for its Executives from time to time. The Compensation Committee of the Board (the “ Compensation Committee ”) shall review Executive’s Base Salary at its first meeting immediately following the Effective Date and may increase, but not decrease, such Base Salary in connection with such review.
(b) Benefit Plans . During the Term, Executive shall be entitled to participate in or become a participant in any employee benefit plan maintained by the Company for which Executive is or will become eligible on such terms as the Board, or committee thereof, may, in its discretion, establish, modify or otherwise change; provided, however, that Executive shall not be eligible to participate in the Eastern Virginia Bankshares, Inc. Supplemental Executive Retirement Plan; and provided further that nothing herein shall limit the ability of the Company to amend, modify or terminate any such plans at any time and from time to time.
(c) Incentive Compensation . Executive shall receive such incentive awards, including but not limited to equity awards, in such manner and subject to such terms and conditions as the Board, or a committee thereof, in its sole discretion, may determine.
(d) Clawback . Executive agrees that any incentive compensation (including both equity and cash incentive compensation) that Executive receives from the Company or a related entity is subject to repayment (i.e., clawback) to the Company or such related entity as determined by the Board or its Compensation Committee in the event (i) of a restatement of the Company’s financial results (other than a restatement caused by a change in applicable accounting rules or interpretations) the result of which is that the financial statements were materially inaccurate and any incentive compensation paid would have been a materially lower amount had it been calculated based on such restated results or (ii) the repayment is otherwise required by applicable state or federal law or regulation or stock exchange requirement, or by a separate “clawback” policy, as may be adopted from time to time by the Board. Except where offset of, or recoupment from, incentive compensation covered by Section 409A of the Code (as defined below) is prohibited by Section 409A of the Code, to the extent allowed by law and as determined by the Compensation Committee, Executive agrees that such repayment may, in the discretion of the Compensation Committee, be accomplished by withholding of future compensation to be paid to Executive by the Company. Any recovery of incentive compensation covered by Section 409A of the Code shall be implemented in a manner which complies with Section 409A of the Code.
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(e) Expenses . During the Term, and subject to Section 10 hereof, Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by Executive in the course of performing his duties and responsibilities under this Agreement, in accordance with the policies, practices and procedures of the Company to the extent available to other Peer Executives with respect to travel and other business expenses.
(f) Automobile Allowance . During the Term, the Company shall pay Executive a monthly automobile allowance in an amount equal to the monthly automobile allowance in effect for Executive immediately prior to the Effective Date.
4. Termination of Employment .
(a) Death . Executive’s employment shall terminate automatically upon his death.
(b) Termination by the Company . The Company may terminate Executive’s employment during the Term with or without Cause (as defined herein), in each case immediately on written notice to Executive. For purposes of this Agreement, a termination shall be considered to be for “ Cause ” if the Company determines that any of the following has occurred: (i) Executive’s willful violation of any laws, rules or regulations applicable to banks or the banking industry generally; (ii) Executive’s material failure to comply with the Company’s policies or guidelines of employment or corporate governance policies or guidelines, including, without limitation, any business code of ethics adopted by the Company, that, if capable of being cured, is not cured by Executive within ten (10) days of written notice by the Company of the failure; (iii) any act of fraud, misappropriation or embezzlement by Executive; (iv) a material breach of this Agreement that, if such breach is capable of being cured, is not cured by Executive within ten (10) days of written notice by the Company of the breach; or (v) Executive’s conviction of, or Executive’s pleading guilty or nolo contendere to, a felony or a crime involving moral turpitude (including pleading guilty or nolo contendere to a felony or lesser charge which results from plea bargaining).
(c) Termination by Executive . Executive’s employment may be terminated by Executive for any reason or no reason by delivering a notice of termination to the Company thirty (30) days prior to the desired date of termination.
5. Obligations of the Company upon Termination .
(a) Termination by the Company Other Than for Cause . During the Term, if the Company terminates Executive’s employment other than for Cause, then: (i) the Company shall pay to Executive in a lump sum in cash within thirty (30) days after the date of termination, with the exact payment date to be determined by the Company, Executive’s Base Salary through the date of termination to the extent not theretofore paid (the “ Accrued Salary ”); and (ii) subject to Section 10 hereof, the Company shall pay to Executive an amount equal to the Base Salary that would have been payable to him through the remainder of the Term had his employment not terminated (the “ Severance Amount ”), payable in a single lump sum on the first payroll date to occur after the sixtieth (60 th ) day after the date of termination. Notwithstanding the foregoing, the Company shall be obligated to provide the Severance Amount only if (A) within forty-five (45) days after the date of termination Executive shall have executed a separation and full release of claims/covenant not to sue agreement in the form provided by the Company (the “ Release Agreement ”) and such Release Agreement shall not have been revoked within the revocation period specified in the Release Agreement, and (B) Executive fully complies with the obligations set forth in Section 6 hereof. For the avoidance of doubt, if Executive does not comply with the obligations set forth in Section 6 hereof, then any obligation of the Company to pay the Severance Amount shall cease immediately upon Executive’s breach thereof.
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(b) Termination by the Company for Cause or Resignation by Executive; Death . If during the Term Executive’s employment is terminated by the Company for Cause or by Executive for any reason, or in the event of Executive’s death, then the Company shall have no further obligations to Executive or Executive’s legal representatives under this Agreement, other than for payment of Accrued Salary, which shall be paid to Executive or Executive’s estate or beneficiary, as applicable, in a lump sum in cash within thirty (30) days after the date of termination.
(c) Expiration of Term . If Executive’s employment terminates due to the expiration of the Term, then the Company shall have no further obligations to Executive or Executive’s legal representatives under this Agreement, other than for payment of Accrued Salary, which shall be paid to Executive in a lump sum in cash within thirty (30) days after the date of termination.
6. Restrictions on Competition and Disclosure and Use of Confidential Information .
(a) Confidential Information . Executive agrees that Executive shall not, directly or indirectly, use any Confidential Information (as defined herein) on Executive’s own behalf or on behalf of any Person (as defined herein) other than the Company, or reveal, divulge, or disclose any Confidential Information to any Person not expressly authorized by the Company to receive such Confidential Information. This obligation shall remain in effect for as long as the information or materials in question retain their status as Confidential Information. Executive further agrees that he shall fully cooperate with the Company in maintaining the Confidential Information to the extent permitted by law. The parties acknowledge and agree that this Agreement is not intended to, and does not, alter either the Company’s rights or Executive’s obligations under any state or federal statutory or common law regarding trade secrets and unfair trade practices. Anything herein to the contrary notwithstanding, Executive shall not be restricted from disclosing information that is required to be disclosed by law, court order or other valid and appropriate legal process; provided, however, that in the event such disclosure is required by law, Executive shall provide the Company with prompt notice of such requirement so that the Company may seek an appropriate protective order prior to any such required disclosure by Executive.
Executive understands and acknowledges that nothing in this section limits his ability to initiate communications directly with, respond to any inquiry from, volunteer information to, or provide testimony before any government agency or otherwise participate in any reporting of, investigation into, or proceeding regarding suspected violations of law, or from making other disclosures that are protected under, or from receiving an award for information provided under, the whistleblower provisions of state or federal law or regulation. Executive does not need the prior authorization of the Company to engage in such communications with any government agency, respond to such inquiries from any government agency, provide Confidential Information or documents containing Confidential Information to any government agency, or make any such reports or disclosures to any government agency. Executive is not required to notify the Company that Executive has engaged in such communications with a government agency. Executive recognizes and agrees that, in connection with any such activity outlined above, Executive must inform the government agency that the information Executive is providing is confidential.
Federal law provides certain protections to individuals who disclose a trade secret to their attorney, a court, or a government official in certain, confidential circumstances. Specifically, federal law provides that an individual shall not be held criminally or civilly liable under any state or federal trade secret law for the disclosure of a trade secret under either of the following conditions:
· | Where the disclosure is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney; and (B) solely for the purpose of reporting or investigating a suspected violation of law; or |
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· | Where the disclosure is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. |
Federal law also provides that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order.
For purposes of this Section 6, “Confidential Information” means any and all data and information relating to the Company or the Bank, their activities, business, or clients that (i) is disclosed to Executive or of which Executive becomes aware as a consequence of his employment with the Company; (ii) has value to the Company; and (iii) is not generally known outside of the Company or the Bank. “Confidential Information” shall include, but is not limited to the following types of information regarding, related to, or concerning the Company or the Bank: trade secrets (as defined by Virginia Uniform Trade Secrets Act); financial plans and data; management planning information; business plans; operational methods; market studies; marketing plans or strategies; pricing information; product development techniques or plans; customer lists; customer files, data and financial information; details of customer contracts; current and anticipated customer requirements; identifying and other information pertaining to business referral sources; past, current and planned research and development; computer aided systems, software, strategies and programs; business acquisition plans; management organization and related information (including, without limitation, data and other information concerning the compensation and benefits paid to officers, directors, employees and management); personnel and compensation policies; new personnel acquisition plans; and other similar information. “Confidential Information” also includes combinations of information or materials which individually may be generally known outside of the Company or the Bank, but for which the nature, method, or procedure for combining such information or materials is not generally known outside of the Company or the Bank. In addition to data and information relating to the Company or the Bank, “Confidential Information” also includes any and all data and information relating to or concerning a third party that otherwise meets the definition set forth above, that was provided or made available to the Company or the Bank by such third party, and that the Company or the Bank has a duty or obligation to keep confidential. This definition shall not limit any definition of “confidential information” or any equivalent term under state or federal law. “Confidential Information” shall not include information that has become generally available to the public by the act of one who has the right to disclose such information without violating any right or privilege of the Company or the Bank. For purposes of this Section 6, “Person” means any individual or any corporation, partnership, joint venture, limited liability company, association or other entity or enterprise.
(b) Non-competition . Beginning on the Effective Date and for a period continuing through the twelve (12) months following cessation of Executive’s employment with the Company (the “ Restricted Period ”), Executive shall not, directly or indirectly, within any State in the United States where the Company or the Bank has a retail bank branch at the time Executive’s employment ceases, own any interest in, control or participate in the ownership or control of, or perform services that are the same as or substantially similar to the services Executive performed for the Company pursuant to this Agreement for any company, person or entity engaged in a Competitive Business (as defined herein). A “Competitive Business” shall mean any person or entity that is providing deposits, money market accounts, certificates of deposit or other typical retail banking deposit-type services or loans on a retail level, to individuals, businesses or non-profit entities in any State in the United States in which the Company or the Bank has a retail bank branch at the time Executive’s employment ceases. Notwithstanding the foregoing, nothing in this Agreement shall prevent Executive from owning for passive investment purposes not intended to circumvent this Agreement, less than five percent (5%) of the
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publicly-traded voting securities of any company engaged in the banking, financial services, insurance, brokerage or other business similar to or competitive with the Company or the Bank (so long as Executive has no power to manage, operate or control the competing enterprise and no power, alone or in conjunction with other affiliated parties, to select a director, manager, general partner, or similar governing official of the competing enterprise other than in connection with the normal and customary voting powers afforded Executive in connection with any permissible equity ownership).
(c) Non-solicitation of Employees . During the Restricted Period, Executive shall not, directly or indirectly solicit, induce or hire, or attempt to solicit, induce or hire, any person who is an employee of the Company or the Bank at the time Executive’s employment ceases or within six (6) months prior thereto, to leave his or her employment with the Company or the Bank or join or become affiliated with any Competitive Business.
(d) Non-solicitation of Customers . During the Restricted Period, Executive shall not, directly or indirectly solicit or induce or attempt to solicit or induce, any customer, lender, supplier, licensee, licensor or other business relation of the Company or the Bank to terminate its relationship or contracts with the Company or the Bank, to cease doing business with the Company or the Bank, or in any way interfere with the relationship between any such customer, lender, supplier, licensee, licensor or business relation and the Company or the Bank.
(e) Rights and Remedies Upon Breach . The parties specifically acknowledge and agree that the remedy at law for any breach of the covenants in Section 6 will be inadequate, and that in the event Executive breaches any such covenant, the Company shall have the right and remedy, without the necessity of proving actual damage or posting any bond, to enjoin, preliminarily and permanently, Executive from violating the covenant and to have the covenant specifically enforced by any court of competent jurisdiction, it being agreed that any breach would cause irreparable injury to the Company and that money damages would not provide an adequate remedy to the Company. Such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to the Company at law or in equity. The Company and Executive understand and agree that, if the parties become involved in legal action regarding the enforcement of the covenants in Section 6, the prevailing party in such legal action will be entitled, in addition to any other remedy, to recover its reasonable costs and attorneys’ fees incurred in enforcing or defending action with respect to such covenants. The Company’s ability to enforce its rights under the covenants in Section 6 or applicable law against Executive shall not be impaired in any way by the existence of a claim or cause of action on the part of Executive based on, or arising out of, this Agreement or any other event or transaction.
7. Non-exclusivity of Rights . Nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in any employee benefit plan, program, policy or practice provided by the Company or its affiliated companies and for which Executive may qualify. Amounts that are vested benefits or which Executive is otherwise entitled to receive under any plan, policy, practice or program of the Company or any of its affiliated companies at or subsequent to the date of termination shall be payable in accordance with such plan, policy, practice or program.
8. Full Settlement; No Mitigation . The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against Executive or others. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not Executive obtains other employment.
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9. Successors . This Agreement is personal to Executive and shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives. This Agreement can be assigned by the Company and shall be binding and inure to the benefit of the Company, and their successors and assigns.
10. Code Section 409A .
(a) General . This Agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder (and any applicable transition relief under Section 409A of the Code) (“ Section 409A of the Code ”). Nevertheless, the tax treatment of the benefits provided under the Agreement is not warranted or guaranteed. Neither the Company nor its directors, officers, employees or advisers, shall be held liable for any taxes, interest, penalties or other monetary amounts owed by Executive as a result of the application of Section 409A of the Code.
(b) Definitional Restrictions . Notwithstanding anything in this Agreement to the contrary, to the extent that any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code (“ Non-Exempt Deferred Compensation ”) would otherwise be payable or distributable hereunder by reason of Executive’s termination of employment, such Non-Exempt Deferred Compensation will not be payable or distributable to Executive by reason of such circumstance unless the circumstances giving rise to such termination of employment meet any description or definition of “separation from service,” in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that may be available under such definition). If this provision prevents the payment or distribution of any Non-Exempt Deferred Compensation, then, subject to subsection (c) below, such payment or distribution shall be made at the time and in the form that would have applied absent the non-409A-conforming event.
(c) Six-Month Delay in Certain Circumstances . Notwithstanding anything in this Agreement to the contrary, if any amount or benefit that would constitute Non-Exempt Deferred Compensation would otherwise be payable or distributable under this Agreement by reason of Executive’s separation from service during a period in which he is a Specified Employee (as defined below), then, subject to any permissible acceleration of payment by the Company under Treas. Reg. Section 1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment of employment taxes): (i) the amount of such Non-Exempt Deferred Compensation that would otherwise be payable during the six-month period immediately following Executive’s separation from service will be accumulated through and paid or provided on the first day of the seventh month following Executive’s separation from service (or, if Executive dies during such period, within 30 days after Executive’s death) (in either case, the “ Required Delay Period ”); and (ii) the normal payment or distribution schedule for any remaining payments or distributions will resume at the end of the Required Delay Period.
(d) Timing of Release of Claims . Whenever in this Agreement a payment or benefit is conditioned on Executive’s execution of a release of claims, such release must be executed and all revocation periods shall have expired within 60 days after the date of termination; failing which such payment or benefit shall be forfeited. If such payment or benefit constitutes Non-Exempt Deferred Compensation, then such payment or benefit (including any installment payments) that would have otherwise been payable during such 60-day period shall be accumulated and paid on the 60 th day after the date of termination provided such release shall have been executed and such revocation periods shall have
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expired. If such payment or benefit is exempt from Section 409A of the Code, the Company may elect to make or commence payment at any time during such period.
(e) Timing of Reimbursements and In-kind Benefits. If Executive is entitled to be paid or reimbursed for any taxable expenses under this Agreement, and such payments or reimbursements are includible in Executive’s federal gross taxable income, the amount of such expenses reimbursable in any one calendar year shall not affect the amount reimbursable in any other calendar year, and the reimbursement of an eligible expense must be made no later than December 31 of the year after the year in which the expense was incurred. No right of Executive to reimbursement of expenses under this Agreement shall be subject to liquidation or exchange for another benefit.
11. Modified Cutback of Compensation Deemed to be Contingent on a Change of Control . If any benefits or payments are to be made under the terms of this Agreement or any other agreement between Executive and the Company or the Bank following a transaction that constitutes a change in the ownership or effective control of the Company or the Bank or in the ownership of a substantial portion of the assets of the Company or the Bank such that the provisions of Section 280G of the Internal Revenue Code of 1986, as amended, and any regulations thereunder (“Code Section 280G”) or Section 4999 of the Internal Revenue Code and any regulations thereunder could potentially apply to such compensation, then the following provisions shall be applicable:
(a) In the event the independent accountants serving as auditors for the Company on the date of a change of control within the meaning of Code Section 280G (or any other accounting firm designated by the Company) determine that some or all of the payments or benefits scheduled under this Agreement, as well as any other payments or benefits on such change of control, would be nondeductible by the Company or the Bank under Code Section 280G, then the payments scheduled under this Agreement and all other agreements between Executive and the Company will be reduced to one dollar less than the maximum amount which may be paid without causing any such payment or benefit to be nondeductible. Any reduction of benefits or payments required to be made under this Section 11(a) shall be taken in the following order: first from cash compensation and then from payments or benefits not payable in cash, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the date of determination.
(b) Notwithstanding the foregoing Section 11(a), in the event the independent accountants serving as auditors for the Company on the date of a change of control within the meaning of Code Section 280G (or any other accounting firm designated by the Company) determine that the net economic benefit to Executive after payment of all income and excise taxes is greater without giving effect to Section 11(a) than Executive’s net economic benefit after a reduction by reason of the application of Section 11(a), then Section 11(a) shall be a nullity and without any force or effect. Any decisions regarding the requirement or implementation of the reductions to compensation described in Section 11(a) shall be made by the independent accountants serving as auditors for the Company on the date of a change of control within the meaning of Code Section 280G (or any other accounting firm designated by the Company), shall be made at the Company’s expense and shall be binding on the parties.
12. Regulatory Action .
(a) If Executive is removed and/or permanently prohibited from participating in the conduct of the Company’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act (“ FDIA ”) (12 U.S.C. 1818(e)(4) and (g)(1)), all obligations of the Company under this Agreement shall terminate, as of the effective date of such order.
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(b) If Executive is suspended and/or temporarily prohibited from participating in the conduct of the Company’s affairs by a notice served under Section 8(e)(3) or 8(g)(1) of the FDIA (12 U.S.C. 1818(e)(3) and (g)(1)), all obligations of the Company under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Company shall reinstate (in whole or in part) any of its obligations which were suspended.
(c) If the Company is in default (as defined in Section 3(x)(1) of the FDIA), all obligations under this Agreement shall terminate as of the date of default.
(d) All obligations under this Agreement shall be terminated, except to the extent a determination is made that continuation of the Agreement is necessary for the continued operation of the Company (1) by the director of the FDIC or his or her designee (the “ Director ”), at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Company under the authority contained in 13(c) of the FDIA; or (2) by the Director, at the time the Director approves a supervisory merger to resolve problems related to operation of the Company when the Company is determined by the Director to be in an unsafe and unsound condition.
(e) Notwithstanding anything contained in this Agreement to the contrary, no payments shall be made pursuant to any provision herein in contravention of the requirements of Section 2[18(k)] of the FDIA (12 U.S.C. 1828(k)). In particular, the provisions pertaining to the potential for payments shall have no force or effect as long as either the agreement concerning the potential for payments or the actual payment of such amounts would be considered a “golden parachute payment,” with the meaning of 12 C.F.R. Section 359.1(f).
13. Miscellaneous .
(a) Applicable Law; Forum Selection; Consent to Jurisdiction . The Company and Executive agree that this Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Virginia without giving effect to its conflicts of law principles. Executive agrees that the exclusive forum for any action to enforce this Agreement, as well as any action relating to or arising out of this Agreement, shall be the Circuit Court of Fairfax County or the federal court encompassing that jurisdiction, at the option of the Company. With respect to any such court action, Executive hereby irrevocably submits to the personal jurisdiction of such courts. The parties hereto further agree that the courts listed above are convenient forums for any dispute that may arise herefrom and that neither party shall raise as a defense that such courts are not convenient forums.
(b) Non-Duplication . Notwithstanding anything to the contrary in this Agreement, and except as specifically provided below, any severance payments or benefits received by Executive pursuant to this Agreement shall be in lieu of any general severance policy or other severance plan maintained by the Company (other than a stock option, restricted stock, share or unit, performance share or unit, supplemental retirement, deferred compensation or similar plan or agreement which may contain provisions operative on a termination of Executive’s employment or may incidentally refer to accelerated vesting or accelerated payment upon a termination of employment).
(c) Captions . The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.
(d) Amendments . This Agreement may not be amended or modified otherwise than-by a written agreement executed by the parties hereto or their respective successors and legal representatives.
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(e) Notices . All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
If to Executive : On file with the Company |
If to the Company : 6830 Old Dominion Drive McLean, Virginia 22101 Attention : CEO |
or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.
(f) Severability . The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
(g) Withholding . The Company may withhold from any amounts payable under this Agreement such federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.
(h) Waivers . Failure of either party to insist, in one or more instances, on performance by the other in strict accordance with the terms and conditions of this Agreement shall not be deemed a waiver or relinquishment of any right granted in this Agreement or of the future performance of any such term or condition or of any other term or condition of this Agreement, unless such waiver is contained in a writing signed by the party making the waiver.
(i) Entire Agreement . This Agreement contains the entire agreement between the Company and Executive with respect to the subject matter hereof and, from and after the date hereof, this Agreement shall supersede any other agreement, written or oral, between the parties relating to the subject matter of this Agreement, including but not limited to any prior discussions, understandings, and/or agreements between the parties, written or oral, at any time.
(j) Construction . The parties understand and agree that because they both have been given the opportunity to have counsel review and revise this Agreement, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. Instead, the language of all parts of this Agreement shall be construed as a whole, and according to its fair meaning, and not strictly for or against either of the parties.
(k) Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.
(Signatures on following page)
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IN WITNESS WHEREOF, Executive has hereunto set Executive’s hand and the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.
/s/ Thomas P. Baker | |
thomas p. baker | |
/s/ Joe A. Shearin | |
SOUTHERN NATIONAL | |
BANCORP OF VIRGINIA, INC. | |
By: Joe A. Shearin | |
Its: President and Chief Executive Officer | |
[Baker Employment Agreement]
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Exhibit 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of this 23rd day of June, 2017, is made by and between (i) Southern National Bancorp of Virginia, Inc. (“Company”) and Sonabank (the “Bank”) (collectively, the “Employer”) and (ii) Joe A. Shearin (the “Executive”).
WHEREAS , the Company and Eastern Virginia Bankshares, Inc. (“EVBS”) have entered into an Agreement and Plan of Merger dated December 13, 2016 (the “Merger Agreement”) whereby EVBS will merge with and into the Company (the “Merger”).
WHEREAS , Executive is currently employed as the President and Chief Executive Officer of EVBS and its wholly-owned banking subsidiary, EVB.
WHEREAS , effective upon the closing of the Merger (the “Effective Date”), the Company and the Bank wish to employ Executive as the President and Chief Executive Officer (“CEO”) of the Company and the Bank, on the terms and conditions herein contained.
WHEREAS , Executive wishes to accept such employment on the terms and subject to the conditions set forth herein.
NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein, conditioned upon the closing of the Merger, the parties agree as follows:
1. Employment and Duties .
(a) Executive shall be employed as President and Chief Executive Officer of the Company and the Bank (the “Position”) on the terms and subject to the conditions of this Agreement. Executive accepts such employment and agrees to perform the managerial duties and responsibilities of the Position, as may be assigned to Executive by the Board of Directors of the Company or the Bank. Unless otherwise specified hereafter, any services performed by Executive shall be for the benefit of the Bank and, therefore, any payments or benefits paid to Executive pursuant to this Agreement shall be the sole responsibility of the Bank; provided, however, the Bank’s obligation to make any payments owed to Executive under this Agreement shall be discharged to the extent compensation payments are made by the Company.
(b) Executive shall devote his best efforts and full time to rendering services on behalf of the Employer in furtherance of its best interests. Executive shall comply with all policies, standards and regulations of the Employer now or hereafter promulgated, and shall perform his duties under this Agreement to the best of his abilities and in accordance with standards of conduct applicable to chief executive officers of banks.
2. Term . The Term (as defined below) of this Agreement is effective as of the Effective Date and will continue through the earlier of (i) December 31, 2020 (the “Initial Term”) or (ii) the date this Agreement otherwise terminates pursuant to Section 6 or Section 16 below; provided, however, that, at the end of the Initial Term, if this Agreement has not been previously terminated pursuant to Section 6 or Section 16 below, this Agreement shall be automatically extended for a two-year term (a “Renewal Term”), commencing at the end of the
Initial Term, unless either party gives written notice of non-renewal no later than ninety (90) days prior to the end of the Initial Term. This Agreement shall continue to be further extended for an additional two-year term at the end of each Renewal Term, unless either party gives written notice of non-renewal no later than ninety (90) days prior to the end of the applicable Renewal Term. During the Initial Term or any Renewal Term, this Agreement may be terminated at any time pursuant to Section 6 or Section 16 below. The term of this Agreement, including all Renewal Terms, if any, is referred to herein as the “Term.”
3. Compensation .
(a) Base Salary . During the Term, the Employer shall cause Executive to be paid an annual base salary as determined by the Company’s Board of Directors (the “Board of Directors”) or its Compensation Committee (the “Compensation Committee”), which total base salary shall not be less than $424,200 per year, subject to all applicable withholdings. The base salary shall be paid in equal installments to Executive in accordance with the Employer’s established payroll practices (but no less frequently than monthly). The Board of Directors or a committee thereof, in its discretion, may increase Executive’s base salary during the Term. Without limiting the foregoing, the Compensation Committee shall review Executive’s base salary at its first meeting immediately following the Effective Date and may increase, but not decrease, such base salary in connection with such review. The Employer shall withhold state and federal income taxes, social security taxes and such other payroll deductions as may from time to time be required by law or agreed upon in writing by Executive and the Employer. The Employer shall also withhold and remit to the proper party any amounts agreed to in writing by the Employer and Executive for participation in any corporate sponsored benefit plans for which a contribution is required. Except as otherwise expressly set forth in this Agreement, no compensation shall be paid pursuant to this Agreement in respect of any month or portion thereof subsequent to any termination of Executive’s employment by the Employer.
(b) Annual Bonuses . Executive shall receive only such annual bonuses as the Board of Directors or the Compensation Committee, in its sole discretion, decides to pay to Executive. Any such bonus shall be paid annually by March 15 of the year following the fiscal year for which performance is being evaluated.
(c) Equity Awards . Executive will be eligible to receive equity awards from the Company, in such manner and subject to such terms and conditions as the Board of Directors or the Compensation Committee, in its sole discretion, may determine.
(d) Clawback . Executive agrees that any incentive compensation (including both equity and cash incentive compensation) that Executive receives from the Employer or a related entity is subject to repayment (i.e., clawback) to the Employer or such related entity as determined by the Board of Directors or the Compensation Committee in the event (i) of a restatement of the Company’s or the Bank’s financial results (other than a restatement caused by a change in applicable accounting rules or interpretations) the result of which is that the financial statements were materially inaccurate and any incentive compensation paid would have been a materially lower amount had it been calculated based on such restated results or (ii) the repayment is otherwise required by applicable federal or state law or regulation or stock exchange requirement, or by a separate “clawback” policy, as may be adopted from time to time
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by the Board of Directors. Except where offset of, or recoupment from, incentive compensation covered by Code Section 409A (as defined in Section 19 below) is prohibited by Code Section 409A, to the extent allowed by law and as determined by the Compensation Committee, Executive agrees that such repayment may, in the discretion of the Compensation Committee, be accomplished by withholding of future compensation to be paid to Executive by the Employer. Any recovery of incentive compensation covered by Code Section 409A shall be implemented in a manner which complies with Code Section 409A.
4. Benefits .
(a) Corporate Benefit Plans . Executive shall be entitled to participate in or become a participant in any employee benefit plan maintained by the Employer for which he is or will become eligible on such terms as the Board of Directors or the Compensation Committee may, in its discretion, establish, modify or otherwise change.
(b) SERP . Executive shall be entitled to the benefits under the Eastern Virginia Bankshares, Inc. Supplemental Executive Retirement Plan effective January 1, 2008, as amended effective November 20, 2014 (the “EVBS SERP”), as amended from time to time in accordance with its terms.
(c) Personal and Sick Leave . Executive shall be entitled to the same personal and sick leave as the Board of Directors may from time to time designate for all full-time employees of the Employer.
(d) Vacations . Executive shall be entitled to thirty (30) weekdays of vacation leave each year, which shall be taken at such time or times as may be approved by the Employer and during which Executive’s compensation hereunder shall continue to be paid.
(e) Club Dues . The Employer shall pay (or reimburse Executive for) Executive’s assessment fees and membership dues at a private club selected by Executive in Richmond, Virginia incurred during the Term. To the extent the Employer reimburses Executive for any such fees or dues, such reimbursements shall be made no later than the last day of the calendar month following the calendar month in which Executive submits the request for payment of the reimbursable expense, which shall be submitted no later than sixty (60) days after the expense is incurred.
(f) Automobile . The Employer shall provide Executive with the use of an automobile that is appropriate for Executive’s Position during the Term and shall pay (or reimburse Executive for) all operational expenses, including taxes, insurance, gasoline, oil, maintenance, repairs and other similar expenses. Executive shall be entitled to a new automobile every three (3) years during the Term. To the extent the Employer reimburses Executive for any such operational expenses, such reimbursements shall be made no later than the last day of the calendar month following the calendar month in which Executive submits the request for payment of the reimbursable expense, which shall be submitted no later than sixty (60) days after the expense is incurred.
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5. Reimbursement of Expenses . Executive shall be reimbursed upon Executive’s incurring reasonable and customary business expenses in connection with the performance of his duties, subject to presentation of adequate substantiation, including receipts, for the reasonable business travel, entertainment, lodging, and other business expenses incurred by Executive. In no event will such reimbursements be made later than the last day of the calendar month following the calendar month in which Executive submits the request for payment of the reimbursable expense, which shall be submitted no later than sixty (60) days after the expense is incurred.
6. Termination of Employment .
(a) Death or Incapacity . Executive’s employment under this Agreement shall terminate automatically upon Executive’s death. Executive’s spouse, if she survives Executive, or, if not, Executive’s estate shall receive (i) any unpaid base salary which otherwise would be payable to Executive through the date of termination payable in a lump sum as soon as administratively feasible following termination, but not later than thirty (30) days thereafter; (ii) any annual bonus compensation earned and awarded pursuant to Section 3(b) above or any other incentive compensation for the prior fiscal year, but not yet paid as of the date of termination, payable on the earlier of (A) the thirtieth (30 th ) day after the date of termination, or (B) when otherwise due; (iii) any benefits or awards vested, due and owing pursuant to the terms of any other plans, policies or programs, payable when otherwise due (hereinafter subsections (i) – (iii) collectively are referred to as the “Accrued Obligations”). Executive’s spouse, if she survives Executive, or, if not, Executive’s estate shall also receive an amount equal to Executive’s base salary from the date of his death through the end of the month in which his death occurs, payable in a lump sum as soon as administratively feasible following his death, but not later than thirty (30) days thereafter. If the Employer determines that Incapacity (as defined below) of Executive has occurred, it may terminate Executive’s employment and this Agreement upon ninety (90) days’ written notice, provided that, within ninety (90) days after receipt of such notice, Executive shall not have returned to full-time performance of Executive’s assigned duties. In the event of a termination due to “Incapacity,” the Employer shall pay the Accrued Obligations to Executive. For purposes of this Agreement, “Incapacity” shall occur if (i) Executive is unable to perform the material functions of his position for thirteen (13) consecutive weeks and is then deemed to be permanently unable to continue in the Position by a physician selected by the Employer or its insurer, and acceptable to Executive or his legal representative, which consent shall not be unreasonably withheld, or (ii) Executive is deemed disabled as defined in the policy of disability insurance maintained by the Employer for the benefit of Executive (and others if a group policy). Notwithstanding any other provision in this Agreement, the Employer shall comply with all requirements of the Americans with Disabilities Act. Further, if Executive’s employment is terminated due to death or “Incapacity,” then no payments (other than the Accrued Obligations and spousal death benefit described above) shall be owed or paid, including those under Section 7(a) or Section 9(a).
(b) Termination by Employer With or Without Cause . The Employer may terminate Executive’s employment at any time during the Term of this Agreement, with or without notice (unless otherwise required herein) and with or without Cause. For purposes of this Agreement, “Cause” shall mean:
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(i) Executive’s willful misconduct in connection with the performance of Executive’s duties;
(ii) Executive’s misappropriation or embezzlement of funds or material property of the Employer or any affiliate;
(iii) Executive’s fraud or dishonesty with respect to the Employer or any affiliate;
(iv) Executive’s failure to perform any of the material duties and responsibilities required by the Position (other than by reason of Incapacity), or Executive’s failure to follow reasonable instructions or policies of the Employer, in either case after being advised in writing of such failure and being given a reasonable opportunity and period (as determined by the Employer in its reasonable business judgment) to remedy such failure (if such breach or violation is capable of being remedied), which period shall be not less than thirty (30) days;
(v) Executive’s conviction of, indictment for (or the procedural equivalent), or entering of a guilty plea or plea of no contest with respect to any felony or any misdemeanor involving moral turpitude;
(vi) Executive’s breach of a material term of this Agreement, or violation in any material respect of any policy, code or standard of behavior generally applicable to officers of the Company and the Bank, after being advised in writing of such breach or violation and being given a reasonable opportunity and period (as determined by the Employer in its reasonable business judgment) to remedy such breach or violation (if such breach or violation is capable of being remedied), which period shall be not less than thirty (30) days;
(vii) Executive’s willful violation of any final cease and desist order;
(viii) Executive’s breach of any fiduciary duty owed to the Employer or its affiliates; or
(ix) Executive’s engaging in conduct that, if it became known by any regulatory or governmental agency or the public, would be or is reasonably likely to result, in the good faith judgment of the Employer, in material injury to the Company or the Bank, monetarily or otherwise.
(c) Termination by Executive for Good Reason . Executive may terminate employment for Good Reason. For purposes of this Agreement, “Good Reason” shall mean:
(i) The assignment of duties to Executive by the Employer which result in Executive having significantly less authority or responsibility than he has on the Effective Date, without his express written consent;
(ii) The removal of Executive from the Position or any failure to nominate Executive for election to the Board of Directors, without his express written consent;
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(iii) Requiring Executive to maintain his principal office outside of the Commonwealth of Virginia unless the Employer moves its principal executive offices to the place to which Executive is required to move;
(iv) A reduction by the Employer of Executive’s base salary, as the same may have been increased from time to time;
(v) The failure of the Employer to provide Executive with substantially the same fringe benefits that are provided to him on the Effective Date;
(vi) The failure of the Employer to comply with any material term of this Agreement;
(vii) The failure of the Employer to obtain the assumption of, and agreement to perform, this Agreement by any successor as contemplated in Section 17 below; or
(viii) Notice by the Employer to Executive that the Employer does not intend to renew the Term of this Agreement for a Renewal Term upon the expiration of the Initial Term or the then-current Renewal Term.
Executive is required to provide written notice to the Employer detailing the existence of a condition described above in this Section 6(c) within a thirty (30) day period after the initial existence of the condition, and the Employer shall have thirty (30) days after notice to remedy the condition without liability. In addition to the foregoing requirements, to trigger payment under this Section 6(c), Executive must also terminate employment within ninety (90) days after the initial occurrence of the event constituting “Good Reason” and the Employer must have been allowed the full opportunity to cure, as set forth above.
Notwithstanding the above, “Good Reason” shall not include any resignation by Executive where Cause for Executive’s termination by the Employer exists under Section 6(b), or there is an isolated, insubstantial or inadvertent action by the Employer (provided that such action is remedied by the Employer after written notice by Executive); and shall not include any action by the Employer taken before the Effective Date of this Agreement.
(d) Other . Executive’s employment hereunder may be terminated voluntarily by Executive upon ninety (90) days’ written notice to the Employer or at any time by mutual agreement in writing. In the event of such voluntary termination notice by Executive, the Employer may terminate Executive’s employment prior to the expiration of the notice period without incurring any liability under Section 7, and the Employer shall be required only to pay Executive’s base salary through the balance of the notice period (with such payments to be made in accordance with the Employer’s established payroll practices (but no less frequently than monthly)), not to exceed ninety (90) days, plus any Accrued Obligation (as defined Section 6(a)).
7. Obligations Upon Termination .
(a) Without Cause or for Good Reason . If either the Employer terminates Executive’s employment without Cause (including termination of employment upon the expiration or non-renewal of this Agreement at the end of the Initial Term or any Renewal Term)
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or Executive terminates his employment for Good Reason, Executive shall be entitled to receive, subject to any applicable delay set forth in Section 19 below:
(i) The Accrued Obligations (as defined in Section 6(a));
(ii) Subject to Executive's signing, delivering and not revoking the Release attached as Exhibit A , which Release must be signed, delivered and not revoked within the period set forth in the Release:
(A) Payment of a monthly amount equal to one-twelfth (1/12) his rate of annual base salary in effect immediately preceding such termination for thirty-six (36) months beginning upon his termination of employment, with such payments to be made in accordance with the Employer’s established payroll practices (but no less frequently than monthly) (the “Severance Benefit”);
(B) For thirty-six (36) months after the date of termination, Executive shall receive coverage under all employee health insurance programs or plans (medical, dental and vision) (“Health Care Plans”) in which Executive and/or his spouse and any of his dependents were entitled to participate immediately prior to such termination, with the Employer paying the full monthly cost of the premium therefor (the “Heath Care Continuance Benefit”), provided that the continued participation of Executive and/or his spouse and any of his dependents is possible under the general terms and provisions of the Health Care Plans. If the Employer cannot maintain such coverage for Executive or his spouse or dependents under the terms and provisions of the Health Care Plans (or where such continuation would adversely affect the tax status of the Health Care Plans pursuant to which the coverage is provided), the Employer shall provide the Health Care Continuance Benefit by either providing substantially identical benefits directly or through an insurance arrangement or by paying Executive the estimated cost of the expected premium for thirty-six (36) months after the date of termination with such payments to be made in accordance with the Employer’s established payroll practices (but no less frequently than monthly) for employees generally for the period during which such cash payments are to be provided. To the extent allowed by applicable law, the 36-month Health Care Continuance Benefit period shall run concurrently with the period for which Executive and/or his spouse and any of his dependents would be eligible for continuation coverage under the Consolidated Omnibus Reconciliation Act of 1985 (the “COBRA Period”), although the 36-month Health Care Continuance Benefit period will continue to run after the COBRA Period has ended;
(C) Complete out-placement services, including job search services, paid by the Employer up to a total of Ten Thousand Dollars ($10,000.00). The services will be provided by a recognized out-placement organization selected by Executive with the approval of the Employer (which approval will not be unreasonably withheld). The services will be provided for up to two (2) years after the date Executive’s employment by the Employer terminates (“Outplacement Services”); and
(D) An additional amount, payable in a lump sum on the date of termination, equal to the average of the annual bonus compensation pursuant to Section 3(b) above earned by Executive for the three (3) immediately preceding complete fiscal years or such fewer number of complete fiscal years as Executive may have been employed by the Employer. For the
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avoidance of any doubt, if the Employer makes a determination to award no annual bonus compensation to Executive for a year, such determination shall be considered to result in a bonus award of Zero Dollars ($0.00) and that shall be the amount used in calculating the average of the annual bonus compensation for purposes of this Section 7(a)(ii)(D).
Notwithstanding the foregoing, and in addition to the Employer’s remedies set forth in Section 7(f), all such payments and benefits under Section 7(a) otherwise to be made after Executive’s termination of employment shall cease to be paid, and the Employer shall have no further obligation with respect thereto, in the event Executive, without the consent of the Employer, engages in any activity prohibited in Section 7 or any of its sub-parts.
(b) Non-Competition . In consideration for the Employer’s entering into this Agreement and in exchange for the benefits promised herein, and other valuable consideration, Executive agrees that Executive will not engage in “Competition” for a period of twelve (12) months after Executive’s employment with the Employer ceases for any reason, including termination of employment upon the expiration or non-renewal of this Agreement at the end of the Initial Term or any Renewal Term. For purposes hereof, “Competition” means Executive’s performing duties that are the same as or substantially similar to those duties performed by Executive for the Company or the Bank or its affiliates during the twelve (12) months prior to the cessation of Executive’s employment, as an officer, a director, an employee, a partner or in any other capacity, within a twenty-five (25) mile radius of the headquarters of the Company and the headquarters of the Bank (or any Virginia headquarters of any successor of any of them in the event of a merger consummated as of the last day of employment), as such locations exist as of the date Executive’s employment ceases, if those duties are performed for a bank holding company of, or for, a bank or other financial institution that provides products or services that are the same as or substantially similar to, and competitive with, any of the products or services provided by the Bank at the time Executive’s employment ceases.
(c) Non-Piracy . In consideration for the Employer’s entering into this Agreement and in exchange for the benefits promised herein, and other valuable consideration, Executive agrees that for a period of twelve (12) months after Executive’s employment ceases for any reason, including termination of employment upon the expiration or non-renewal of this Agreement at the end of the Initial Term or any Renewal Term, Executive will not, directly or indirectly, solicit, divert from the Bank or transact business with any “Customers” of the Bank with whom Executive had “Material Contact” during the last twelve (12) months of Executive’s employment or about whom Executive obtained information not known generally to the public while acting within the scope of his employment during the last twelve (12) months of employment, if the purpose of such solicitation, diversion or transaction is to provide products or services that are the same as or substantially similar to, and competitive with, those offered by the Bank at the time Executive’s employment ceases. “Material Contact” means that Executive personally communicated with the Customer, either orally or in writing, for the purpose of providing, offering to provide or assisting in providing products or services of the Bank during the last twelve (12) months of Executive’s employment. “Customer” means any person or entity with whom the Bank had a depository or other contractual relationship, pursuant to which the Bank provided products or services within twelve (12) months prior to the cessation of Executive’s employment.
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(d) Non-Solicitation . In consideration for the Employer’s entering into this Agreement and in exchange for the benefits promised herein, and other valuable consideration, Executive agrees that for a period of twelve (12) months after employment ceases for any reason, including termination of employment upon the expiration or non-renewal of this Agreement at the end of the Initial Term or any Renewal Term, Executive will not, directly or indirectly, hire any person employed by the Employer or solicit for hire or induce any person to terminate employment with the Employer, if the purpose is to compete with the Employer. The parties agree that Executive will not be in violation of this sub-paragraph (d) if he has no personal involvement, directly or indirectly, in the hiring, solicitation or inducement of the Employer’s employee(s), as referenced above.
(e) For Cause; Other Than for Good Reason . If Executive’s employment is terminated for Cause or if Executive voluntarily terminates his employment other than for Good Reason, this Agreement shall terminate without any further obligation of the Employer to Executive other than the payment to Executive of the Accrued Obligations and as provided in Section 6(d) above.
(f) Remedies . Executive acknowledges that the covenants set forth in Sections 7 and 8 of this Agreement are just, reasonable, and necessary to protect the legitimate business interests of the Employer. Executive further acknowledges that if Executive breaches or threatens to breach any provision of Sections 7 and 8, the Employer’s remedies at law will be inadequate, and the Employer will be irreparably harmed. Accordingly, the Employer shall be entitled to an injunction, both preliminary and permanent, restraining Executive from such breach or threatened breach, such injunctive relief not to preclude the Employer from pursuing all available legal and equitable remedies, and being entitled to all reasonable attorney’s fees and costs incurred in connection with the breach, threatened breach, or any challenge to the enforceability of Sections 7 or 8.
8. Confidentiality . As an employee of the Employer, Executive will have access to and may participate in the origination of non-public, proprietary and confidential information relating to the Company and the Bank and/or their affiliates and Executive acknowledges a fiduciary duty owed to the Employer and its affiliates not to disclose any such information. Confidential information may include, but is not limited to, trade secrets, customer lists and information, internal corporate planning, methods of marketing and operation, and other data or information of or concerning the Employer and its affiliates or their customers that is not generally known to the public or generally in the banking industry. Executive agrees that for a period of five (5) years following the cessation of employment, Executive will not use or disclose to any third party any such confidential information, either directly or indirectly, except as may be authorized in writing specifically by the Employer; provided, however that to the extent the information covered by this Section 8 is otherwise protected by the law, such as “trade secrets,” as defined by the Virginia Uniform Trade Secrets Act, or customer information protected by banking privacy laws, that information shall not be disclosed or used for however long the legal protections applicable to such information remain in effect.
Nothing in this Agreement restricts or prohibits Executive or Executive’s counsel from initiating communications directly with, responding to any inquiry from, volunteering information to, or providing testimony before a self-regulatory authority or a governmental, law
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enforcement or other regulatory authority, including the U.S. Equal Employment Opportunity Commission, the Department of Labor, the National Labor Relations Board, the Department of Justice, the Securities and Exchange Commission, the Financial Industry Regulatory Authority, the Congress, and any Office of Inspector General (collectively, the “Regulators”), from participating in any reporting of, investigation into, or proceeding regarding suspected violations of law, or from making other disclosures that are protected under or from receiving an award for information provided under the whistleblower provisions of state or federal law or regulation. Executive does not need the prior authorization of the Company to engage in such communications with the Regulators, respond to such inquiries from the Regulators, provide confidential information or documents containing confidential information to the Regulators, or make any such reports or disclosures to the Regulators. Executive is not required to notify the Employer that Executive has engaged in such communications with the Regulators. Executive recognizes and agrees that, in connection with any such activity outlined above, Executive must inform the Regulators that the information Executive is providing is confidential.
Federal law provides certain protections to individuals who disclose a trade secret to their attorney, a court, or a government official in certain, confidential circumstances. Specifically, federal law provides that an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret under either of the following conditions:
· | Where the disclosure is made (a) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney; and (b) solely for the purpose of reporting or investigating a suspected violation of law; or |
· | Where the disclosure is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. |
Federal law also provides that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (a) files any document containing the trade secret under seal; and (b) does not disclose the trade secret, except pursuant to court order.
9. Termination After Change of Control .
(a) Without Cause or for Good Reason . If Executive’s employment is involuntarily terminated without Cause within one (1) year after a Change of Control (as defined below) shall have occurred or if Executive resigns for Good Reason within one (1) year after a Change of Control shall have occurred, Executive shall be entitled to receive, subject to any applicable delay set forth in Section 19 below:
(i) The Accrued Obligations (as defined in Section 6(a));
(ii) Subject to Executive's signing, delivering and not revoking the Release attached as Exhibit A , which Release must be signed, delivered and not revoked within the period set forth in the Release:
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(A) The Severance Benefit (as defined in Section 7(a)(ii)(A));
(B) The Heath Care Continuance Benefit (as defined in Section 7(a)(ii)(B));
(C) The Outplacement Services (as defined in Section 7(a)(ii)(C)); and
(D) An additional amount, payable in a lump sum on the date of termination, equal to three (3) times the highest annual bonus compensation pursuant to Section 3(b) above earned by Executive for the three (3) immediately preceding complete fiscal years or such fewer number of complete fiscal years as Executive may have been employed by the Employer. For the avoidance of any doubt, if the Employer makes a determination to award no annual bonus compensation to Executive for the three (3) immediately preceding complete fiscal years or such fewer number of complete fiscal years as Executive may have been employed by the Employer, then no amount is payable under this Section 9(a)(ii)(D).
(b) Covenants Cease to Apply . Notwithstanding any other provision in this Agreement, Executive’s obligations under Section 7(b), Section 7(c) and Section 7(d) above shall not apply (i) for the one (1) year period beginning on the Effective Date, and (ii) following a Change of Control that occurs after the Effective Date.
(c) Modified Cutback of Compensation Deemed to be Contingent on a Change of Control . If any benefits or payments are to be made under the terms of this Agreement or any other agreement between Executive and the Employer following a transaction that constitutes a change in the ownership or effective control of the Employer or in the ownership of a substantial portion of the assets of the Employer such that the provisions of Section 280G of the Internal Revenue Code of 1986, as amended, and any regulations thereunder (“Code Section 280G”) or Section 4999 of the Internal Revenue Code and any regulations thereunder could potentially apply to such compensation, then the following provisions shall be applicable:
(i) In the event the independent accountants serving as auditors for the Employer on the date of a change of control within the meaning of Code Section 280G (or any other accounting firm designated by the Employer) determine that some or all of the payments or benefits scheduled under this Agreement, as well as any other payments or benefits on such change of control, would be nondeductible by the Employer under Code Section 280G, then the payments scheduled under this Agreement and all other agreements between Executive and the Employer will be reduced to one dollar less than the maximum amount which may be paid without causing any such payment or benefit to be nondeductible. Any reduction of benefits or payments required to be made under this Section 9(c)(i) shall be taken in the following order: first from cash compensation and then from payments or benefits not payable in cash, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the date of determination.
(ii) Notwithstanding the foregoing Section 9(c)(i), in the event the independent accountants serving as auditors for the Employer on the date of a change of control within the meaning of Code Section 280G (or any other accounting firm designated by the Employer) determine that the net economic benefit to Executive after
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payment of all income and excise taxes is greater without giving effect to Section 9(c)(i) than Executive’s net economic benefit after a reduction by reason of the application of Section 9(c)(i), then Section 9(c)(i) shall be a nullity and without any force or effect. Any decisions regarding the requirement or implementation of the reductions to compensation described in Section 9(c)(i) shall be made by the independent accountants serving as auditors for the Employer on the date of a change of control within the meaning of Code Section 280G (or any other accounting firm designated by the Employer), shall be made at the Employer’s expense and shall be binding on the parties.
(d) Superseding Provisions . The benefits and payments set forth in Section 9(a) that may be due in connection with a Change of Control shall supersede all payments, entitlements and benefits of Executive otherwise payable under Section 7(a). The benefits and payments due under Section 9(a) replace those in Section 7(a), and are not cumulative thereof.
(e) For Cause; Other Than for Good Reason . If Executive’s employment is terminated for Cause or if Executive voluntarily terminates his employment other than for Good Reason, within one (1) year after a Change of Control, this Agreement shall terminate without any further obligation of the Employer to Executive other than the payment to Executive of the Accrued Obligations.
10. Change of Control Defined . For purposes of this Agreement, a “Change of Control” occurs if (a) any person, including persons acting as a group, as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the owner or beneficial owner of securities of the Company having fifty percent (50%) or more of the combined voting power of the then outstanding securities of the Company that may be cast for the election of the Company’s directors other than a result of an issuance of securities initiated by the Company, or open market purchases approved by the Board of Directors, as long as the majority of the Board of Directors approving the purchases constitutes a majority of the Board of Directors at the time the purchases are made; (b) during any twelve-month period, as the direct or indirect result of, or in connection with, a tender or exchange offer, a merger or other business combination, a sale of assets, a contested election of directors, or any combination of these events, the persons who were directors of the Company before such events cease to constitute a majority of the Board of Directors or any successor’s board, as applicable. For purposes of this Agreement, a Change of Control occurs on the date on which an event described in (a) – (b) occurs. If a Change of Control occurs on account of a series of transactions or events, the Change of Control occurs on the date of the last of such transactions or events. The above definition of Change of Control is intended to, and shall be interpreted in a manner as to, comply with the requirements of Code Section 409A. For the avoidance of any doubt, for all purposes under this Agreement except as specifically provided otherwise in Section 9(b), a Change of Control shall include the Merger or any related transaction.
11. Documents . All documents, records, tapes and other media of any kind or description relating to the business of the Employer or any of its affiliates or subsidiaries (the “Documents”), whether or not prepared by Executive, shall be the sole and exclusive property of the Employer. The Documents (and any copies) shall be returned to the Employer upon
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Executive’s termination of employment for any reason or at such earlier time or times as the Board of Directors of the Company or the Bank or its designee may specify.
12. Suspension or Temporary Prohibition of Services; Permanent Prohibition of Services . If Executive is suspended and/or temporarily prohibited from participating in the conduct of the Employer’s affairs by a notice served pursuant to the Federal Deposit Insurance Act, the Employer’s obligations under this Agreement shall be suspended as of the date of service unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Employer may in its discretion (a) pay Executive all or part of the compensation withheld while its contract obligations were suspended, and (b) reinstate (in whole or in part) any of its obligations which were suspended. If Executive is removed and/or permanently prohibited from participating in the conduct of the Employer’s affairs by an order issued under the Federal Deposit Insurance Act or the Code of Virginia, all obligations of the Employer under this Agreement shall terminate as of the effective date of the order, but vested rights of the parties shall not be affected.
13. Severability . If any provision of this Agreement, or part thereof, is determined to be unenforceable for any reason whatsoever, it shall be severable from the remainder of this Agreement and shall not invalidate or affect the other provisions of this Agreement, which shall remain in full force and effect and shall be enforceable according to their terms. No covenant shall be dependent upon any other covenant or provision herein, each of which stands independently.
14. Governing Law/Venue . This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia. The parties further agree that venue in the event of a dispute shall be exclusively in the Circuit Court of Henrico, Virginia, or the applicable federal court encompassing that jurisdiction, at the sole option of the Employer, and Executive agrees not to object to venue.
15. Notices . All written notices required by this Agreement shall be deemed given when delivered personally or sent by registered or certified mail, return receipt requested, to the parties at the following addresses (or to such other address as the party entitled to notice shall hereafter designate in accordance with the terms hereof):
16. Amendment and Termination of Agreement . This Agreement may not be varied, altered, modified or in any way amended except by an instrument in writing executed by the parties hereto or their legal representatives. Except as specifically set forth herein, including pursuant to the provisions of Section 6 above, this Agreement may not be terminated except by an instrument in writing executed by the parties hereto or their legal representatives, provided,
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however, and notwithstanding anything in this Agreement to the contrary, the Employer or its successor has the unilateral right to terminate this Agreement and pay out the full value of all benefits hereunder in one lump sum payment in connection with a Change of Control pursuant to, and in compliance with, Treasury Regulation § 1.409A-3(j)(4)(ix)(B).
17. Binding Effect . This Agreement shall be binding upon Executive and on the Employer, its successors and assigns on the Effective Date, subject to the approval by the Boards of Directors of the Company and the Bank. The Employer will require any successor to all or substantially all of the business, stock or assets of the Employer to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Employer would be required to perform it if no such succession had taken place. Failure of the Employer to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement by the Employer. This Agreement shall be freely assignable by the Employer.
18. No Construction Against Any Party . This Agreement is the product of informed negotiations between Executive and the Employer. If any part of this Agreement is deemed to be unclear or ambiguous, it shall be construed as if it were drafted jointly by all parties. Executive and the Employer agree that neither party was in a superior bargaining position regarding the substantive terms of this Agreement.
19. Code Section 409A Compliance .
(a) The intent of the parties is that payments and benefits under this Agreement comply with Section 409A of the Internal Revenue Code of 1986, as amended, and applicable guidance thereunder (“Code Section 409A”) or comply with an exemption from the application of Code Section 409A and, accordingly, all provisions of this Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under Code Section 409A.
(b) A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the form or timing of payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” (within the meaning of Code Section 409A) and, for purposes of any such provision of this Agreement under which (and to the extent) deferred compensation subject to Code Section 409A is paid, references to a “termination” or “termination of employment” or like references shall mean separation from service. A “separation from service” shall not occur under Code Section 409A unless such Executive has completely severed Executive’s relationship with the Employer or Executive has permanently decreased Executive’s services to twenty percent (20%) or less of the average level of bona fide services over the immediately preceding thirty-six (36) month period (or the full period if Executive has been providing services for less than thirty-six (36) months). A leave of absence shall only trigger a termination of employment that constitutes a separation from service at the time required under Code Section 409A. If Executive is deemed on the date of separation from service with the Employer to be a “specified employee”, within the meaning of that term under Code Section 409A(a)(2)(B) and using the identification methodology selected by the Employer from time to time, or if none, the default methodology, then with regard to any payment or benefit that is required to be delayed for six (6) months in compliance with Code Section 409A(a)(2)(B), such
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payment or benefit shall be paid with interest on the earlier of (i) the first day of the seventh (7 th ) month measured from the date of Executive’s separation from service or (ii) the date of Executive’s death. The amount of interest to be paid shall be based on the prime rate of interest in effect on the first day of the month following the Executive's separation from service as reported in the Wall Street Journal. In the case of benefits required to be delayed under Code Section 409A, however, Executive may pay the cost of benefit coverage, and thereby obtain benefits, during such six (6) month delay period and then be reimbursed by the Employer thereafter on the first day of the seventh (7 th ) month following the date of Executive’s separation from service or, if earlier, on the date of Executive’s death.
(c) With regard to any provision herein that provides for reimbursement of expenses or in-kind benefits subject to Code Section 409A, except as permitted by Code Section 409A, (i) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit, and (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, provided that the foregoing clause (ii) shall not be violated with regard to expenses reimbursed under any arrangement covered by Code Section 105(b) solely because such expenses are subject to a limit related to the period the arrangement is in effect. All reimbursements shall be reimbursed in accordance with the Employer’s reimbursement policies but in no event later than the calendar year following the calendar year in which the related expense is incurred.
(d) When, if ever, a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within ten (10) days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Employer.
(e) Notwithstanding any other provision of this Agreement, Executive shall be solely liable, and the Employer shall not be liable in any way to Executive if any payment or benefit which is to be provided pursuant to this Agreement and which is considered deferred compensation subject to Code Section 409A otherwise fails to comply with, or be exempt from, the requirements of Code Section 409A.
20. Regulatory Limitation . Notwithstanding any other provision of this Agreement, neither the Employer nor any subsidiary shall be obligated to make, and Executive shall have no right to receive, any payment, benefit or amount under this Agreement that would violate any law, regulation or regulatory order applicable to the Employer or the subsidiary at the time such payment is due, including without limitation, any regulation or order of the Federal Deposit Insurance Corporation or the Board of Governors of the Federal Reserve System. Executive agrees that compliance by the Employer with such regulatory restrictions, even to the extent that compensation or other benefits paid to Executive are limited, shall not be a breach of this Agreement by the Employer.
21. Waiver of Breach . The failure at any time to enforce or exercise any right under any of the provisions of this Agreement or to require at any time performance by the other parties of any of the provisions of this Agreement shall in no way be construed to be a waiver of such provisions or to affect either the validity of this Agreement or any part of this Agreement,
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or the right of any party hereafter to enforce or exercise its rights under each and every provision in accordance with the terms of this Agreement.
22. No Attachment . Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect; provided, however, that nothing in this Section 22 shall preclude the assumption of such rights by executors, administrators or other legal representatives of Executive or Executive’s estate and their assigning any rights under this Agreement to the person or persons entitled hereto.
23. Full Capacity . The persons signing this Agreement represent that they have full authority and representative capacity to execute this Agreement in the capacities indicated below and to perform all obligations under this Agreement.
24. Representation and Warranty of Executive . Executive represents and warrants to the Employer that Executive is not under any obligation, contractual or otherwise, to any other firm or corporation, which would prevent Executive from entering into the employ of the Employer under this Agreement or prevent Executive from performing the terms of this Agreement.
25. Entire Agreement . Except as otherwise provided herein, this Agreement constitutes the entire agreement of the parties with respect to the matters addressed herein and, upon the Effective Date, it supersedes all other prior agreements and understandings, both written and oral, express or implied, with respect to the subject matter of this Agreement, including but not limited to Executive’s Amended and Restated Employment Agreement, effective January 1, 2008, as amended, effective March 19, 2015 (the “Prior Agreement”). Executive expressly waives all rights and entitlements, if any, under the Prior Agreement, including but not limited to any rights under Section 14 thereunder. Provided, however, nothing herein is intended to, or does, waive any restricted stock award granted to Executive prior to the closing of the Merger, vested or unvested, in effect prior to the execution of this Agreement, or Executive's rights under the EVBS SERP or any successor thereto.
26. Survivability . The provisions of Section 7 and 8 shall survive the termination, expiration or non-renewal of this Agreement.
27. Counterparts/Facsimile . This Agreement may be executed in counterparts (including by facsimile), each of which shall be deemed an original and all of which together shall constitute one and the same instrument.
28. Case and Gender . Wherever required by the context of this Agreement, the singular or plural case and the masculine, feminine and neuter genders shall be interchangeable.
29. Title . The titles and sub-headings of each Section and Sub-Section in this Agreement are for convenience only and should not be considered part of this Agreement to aid in interpretation or construction.
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[Signature Block on Next Page]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
SOUTHERN NATIONAL BANCORP OF VIRGINIA, INC. | ||
/s/ Georgia S. Derrico | ||
By: | Georgia S. Derrico | |
Its: | Chairman of the Board of Directors and Chief Executive Officer | |
SONABANK | ||
/s/ Georgia S. Derrico | ||
By: | Georgia S. Derrico | |
Its: | Chairman of the Board of Directors and Chief Executive Officer | |
JOE A. SHEARIN | ||
/s/ Joe A. Shearin |
[Shearin Employment Agreement]
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EXHIBIT A
RELEASE
In consideration of the benefits promised in the Employment Agreement to which this Release is attached as Exhibit A (and further defined below), Joe A. Shearin (“Executive”), hereby irrevocably and unconditionally releases, acquits, and forever discharges Southern National Bancorp of Virginia, Inc. and Sonabank, and each of their agents, directors, members, shareholders, 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 arising out of alleged violations or breaches of any contracts, express or implied, or any tort, or any legal restrictions on Releasees’ right to terminate employees, or 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; and (8) the Employee Retirement Income Security Act (“ERISA”) (“Claim” or “Claims”), which Executive now has, owns or holds, or claims to have, own or hold, or which Executive 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.
Executive hereby acknowledges and agrees that the execution of this Release and the cessation of Executive’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. Executive further acknowledges and agrees that:
a. The Release given by Executive is given solely in exchange for the benefits set forth in the Employment Agreement dated as of June 23, 2017 between Southern National Bancorp of Virginia, Inc., Sonabank and Executive (the “Employment Agreement”) to which this Release was initially attached and such consideration is in addition to anything of value which Executive was entitled to receive prior to entering into this Release;
b. By entering into this Release, Executive does not waive rights or claims that may arise after the date this Release is executed;
c. Executive 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 Executive be so advised in writing;
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d. Executive has been offered twenty-one (21) days [or 45 days if applicable] from receipt of this Release within which to consider whether to sign this Release; and
e. For a period of seven (7) days following Executive’s execution of this Release, Executive may revoke this Release by delivering the revocation to a Sonabank officer and it shall not become effective or enforceable until such seven (7) day period has expired.
This Release shall be binding upon the heirs and personal representatives of Executive and shall inure to the benefit of the successors and assigns of Southern National Bancorp of Virginia, Inc. and Sonabank.
Date | JOE A. SHEARIN |
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Exhibit 10.8
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of this 23 rd day of June, 2017, is made by and between (i) Southern National Bancorp of Virginia, Inc. (“Company”) and Sonabank (the “Bank”) (collectively, the “Employer”) and (ii) J. Adam Sothen (the “Executive”).
WHEREAS , the Company and Eastern Virginia Bankshares, Inc. (“EVBS”) have entered into an Agreement and Plan of Merger dated December 13, 2016 (the “Merger Agreement”) whereby EVBS will merge with and into the Company (the “Merger”).
WHEREAS , Executive is currently employed as the Chief Financial Officer of EVBS and the Executive Vice President and Chief Financial Officer of its wholly-owned banking subsidiary, EVB.
WHEREAS , effective upon the closing of the Merger (the “Effective Date”), the Company and the Bank wish to employ Executive as the Chief Financial Officer (“CFO”) of the Company and the Bank, on the terms and conditions herein contained.
WHEREAS , Executive wishes to accept such employment on the terms and subject to the conditions set forth herein.
NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein, conditioned upon the closing of the Merger, the parties agree as follows:
1. Employment and Duties .
(a) Executive shall be employed as Chief Financial Officer of the Company and the Bank (the “Position”) on the terms and subject to the conditions of this Agreement. Executive accepts such employment and agrees to perform the duties and responsibilities of the Position, as may be assigned to Executive by the Chief Executive Officer or Board of Directors of the Company or the Bank. Unless otherwise specified hereafter, any services performed by Executive shall be for the benefit of the Bank and, therefore, any payments or benefits paid to Executive pursuant to this Agreement shall be the sole responsibility of the Bank even if referred to herein as paid by the Company; provided, however, the Bank’s obligation to make any payments owed to Executive under this Agreement shall be discharged to the extent compensation payments are made by the Company.
(b) Executive shall devote his best efforts and full time to rendering services on behalf of the Employer in furtherance of its best interests. Executive shall comply with all policies, standards and regulations of the Employer now or hereafter promulgated, and shall perform his duties under this Agreement to the best of his abilities and in accordance with standards of conduct applicable to chief financial officers of banks.
2. Term . The Term (as defined below) of this Agreement is effective as of the Effective Date and will continue through the earlier of (i) December 31, 2019 (the “Initial Term”) or (ii) the date this Agreement otherwise terminates pursuant to Section 6 or Section 16 below; provided, however, that, at the end of the Initial Term, if this Agreement has not been
previously terminated pursuant to Section 6 or Section 16 below, this Agreement shall be automatically extended for a one-year term (a “Renewal Term”), commencing at the end of the Initial Term, unless either party gives written notice of non-renewal no later than thirty (30) days prior to the end of the Initial Term. This Agreement shall continue to be further extended for an additional one-year term at the end of each Renewal Term, unless either party gives written notice of non-renewal no later than thirty (30) days prior to the end of the applicable Renewal Term. During the Initial Term or any Renewal Term, this Agreement may be terminated at any time pursuant to Section 6 or Section 16 below. The term of this Agreement, including all Renewal Terms, if any, is referred to herein as the “Term.”
3. Compensation .
(a) Base Salary . During the Term, the Employer shall cause Executive to be paid an annual base salary of $193,784.87, paid in equal installments to Executive in accordance with the Employer’s established payroll practices (but no less frequently than monthly). The Company’s Board of Directors (the “Board of Directors”) or a committee thereof, in its discretion, may increase Executive's base salary during the term. Without limiting the foregoing, the Compensation Committee (the “ Compensation Committee”) of the Board of Directors shall review Executive’s base salary at its first meeting immediately following the Effective Date and may increase, but not decrease, such base salary in connection with such review. The Employer shall withhold state and federal income taxes, social security taxes and such other payroll deductions as may from time to time be required by law or agreed upon in writing by Executive and the Employer. The Employer shall also withhold and remit to the proper party any amounts agreed to in writing by the Employer and Executive for participation in any corporate sponsored benefit plans for which a contribution is required. Except as otherwise expressly set forth hereunder, no compensation shall be paid pursuant to this Agreement in respect of any month or portion thereof subsequent to any termination of Executive’s employment by the Employer.
(b) Annual Bonuses . Executive shall receive only such annual bonuses as the Board of Directors or its Compensation Committee, in its sole discretion, decides to pay to Executive. Any such bonus shall be paid annually by March 15 of the year following the fiscal year for which performance is being evaluated.
(c) Equity Awards . Executive will be eligible to receive equity awards from the Company, in such manner and subject to such terms and conditions as the Board of Directors or the Compensation Committee, in its sole discretion, may determine.
(d) Clawback . Executive agrees that any incentive compensation (including both equity and cash incentive compensation) that Executive receives from the Employer or a related entity is subject to repayment (i.e., clawback) to the Employer or such related entity as determined by the Board of Directors or the Compensation Committee in the event (i) of a restatement of the Company’s or the Bank’s financial results (other than a restatement caused by a change in applicable accounting rules or interpretations) the result of which is that the financial statements were materially inaccurate and any incentive compensation paid would have been a materially lower amount had it been calculated based on such restated results or (ii) the repayment is otherwise required by applicable federal or state law or regulation or stock
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exchange requirement, or by a separate “clawback” policy, as may be adopted from time to time by the Board of Directors. Except where offset of, or recoupment from, incentive compensation covered by Code Section 409A (as defined in Section 19 below) is prohibited by Code Section 409A, to the extent allowed by law and as determined by the Compensation Committee, Executive agrees that such repayment may, in the discretion of the Compensation Committee, be accomplished by withholding of future compensation to be paid to Executive by the Employer. Any recovery of incentive compensation covered by Code Section 409A shall be implemented in a manner which complies with Code Section 409A.
4. Benefits .
(a) Corporate Benefit Plans . Executive shall be entitled to participate in or become a participant in any employee benefit plan maintained by the Employer for which he is or will become eligible on such terms as the Board of Directors or the Compensation Committee may, in its discretion, establish, modify or otherwise change.
(b) Personal Time Off . Executive shall be entitled to thirty one (31) days of paid time off ("PTO") each year (or such greater annual number of days provided under the Employer's PTO policy) which shall be taken in accordance with the Employer's PTO Policy.
5. Reimbursement of Expenses . Executive shall be reimbursed upon Executive’s incurring reasonable and customary business expenses in connection with the performance of his duties, subject to presentation of adequate substantiation, including receipts, for the reasonable business travel, entertainment, lodging, and other business expenses incurred by Executive. In no event will such reimbursements be made later than the last day of the calendar month following the calendar month in which Executive submits the request for payment of the reimbursable expense, which shall be submitted no later than sixty (60) days after the expense is incurred.
6. Termination of Employment .
(a) Death or Incapacity . Executive’s employment under this Agreement shall terminate automatically upon Executive’s death. Executive’s spouse, if she survives Executive, or, if not, Executive’s estate shall receive (i) any unpaid base salary which otherwise would be payable to Executive through the date of termination payable in a lump sum as soon as administratively feasible following termination, but not later than thirty (30) days thereafter; (ii) any annual bonus compensation earned and awarded pursuant to Section 3(b) above or any other incentive compensation for the prior fiscal year, but not yet paid as of the date of termination, payable on the earlier of (A) the thirtieth (30 th ) day after the date of termination, or (B) when otherwise due; (iii) any benefits or awards vested, due and owing pursuant to the terms of any other plans, policies or programs, payable when otherwise due (hereinafter subsections (i) – (iii) collectively are referred to as the “Accrued Obligations”). Executive’s spouse, if she survives Executive, or, if not, Executive’s estate shall also receive an amount equal to Executive’s base salary from the date of his death through the end of the month in which his death occurs, payable in a lump sum as soon as administratively feasible following his death, but not later than thirty (30) days thereafter. If the Employer determines that Incapacity (as defined below) of Executive has occurred, it may terminate Executive’s employment and this Agreement upon ninety (90) days’ written notice, provided that, within ninety (90) days after receipt of such
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notice, Executive shall not have returned to full-time performance of Executive’s assigned duties. In the event of a termination due to “Incapacity,” the Employer shall pay the Accrued Obligations to Executive. For purposes of this Agreement, “Incapacity” shall occur if (i) Executive is unable to perform the material functions of his position for thirteen (13) consecutive weeks and is then deemed to be permanently unable to continue in the Position by a physician selected by the Employer or its insurer, and acceptable to Executive or his legal representative, which consent shall not be unreasonably withheld, or (ii) Executive is deemed disabled as defined in the policy of disability insurance maintained by the Employer for the benefit of Executive (and others if a group policy). Notwithstanding any other provision in this Agreement, the Employer shall comply with all requirements of the Americans with Disabilities Act. Further, if Executive’s employment is terminated due to death or “Incapacity,” then no payments (other than the Accrued Obligations and spousal death benefit described above) shall be owed or paid, including those under Section 7(a) or Section 9(a).
(b) Termination by Employer With or Without Cause . The Employer may terminate Executive’s employment at any time during the Term of this Agreement, with or without notice (unless otherwise required herein) and with or without Cause. For purposes of this Agreement, “Cause” shall mean:
(i) Executive’s willful misconduct in connection with the performance of Executive’s duties;
(ii) Executive’s misappropriation or embezzlement of funds or material property of the Employer or any affiliate;
(iii) Executive’s fraud or dishonesty with respect to the Employer or any affiliate;
(iv) Executive’s failure to perform any of the material duties and responsibilities required by the Position (other than by reason of Incapacity), or Executive’s failure to follow reasonable instructions or policies of the Employer, in either case after being advised in writing of such failure and being given a reasonable opportunity and period (as determined by the Employer in its reasonable business judgment) to remedy such failure (if such breach or violation is capable of being remedied), which period shall be not less than thirty (30) days;
(v) Executive’s conviction of, indictment for (or the procedural equivalent), or entering of a guilty plea or plea of no contest with respect to any felony or any misdemeanor involving moral turpitude;
(vi) Executive’s breach of a material term of this Agreement, or violation in any material respect of any policy, code or standard of behavior generally applicable to officers of the Company and the Bank, after being advised in writing of such breach or violation and being given a reasonable opportunity and period (as determined by the Employer in its reasonable business judgment) to remedy such breach or violation (if such breach or violation is capable of being remedied), which period shall be not less than thirty (30) days;
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(vii) Executive’s willful violation of any final cease and desist order;
(viii) Executive’s breach of any fiduciary duty owed to the Employer or its affiliates; or
(ix) Executive’s engaging in conduct that, if it became known by any regulatory or governmental agency or the public, would be or is reasonably likely to result, in the good faith judgment of the Employer, in material injury to the Company or the Bank, monetarily or otherwise.
(c) Termination by Executive for Good Reason . Executive may terminate employment for Good Reason. For purposes of this Agreement, “Good Reason” shall mean:
(i) The assignment of duties to Executive by the Employer which result in Executive having materially less authority or responsibility than he has on the Effective Date, without his express written consent;
(ii) Requiring Executive to maintain his principal office outside of the Richmond, Virginia and any contiguous counties unless the Employer moves its principal executive offices to the place to which Executive is required to move;
(iii) A material reduction by the Employer of Executive’s base salary, as the same may have been increased from time to time; or
(iv) The failure of the Employer to comply with any material term of this Agreement.
Executive is required to provide written notice to the Employer detailing the existence of a condition described above in this Section 6(c) within a thirty (30) day period after the initial existence of the condition, and the Employer shall have thirty (30) days after notice to remedy the condition without liability. In addition to the foregoing requirements, to trigger payment under this Section 6(c), Executive must also terminate employment within ninety (90) days after the initial occurrence of the event constituting “Good Reason” and the Employer must have been allowed the full opportunity to cure, as set forth above.
Notwithstanding the above, “Good Reason” shall not include any resignation by Executive where Cause for Executive’s termination by the Employer exists under Section 6(b), or there is an isolated, insubstantial or inadvertent action by the Employer (provided that such action is remedied by the Employer after written notice by Executive); and shall not include any action by the Employer taken before the Effective Date of this Agreement.
(d) Other . Executive’s employment hereunder may be terminated voluntarily by Executive without Good Reason upon ninety (90) days’ written notice to the Employer or at any time by mutual agreement in writing. In the event of such voluntary termination notice by Executive without Good Reason, the Employer may terminate Executive’s employment prior to the expiration of the notice period without incurring any liability under Section 7, and the Employer shall be required only to pay Executive’s base salary through the balance of the notice
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period (with such payments to be made in accordance with the Employer’s established payroll practices (but no less frequently than monthly)), not to exceed ninety (90) days, plus any Accrued Obligation (as defined Section 6(a)).
7. Obligations Upon Termination .
(a) Without Cause or for Good Reason . If either the Employer terminates Executive’s employment without Cause or Executive terminates his employment for Good Reason during the Term (including the last day of the Term), Executive shall be entitled to receive, subject to any applicable delay set forth in Section 19 below:
(i) The Accrued Obligations (as defined in Section 6(a)); and
(ii) Subject to Executive's signing, delivering and not revoking the Release attached as Exhibit A , which Release must be signed, delivered and not revoked within the period set forth in the Release:
(A) Payment of a monthly amount equal to one-twelfth (1/12) his rate of annual base salary in effect immediately preceding such termination for twenty-four (24) months, payable in accordance with the Employer’s established payroll practices (but no less frequently than monthly), provided that the amounts Executive would otherwise have received during the sixty (60) days after Executive's termination had the payments begun immediately after Executive's termination of employment shall be paid in a lump sum on the sixtieth (60 th ) day after Executive's termination of employment (the “Severance Benefit”); and
(B) For twenty-four (24) months after the date of termination, Executive shall receive coverage under all employee health insurance programs or plans (medical, dental and vision) (“Health Care Plans”) in which Executive and/or his spouse and any of his dependents were entitled to participate immediately prior to such termination, with the Employer paying the employer portion of the premium therefor (the “Heath Care Continuance Benefit”), provided that the continued participation of Executive and/or his spouse and any of his dependents is possible under the general terms and provisions of the Health Care Plans. If the Employer cannot maintain such coverage for Executive or his spouse or dependents under the terms and provisions of the Health Care Plans (or where such continuation would adversely affect the tax status of the Health Care Plans pursuant to which the coverage is provided), the Employer shall provide the Health Care Continuance Benefit by either providing substantially identical benefits directly or through an insurance arrangement or by paying Executive the estimated cost of the expected premium for twenty-four (24) months after the date of termination with such payments to be made in accordance with the Employer’s established payroll practices (but no less frequently than monthly) for employees generally for the period during which such cash payments are to be provided. To the extent allowed by applicable law, the 24-month Health Care Continuance Benefit period shall run concurrently with the period for which Executive and/or his spouse and any of his dependents would be eligible for continuation coverage under the Consolidated Omnibus Reconciliation Act of 1985
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(the “COBRA Period”), although the 24-month Health Care Continuance Benefit period will continue to run after the COBRA Period has ended.
Notwithstanding the foregoing, and in addition to the Employer’s remedies set forth in Section 7(f), all such payments and benefits under Section 7(a) otherwise to be made after Executive’s termination of employment shall cease to be paid, and the Employer shall have no further obligation with respect thereto, in the event Executive, without the consent of the Employer, engages in any activity prohibited in Section 7 or any of its sub-parts or breaches Section 8.
(b) Non-Competition . In consideration for the Employer’s entering into this Agreement and in exchange for the benefits promised herein, and other valuable consideration, Executive agrees that Executive will not engage in “Competition” for a period of twelve (12) months after Executive’s employment with the Employer ceases for any reason, including termination of employment upon the expiration or non-renewal of this Agreement at the end of the Initial Term or any Renewal Term. For purposes hereof, “Competition” means Executive’s performing duties that are the same as or substantially similar to those duties performed by Executive for the Company or the Bank or its affiliates during the twelve (12) months prior to the cessation of Executive’s employment, as an officer, a director, an employee, a partner or in any other capacity, within a twenty-five (25) mile radius of the headquarters of the Company and the headquarters of the Bank (or any Virginia headquarters of any successor of any of them in the event of a merger consummated as of the last day of employment), as such locations exist as of the date Executive’s employment ceases, if those duties are performed for a bank holding company of, or for, a bank or other financial institution that provides products or services that are the same as or substantially similar to, and competitive with, any of the products or services provided by the Bank at the time Executive’s employment ceases.
(c) Non-Piracy . In consideration for the Employer’s entering into this Agreement and in exchange for the benefits promised herein, and other valuable consideration, Executive agrees that for a period of twelve (12) months after Executive’s employment ceases for any reason, including termination of employment upon the expiration or non-renewal of this Agreement at the end of the Initial Term or any Renewal Term, Executive will not, directly or indirectly, solicit, divert from the Bank or transact business with any “Customers” of the Bank with whom Executive had “Material Contact” during the last twelve (12) months of Executive’s employment or about whom Executive obtained information not known generally to the public while acting within the scope of his employment during the last twelve (12) months of employment, if the purpose of such solicitation, diversion or transaction is to provide products or services that are the same as or substantially similar to, and competitive with, those offered by the Bank at the time Executive’s employment ceases. “Material Contact” means that Executive personally communicated with the Customer, either orally or in writing, for the purpose of providing, offering to provide or assisting in providing products or services of the Bank during the last twelve (12) months of Executive’s employment. “Customer” means any person or entity with whom the Bank had a depository or other contractual relationship, pursuant to which the Bank provided products or services during the last twelve (12) months of Executive’s employment.
(d) Non-Solicitation . In consideration for the Employer’s entering into this Agreement and in exchange for the benefits promised herein, and other valuable consideration,
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Executive agrees that for a period of twelve (12) months after Executive’s employment ceases for any reason, including termination of employment upon the expiration or non-renewal of this Agreement at the end of the Initial Term or any Renewal Term, Executive will not, directly or indirectly, hire any person employed by the Employer or solicit for hire or induce any person to terminate employment with the Employer, if the purpose is to compete with the Employer. The parties agree that Executive will not be in violation of this sub-paragraph (d) if he has no personal involvement, directly or indirectly, in the hiring, solicitation or inducement of the Employer’s employee(s), as referenced above.
(e) For Cause; Other Than for Good Reason . If Executive’s employment is terminated for Cause or if Executive voluntarily terminates his employment other than for Good Reason, this Agreement shall terminate without any further obligation of the Employer to Executive other than the payment to Executive of the Accrued Obligations and as provided in Section 6(d) above.
(f) Remedies . Executive acknowledges that the covenants set forth in Sections 7 and 8 of this Agreement are just, reasonable, and necessary to protect the legitimate business interests of the Employer. Executive further acknowledges that if Executive breaches or threatens to breach any provision of Sections 7 and 8, the Employer’s remedies at law will be inadequate, and the Employer will be irreparably harmed. Accordingly, the Employer shall be entitled to an injunction, both preliminary and permanent, restraining Executive from such breach or threatened breach, such injunctive relief not to preclude the Employer from pursuing all available legal and equitable remedies, and being entitled to all reasonable attorney’s fees and costs incurred in connection with the breach, threatened breach, or any challenge to the enforceability of Sections 7 or 8.
(g) Non-Renewal or Termination of the Agreement . In the event (i) Executive's employment is terminated by the Employer without Cause or by the Executive with Good Reason (which shall have the meaning set forth in Section 6(c) without regard to Section 6(c)(iv)) after the end of the Term and (ii) Executive is subject to the restrictions in Section 7(b), Executive shall be entitled to the payments referenced in Section 7(a)(i) and 7(a)(ii)(A), provided that (i) the term "twelve (12) months" shall be substituted for the term "twenty-four (24) months" in Section 7(a)(ii)(A) and (ii) Executive complies with the Release requirements set forth in Section 7(a)(ii). All such payments provided in this Section 7(g) shall cease to be paid, and the Employer shall have no further obligation with respect thereto, in the event Executive, without the consent of the Employer, engages in any activity prohibited in Section 7(b), 7(c) or 7(d) or breaches Section 8.
8. Confidentiality . As an employee of the Employer, Executive will have access to and may participate in the origination of non-public, proprietary and confidential information relating to the Company and the Bank and/or their affiliates and Executive acknowledges a fiduciary duty owed to the Employer and its affiliates not to disclose any such information. Confidential information may include, but is not limited to, trade secrets, customer lists and information, internal corporate planning, methods of marketing and operation, and other data or information of or concerning the Employer and its affiliates or their customers that is not generally known to the public or generally in the banking industry. Executive agrees that for a period of five (5) years following the cessation of employment, Executive will not use or
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disclose to any third party any such confidential information, either directly or indirectly, except as may be authorized in writing specifically by the Employer; provided, however that to the extent the information covered by this Section 8 is otherwise protected by the law, such as “trade secrets,” as defined by the Virginia Uniform Trade Secrets Act, or customer information protected by banking privacy laws, that information shall not be disclosed or used for however long the legal protections applicable to such information remain in effect.
Nothing in this Agreement restricts or prohibits Executive or Executive’s counsel from initiating communications directly with, responding to any inquiry from, volunteering information to, or providing testimony before a self-regulatory authority or a governmental, law enforcement or other regulatory authority, including the U.S. Equal Employment Opportunity Commission, the Department of Labor, the National Labor Relations Board, the Department of Justice, the Securities and Exchange Commission, the Financial Industry Regulatory Authority, the Congress, and any Office of Inspector General (collectively, the “Regulators”), from participating in any reporting of, investigation into, or proceeding regarding suspected violations of law, or from making other disclosures that are protected under or from receiving an award for information provided under the whistleblower provisions of state or federal law or regulation. Executive does not need the prior authorization of the Company to engage in such communications with the Regulators, respond to such inquiries from the Regulators, provide confidential information or documents containing confidential information to the Regulators, or make any such reports or disclosures to the Regulators. Executive is not required to notify the Employer that Executive has engaged in such communications with the Regulators. Executive recognizes and agrees that, in connection with any such activity outlined above, Executive must inform the Regulators that the information Executive is providing is confidential.
Federal law provides certain protections to individuals who disclose a trade secret to their attorney, a court, or a government official in certain, confidential circumstances. Specifically, federal law provides that an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret under either of the following conditions:
· | Where the disclosure is made (a) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney; and (b) solely for the purpose of reporting or investigating a suspected violation of law; or |
· | Where the disclosure is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. |
Federal law also provides that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (a) files any document containing the trade secret under seal; and (b) does not disclose the trade secret, except pursuant to court order.
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9. Termination After Change of Control .
(a) Without Cause or for Good Reason . If Executive’s employment is involuntarily terminated without Cause within one (1) year after a Change of Control (as defined below) shall have occurred or if Executive resigns for Good Reason within one (1) year after a Change of Control shall have occurred, Executive shall be entitled to receive, subject to any applicable delay set forth in Section 19 below:
(i) The Accrued Obligations (as defined in Section 6(a));
(ii) Subject to Executive’s signing, delivering and not revoking the Release attached as Exhibit A , which Release must be signed, delivered and not revoked within the period set forth in the Release:
(A) The Severance Benefit (as defined in Section 7(a)(ii)(A)) but, instead of the time and form of payment set forth in 7(a)(ii)(A), payable in one lump sum on the sixtieth (60 th ) day following Executive's termination of employment;
(B) The Heath Care Continuance Benefit (as defined in Section 7(a)(ii)(B)); and
(C) An additional amount, payable in one lump sum on the sixtieth (60 th ) day following Executive's termination of employment, equal to two (2) times the highest annual bonus compensation pursuant to Section 3(b) above earned by Executive for the three (3) immediately preceding complete fiscal years or such fewer number of complete fiscal years as Executive may have been employed by the Employer. For the avoidance of any doubt, if the Employer makes a determination to award no annual bonus compensation to Executive for the three (3) immediately preceding complete fiscal years or such fewer number of complete fiscal years as Executive may have been employed by the Employer, then no amount is payable under this Section 9(a)(ii)(C).
Notwithstanding the foregoing, and in addition to the Employer’s remedies set forth in Section 7(f), all such payments and benefits under Section 9(a) otherwise to be made after Executive’s termination of employment shall cease to be paid, and the Employer shall have no further obligation with respect thereto, in the event Executive, without the consent of the Employer, engages in any activity prohibited in Section 7(c) and Section 7(d) or breaches Section 8.
(b) Covenants Cease to Apply . Notwithstanding any other provision in this Agreement, Executive’s obligations under Section 7(b) above shall not apply following a Change of Control that occurs after the Effective Date.
(c) Modified Cutback of Compensation Deemed to be Contingent on a Change of Control . If any benefits or payments are to be made under the terms of this Agreement or any other agreement between Executive and the Employer following a transaction that constitutes a change in the ownership or effective control of the Employer or in the ownership of a substantial portion of the assets of the Employer such that the provisions of Section 280G of the Internal
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Revenue Code of 1986, as amended, and any regulations thereunder (“Code Section 280G”) or Section 4999 of the Internal Revenue Code and any regulations thereunder could potentially apply to such compensation, then the following provisions shall be applicable:
(i) In the event the independent accountants serving as auditors for the Employer on the date of a change of control within the meaning of Code Section 280G (or any other accounting firm designated by the Employer) determine that some or all of the payments or benefits scheduled under this Agreement, as well as any other payments or benefits on such change of control, would be nondeductible by the Employer under Code Section 280G, then the payments scheduled under this Agreement and all other agreements between Executive and the Employer will be reduced to one dollar less than the maximum amount which may be paid without causing any such payment or benefit to be nondeductible. Any reduction of benefits or payments required to be made under this Section 9(c)(i) shall be taken in the following order: first from cash compensation and then from payments or benefits not payable in cash, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the date of determination.
(ii) Notwithstanding the foregoing Section 9(c)(i), in the event the independent accountants serving as auditors for the Employer on the date of a change of control within the meaning of Code Section 280G (or any other accounting firm designated by the Employer) determine that the net economic benefit to Executive after payment of all income and excise taxes is greater without giving effect to Section 9(c)(i) than Executive’s net economic benefit after a reduction by reason of the application of Section 9(c)(i), then Section 9(c)(i) shall be a nullity and without any force or effect. Any decisions regarding the requirement or implementation of the reductions to compensation described in Section 9(c)(i) shall be made by the independent accountants serving as auditors for the Employer on the date of a change of control within the meaning of Code Section 280G (or any other accounting firm designated by the Employer), shall be made at the Employer’s expense and shall be binding on the parties.
(d) Superseding Provisions . The benefits and payments set forth in Section 9(a) that may be due in connection with a Change of Control shall supersede all payments, entitlements and benefits of Executive otherwise payable under Section 7(a). The benefits and payments due under Section 9(a) replace those in Section 7(a), and are not cumulative thereof.
(e) For Cause; Other Than for Good Reason . If Executive’s employment is terminated for Cause or if Executive voluntarily terminates his employment other than for Good Reason, within one (1) year after a Change of Control, this Agreement shall terminate without any further obligation of the Employer to Executive other than the payment to Executive of the Accrued Obligations.
10. Change of Control Defined . For purposes of this Agreement, a “Change of Control” occurs if (a) any person, including persons acting as a group, as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the owner or beneficial owner of
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securities of the Company having fifty percent (50%) or more of the combined voting power of the then outstanding securities of the Company that may be cast for the election of the Company’s directors other than a result of an issuance of securities initiated by the Company, or open market purchases approved by the Board of Directors, as long as the majority of the Board of Directors approving the purchases constitutes a majority of the Board of Directors at the time the purchases are made; (b) during any twelve-month period, as the direct or indirect result of, or in connection with, a tender or exchange offer, a merger or other business combination, a sale of assets, a contested election of directors, or any combination of these events, the persons who were directors of the Company before such events cease to constitute a majority of the Board of Directors or any successor’s board, as applicable. For purposes of this Agreement, a Change of Control occurs on the date on which an event described in (a) – (b) occurs. If a Change of Control occurs on account of a series of transactions or events, the Change of Control occurs on the date of the last of such transactions or events. The above definition of Change of Control is intended to, and shall be interpreted in a manner as to, comply with the requirements of Code Section 409A. For the avoidance of any doubt, for all purposes under this Agreement, a Change of Control shall not include the Merger or any related transaction.
11. Documents . All documents, records, tapes and other media of any kind or description relating to the business of the Employer or any of its affiliates or subsidiaries (the “Documents”), whether or not prepared by Executive, shall be the sole and exclusive property of the Employer. The Documents (and any copies) shall be returned to the Employer upon Executive’s termination of employment for any reason or at such earlier time or times as the Board of Directors of the Company or the Bank or its designee may specify.
12. Suspension or Temporary Prohibition of Services; Permanent Prohibition of Services . If Executive is suspended and/or temporarily prohibited from participating in the conduct of the Employer’s affairs by a notice served pursuant to the Federal Deposit Insurance Act, the Employer’s obligations under this Agreement shall be suspended as of the date of service unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Employer may in its discretion (a) pay Executive all or part of the compensation withheld while its contract obligations were suspended, and (b) reinstate (in whole or in part) any of its obligations which were suspended. If Executive is removed and/or permanently prohibited from participating in the conduct of the Employer’s affairs by an order issued under the Federal Deposit Insurance Act or the Code of Virginia, all obligations of the Employer under this Agreement shall terminate as of the effective date of the order, but vested rights of the parties shall not be affected.
13. Severability . If any provision of this Agreement, or part thereof, is determined to be unenforceable for any reason whatsoever, it shall be severable from the remainder of this Agreement and shall not invalidate or affect the other provisions of this Agreement, which shall remain in full force and effect and shall be enforceable according to their terms. No covenant shall be dependent upon any other covenant or provision herein, each of which stands independently.
14. Governing Law/Venue . This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia. The parties further agree that venue in the event of a dispute shall be exclusively in the Circuit Court of Henrico County, Virginia, or
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the applicable federal court encompassing that jurisdiction, at the sole option of the Employer, and Executive agrees not to object to venue.
15. Notices . All written notices required by this Agreement shall be deemed given when delivered personally or sent by registered or certified mail, return receipt requested, to the parties at the following addresses (or to such other address as the party entitled to notice shall hereafter designate in accordance with the terms hereof):
16. Amendment and Termination of Agreement . This Agreement may not be varied, altered, modified or in any way amended except by an instrument in writing executed by the parties hereto or their legal representatives. Except as specifically set forth herein, including pursuant to the provisions of Section 6 above, this Agreement may not be terminated except by an instrument in writing executed by the parties hereto or their legal representatives, provided, however, and notwithstanding anything in this Agreement to the contrary, the Employer or its successor has the unilateral right to terminate this Agreement and pay out the full value of all benefits hereunder in one lump sum payment in connection with a Change of Control pursuant to, and in compliance with, Treasury Regulation § 1.409A-3(j)(4)(ix)(B).
17. Binding Effect . This Agreement shall be binding upon Executive and on the Employer, its successors and assigns on the Effective Date, subject to the approval by the Boards of Directors of the Company and the Bank. The Employer will require any successor to all or substantially all of the business, stock or assets of the Employer to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Employer would be required to perform it if no such succession had taken place. Failure of the Employer to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement by the Employer. This Agreement shall be freely assignable by the Employer.
18. No Construction Against Any Party . This Agreement is the product of informed negotiations between Executive and the Employer. If any part of this Agreement is deemed to be unclear or ambiguous, it shall be construed as if it were drafted jointly by all parties. Executive and the Employer agree that neither party was in a superior bargaining position regarding the substantive terms of this Agreement.
19. Code Section 409A Compliance .
(a) The intent of the parties is that payments and benefits under this Agreement comply with Section 409A of the Internal Revenue Code of 1986, as amended, and
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applicable guidance thereunder (“Code Section 409A”) or comply with an exemption from the application of Code Section 409A and, accordingly, all provisions of this Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under Code Section 409A.
(b) A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the form or timing of payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” (within the meaning of Code Section 409A) and, for purposes of any such provision of this Agreement under which (and to the extent) deferred compensation subject to Code Section 409A is paid, references to a “termination” or “termination of employment” or like references shall mean separation from service. A “separation from service” shall not occur under Code Section 409A unless such Executive has completely severed Executive’s relationship with the Employer or Executive has permanently decreased Executive’s services to twenty percent (20%) or less of the average level of bona fide services over the immediately preceding thirty-six (36) month period (or the full period if Executive has been providing services for less than thirty-six (36) months). A leave of absence shall only trigger a termination of employment that constitutes a separation from service at the time required under Code Section 409A. If Executive is deemed on the date of separation from service with the Employer to be a “specified employee”, within the meaning of that term under Code Section 409A(a)(2)(B) and using the identification methodology selected by the Employer from time to time, or if none, the default methodology, then with regard to any payment or benefit that is required to be delayed for six (6) months in compliance with Code Section 409A(a)(2)(B), such payment or benefit shall be paid with interest on the earlier of (i) the first day of the seventh (7 th ) month measured from the date of Executive’s separation from service or (ii) the date of Executive’s death. The amount of interest to be paid shall be based on the prime rate of interest in effect on the first day of the month following the Executive's separation from service as reported in the Wall Street Journal. In the case of benefits required to be delayed under Code Section 409A, however, Executive may pay the cost of benefit coverage, and thereby obtain benefits, during such six (6) month delay period and then be reimbursed by the Employer thereafter on the first day of the seventh (7 th ) month following the date of Executive’s separation from service or, if earlier, on the date of Executive’s death.
(c) With regard to any provision herein that provides for reimbursement of expenses or in-kind benefits subject to Code Section 409A, except as permitted by Code Section 409A, (i) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit, and (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, provided that the foregoing clause (ii) shall not be violated with regard to expenses reimbursed under any arrangement covered by Code Section 105(b) solely because such expenses are subject to a limit related to the period the arrangement is in effect. All reimbursements shall be reimbursed in accordance with the Employer’s reimbursement policies but in no event later than the calendar year following the calendar year in which the related expense is incurred.
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(d) If under this Agreement, an amount is to be paid in two or more installments, for purposes of Code Section 409A, each installment shall be treated as a separate payment.
(e) When, if ever, a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within ten (10) days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Employer. In the event any payment payable upon termination of employment would be exempt from Code Section 409A under Treas. Reg. § 1.409A-1(b)(9)(iii) but for the amount of such payment, the determination of the payments to the Executive that are exempt under such provision shall be made by applying the exemption to payments based on chronological order beginning with the payments paid closest in time on or after such termination of employment.
(f) Notwithstanding any other provision of this Agreement, Executive shall be solely liable, and the Employer shall not be liable in any way to Executive if any payment or benefit which is to be provided pursuant to this Agreement and which is considered deferred compensation subject to Code Section 409A otherwise fails to comply with, or be exempt from, the requirements of Code Section 409A.
20. Regulatory Limitation . Notwithstanding any other provision of this Agreement, neither the Employer nor any subsidiary shall be obligated to make, and Executive shall have no right to receive, any payment, benefit or amount under this Agreement that would violate any law, regulation or regulatory order applicable to the Employer or the subsidiary at the time such payment is due, including without limitation, any regulation or order of the Federal Deposit Insurance Corporation or the Board of Governors of the Federal Reserve System. Executive agrees that compliance by the Employer with such regulatory restrictions, even to the extent that compensation or other benefits paid to Executive are limited, shall not be a breach of this Agreement by the Employer.
21. Waiver of Breach . The failure at any time to enforce or exercise any right under any of the provisions of this Agreement or to require at any time performance by the other parties of any of the provisions of this Agreement shall in no way be construed to be a waiver of such provisions or to affect either the validity of this Agreement or any part of this Agreement, or the right of any party hereafter to enforce or exercise its rights under each and every provision in accordance with the terms of this Agreement.
22. No Attachment . Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect; provided, however, that nothing in this Section 22 shall preclude the assumption of such rights by executors, administrators or other legal representatives of Executive or Executive’s estate and their assigning any rights under this Agreement to the person or persons entitled hereto.
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23. Full Capacity . The persons signing this Agreement represent that they have full authority and representative capacity to execute this Agreement in the capacities indicated below and to perform all obligations under this Agreement.
24. Representation and Warranty of Executive . Executive represents and warrants to the Employer that Executive is not under any obligation, contractual or otherwise, to any other firm or corporation, which would prevent Executive from entering into the employ of the Employer under this Agreement or prevent Executive from performing the terms of this Agreement.
25. Entire Agreement . Except as otherwise provided herein, this Agreement constitutes the entire agreement of the parties with respect to the matters addressed herein and, upon the Effective Date, it supersedes all other prior agreements and understandings, both written and oral, express or implied, with respect to the subject matter of this Agreement, including but not limited to the Eastern Virginia Bankshares, Inc. Executive Severance Plan (the “Executive Severance Plan”). Executive expressly waives all rights and entitlements, if any, under the Executive Severance Plan.
26. Survivability . The provisions of Section 7 and 8 shall survive the termination, expiration or non-renewal of this Agreement.
27. Counterparts/Facsimile . This Agreement may be executed in counterparts (including by facsimile), each of which shall be deemed an original and all of which together shall constitute one and the same instrument.
28. Case and Gender . Wherever required by the context of this Agreement, the singular or plural case and the masculine, feminine and neuter genders shall be interchangeable.
29. Title . The titles and sub-headings of each Section and Sub-Section in this Agreement are for convenience only and should not be considered part of this Agreement to aid in interpretation or construction.
[Signature Block on Next Page]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
SOUTHERN NATIONAL BANCORP OF VIRGINIA, INC. | ||
/s/ Georgia S. Derrico | ||
By: | Georgia S. Derrico | |
Its: | Chairman of the Board of Directors and Chief Executive Officer | |
SONABANK | ||
/s/ Georgia S. Derrico | ||
By: | Georgia S. Derrico | |
Its: | Chairman of the Board of Directors and Chief Executive Officer | |
J. ADAM SOTHEN | ||
/s/ J. Adam Sothen |
[Sothen Employment Agreement]
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EXHIBIT A
RELEASE
In consideration of the benefits promised in the Employment Agreement to which this Release is attached as Exhibit A (and further defined below), J. Adam Sothen (“Executive”), hereby irrevocably and unconditionally releases, acquits, and forever discharges Southern National Bancorp of Virginia, Inc. and Sonabank, and each of their agents, directors, members, shareholders, 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 arising out of alleged violations or breaches of any contracts, express or implied, or any tort, or any legal restrictions on Releasees’ right to terminate employees, or 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; and (8) the Employee Retirement Income Security Act (“ERISA”) (“Claim” or “Claims”), which Executive now has, owns or holds, or claims to have, own or hold, or which Executive 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.
Executive hereby acknowledges and agrees that the execution of this Release and the cessation of Executive’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. Executive further acknowledges and agrees that:
a. The Release given by Executive is given solely in exchange for the benefits set forth in the Employment Agreement dated as of June 23, 2017 between Southern National Bancorp of Virginia, Inc., Sonabank and Executive (the “Employment Agreement”) to which this Release was initially attached and such consideration is in addition to anything of value which Executive was entitled to receive prior to entering into this Release;
b. By entering into this Release, Executive does not waive rights or claims that may arise after the date this Release is executed;
c. Executive 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 Executive be so advised in writing;
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d. Executive has been offered twenty-one (21) days [or 45 days if applicable] from receipt of this Release within which to consider whether to sign this Release; and
e. For a period of seven (7) days following Executive’s execution of this Release, Executive may revoke this Release by delivering the revocation to a Sonabank officer and it shall not become effective or enforceable until such seven (7) day period has expired.
This Release shall be binding upon the heirs and personal representatives of Executive and shall inure to the benefit of the successors and assigns of Southern National Bancorp of Virginia, Inc. and Sonabank.
Date | J. ADAM SOTHEN |
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Exhibit 10.9
Eastern Virginia Bankshares, Inc.
Supplemental Executive Retirement Plan
Effective January 1, 2008
INTRODUCTION
The Board of Directors of Eastern Virginia Bankshares, Inc. adopted the Supplemental Executive Retirement Plan, effective January 1, 2008, for the purpose of retaining and motivating the Corporation’s Chief Executive Officer.
The Plan is intended to be unfunded and maintained primarily for the purpose of providing deferred compensation for a “select group of management or highly compensated employees” (as such phrase is used in the Employee Retirement Income Security Act of 1974). The Plan must be administered and construed in a manner that is consistent with that intent.
The Plan is intended to satisfy the requirements of Code Section 409A and Treasury Regulations issued thereunder. Each provision and term of the Plan should be interpreted accordingly.
ARTICLE I
DEFINITIONS
The following phrases or terms have the indicated meanings:
1.01 | Affiliate |
Affiliate means (i) any entity that is a member of a controlled group of corporations as defined in Code section 1563(a), determined without regard to Code sections 1563(a)(4) and 1563(e)(3)(c), of which the Corporation is a member according to Code section 414(b); (ii) an unincorporated trade or business that is under common control with the Corporation as determined according to Code section 414(c); or (iii) a member of an affiliated service group of which the Corporation is a member according to Code section 414(m).
1.02 | Beneficiary |
Beneficiary means the person, persons, entity, entities or the estate of a Participant entitled to receive benefits under the Plan in accordance with a properly completed beneficiary designation form. If a Participant fails to complete a beneficiary designation form, or the form is incomplete, Beneficiary means the Participant’s estate. A Participant may amend or change his Beneficiary designation in accordance with procedures established by the Board.
1.03 | Board |
Board means the Board of Directors of Eastern Virginia Bankshares, Inc.
1.04 | Change in Control |
Change in Control means, (i) any person, including a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the owner or beneficial owner of Corporation securities having 50% or more of the combined voting power of the then outstanding Corporation securities that may be cast for the election of the Corporation’s directors other than a result of an issuance of securities initiated by the Corporation, or open market purchases approved by the Board of Directors, as long as the majority of the Board of Directors approving the purchases is a majority at the time the purchases are made; or (ii) as the direct or indirect result of, or in connection with, a tender or exchange offer, a merger
or other business combination, a sale of assets, a contested election of directors, or any combination of these events, the persons who were directors of the Corporation before such events cease to constitute a majority of the Corporation’s Board, or any successor’s board, within two years of the last of such transactions. For purposes of this Agreement, a Change of Control occurs on the date on which an event described in (i) or (ii) occurs. If a Change of Control occurs on account of a series of transactions or events, the Change of Control occurs on the date of the last of such transactions or events.
1.05 | Code |
Code means the Internal Revenue Code of 1986, as amended.
1.06 | Corporation |
Corporation means Eastern Virginia Bankshares, Inc.
1.07 | Disability or Disabled |
Disability or Disabled means a Participant is considered disabled if the Participant is (a) unable to engage in any substantial gainful activity by reason of 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 12 months, or (b) by reason of 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 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Corporation.
1.08 | Eligible Employee |
Eligible Employee means an individual (i) who is employed by the Corporation or an Affiliate and (ii) who is a member of management or is a highly compensated employee.
1.09 | Normal Retirement Age |
Normal Retirement Age means the attainment of age 67.
1.10 | Participant |
Participant means an Eligible Employee who is designated by the Board to participate in the Plan in accordance with Article II. An individual shall remain a Participant only so long as the individual remains an Eligible Employee and his designation as a Participant has not been revoked or rescinded.
1.11 | Plan |
Plan means the Eastern Virginia Bankshares, Inc. Supplemental Executive Retirement Plan.
1.12 | Separation from Service |
Separation from Service means either: (i) the complete cessation of the performance of services by the Participant for the Corporation for whatever reason, or (ii) a diminished level of services where the Participant is expected to perform services at a level equal to 20% or less of the average level of service provided during the immediately preceding 36 months, provided, however, that Separation from Service does not include military leave, sick leave or other bona fide leave of absence if (i) the period of such leave does not exceed six months, and (ii) there is a reasonable expectation that the Participant will return to perform service with the Corporation.
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1.13 | Specified Employee |
Specified Employee means a Participant who on the date of his Separation from Service is a Key Employee of the Corporation provided that the Corporation is publicly traded on an established securities market. The Corporation shall determine the Participants who are Key Employees on the Specified Employee Identification Date. Any Participant who is a Key Employee on the Specified Employee Identification Date shall be treated as a Key Employee for the entire 12 month period beginning on the Specified Employee Effective Date. For purposes of this definition, the following terms apply:
(a) Key employee means a Participant who meets the requirements of Code section 416(i)(l)(A)(i), (ii), or (iii) applied in accordance with the regulations thereunder and disregarding Code section 416(i)(5). Compensation for purposes of identifying the Key Employee is defined according to Treasury Regulation section 1.415(c)-2(a) applied without regard to the safe harbor provided in Treasury Regulation section 1.415(c)-2(d), the special timing rules provided in Treasury Regulation section 1.415(c)-2(e), and the special rules provided in Treasury Regulation section 1.415(c)-2(g).
(b) The Specified Employee Identification Date shall be December 31.
(c) The Specified Employee Effective Date is the first day of the fourth month following the Specified Employee Identification Date.
ARTICLE II
PARTICIPATION
An Eligible Employee who is designated to participate in the Plan by the Board shall become a Participant in the Plan as of the date specified by the Board. A Participant shall continue to participate until such date as the Board may declare he is no longer a Participant or until the date that he is no longer an Eligible Employee.
ARTICLE III
BENEFITS
3.01 | Normal Retirement Benefit |
(a) Upon his Separation from Service on or after his Normal Retirement Age, a Participant shall be entitled to an annual Retirement benefit equal to $155,000.
(b) A Participant’s benefit under subsection (a) above shall be payable in equal or substantially equal monthly installments over a 15-year period commencing on the first day of the month following the Participant’s Separation from Service after his Normal Retirement Age, provided that with respect to a Participant who is a Specified Employee or his Separation from Service, such monthly benefits shall commence on the first day of the month following the six- month anniversary of the Participant’s Separation from Service. The first payment shall include a “catch up” amount equal to the sum of payments that would have been made to the Participant during the period preceding the first payment date if no six-month delay applied, plus interest compounded monthly using the prime rate as published in the Wall Street Journal in effect as of the first day of each month.
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3.02 | Separation from Service Prior to Normal Retirement Age |
(a) Subject to subsection (c) below, a Participant who Separates from Service prior to his Normal Retirement Age shall forfeit the nonvested portion of the benefit provided in section 3.01. A Participant shall vest in his Normal Retirement Benefit in accordance with the following schedule:
Separation at age | Percentage Vested | |||
52 | 5.00 | % | ||
53 | 10.15 | % | ||
54 | 15.45 | % | ||
55 | 20.90 | % | ||
56 | 26.56 | % | ||
57 | 32.25 | % | ||
58 | 38.15 | % | ||
59 | 44.20 | % | ||
60 | 50.40 | % | ||
61 | 56.75 | % | ||
62 | 63.25 | % | ||
63 | 69.90 | % | ||
64 | 76.70 | % | ||
65 | 83.65 | % | ||
66 | 90.75 | % | ||
67 | 100.00 | % |
(b) A Participant who separates from Service prior to his Normal Retirement Age shall be entitled to the vested percentage of his Normal Retirement commencing on the first day of the month following the later of the Participant’s attainment of age 62 or his Separation from Service, and such benefits shall be payable in substantially equal monthly installments over a 15- year period; provided, however, that if the Participant is a Specified Employee, his benefits shall commence no earlier than the first day of the month following the six-month anniversary of his Separation of Service. The first payment shall include a “catch up” amount equal to the sum of payments that would have been made to the Participant during the period preceding the first payment date if no six-month delay applied, plus interest compounded monthly using the prime rate as published in the Wall Street Journal in effect as of the first day of each month.
(c) Upon a Change in Control, a Participant shall be fully vested in his Normal Retirement benefit.
3.03 | Disability |
If a Participant becomes Disabled prior to his Separation from Service and during his employment with the Corporation or an Affiliate, he shall be entitled to receive the vested percentage of his Normal Retirement Benefit based on his age (in whole years) as of the date he became Disabled. Such benefit shall be payable as of the first day of the month following the date the Participant is determined to be Disabled and shall be payable in substantially equal monthly payments over a 15-year period.
3.04 | Death Benefits |
(a) If a Participant dies prior to his Separation from Service, no benefits shall be payable under the Plan.
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(b) If a Participant dies after benefit payments begin under the Plan, a Participant’s Beneficiary shall be entitled to any payments remaining in the 15-year period certain period.
3.05 | Anti-Acceleration |
Notwithstanding anything in the Plan to the contrary, no payment may be made which accelerates the time over which distributions shall be made to the Participant (except as other permitted under Code section 409A).
Notwithstanding the preceding, the Company, in its discretion, may accelerate distributions under the Plan in accordance with each of the payment events contained in Treasury Regulation section 1.409A-3(j)(4)(ii) through (xiv).
ARTICLE IV
GUARANTEES
Eastern Virginia Bankshares, Inc. and any Affiliate participating in the Plan have only a contractual obligation to pay the benefits described in Article III. All benefits are to be satisfied solely out of the general corporate assets of the Corporation or the appropriate Affiliate which shall remain subject to the claims of its creditors. No assets of the Corporation or a participating Affiliate will be segregated or committed to the satisfaction of its obligations to any Participant or Beneficiary under this Plan. If the Corporation, in its sole discretion, elects to purchase life insurance on the life of a Participant in connection with the Plan, the Participant must submit to a physical examination, if required by the insurer, and otherwise cooperate in the issuance of such policy or his rights under the Plan will be forfeited.
ARTICLE V
TERMINATION OF EMPLOYMENT
5.01 | No Guarantee of Employment |
The Plan does not in any way limit the right of the Corporation or an Affiliate at any time and for any reason to terminate the Participant’s employment or such Participant’s status as an Eligible Employee. In no event shall the Plan, by its terms or by implication, constitute an employment contract of any nature whatsoever between the Corporation or an Affiliate and a Participant.
5.02 | Termination of Employment |
A Participant who ceases to be an Eligible Employee or whose employment with the Corporation and its Affiliates is terminated with Cause shall immediately cease to be a Participant under this Plan and shall forfeit all rights under this Plan. For purposes of this Section 5.02, “Cause” means the Participant’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform the stated duties for any reason other than for Disability, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease and desist order, conviction of a felony or misdemeanor involving moral turpitude, misappropriation of the Corporation’s assets (determined on a reasonable basis) or those of its Affiliates.
5.03 | Forfeiture |
Notwithstanding Section 5.02 above, a Participant forfeits all benefits if he enters into Competition with the Corporation prior to a Change in Control. For purposes of this Section 5.03,
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“Competition” means to directly or indirectly, either as a principal, agent, employee, employer, stockholder, co-partner or any other individual or representative capacity whatsoever: (i) engage in a Competitive Business anywhere with a 20 mile radius of the principal executive offices of the Corporation or on the date the Participant’s employment terminates; or (ii) solicit, or assist any other person or business entity in soliciting, any depositors or other customers of the Corporation to make deposits in or to become customers of any other financial institution conducting a Competitive Business; or (iii) induce any individuals to terminate their employment with the Corporation or its Affiliates. As used in this Plan, the term “Competitive Business” means all banking and financial products and services that are substantially similar to those offered by the Corporation on the date that the Participant’s employment terminates.
ARTICLE VI
TERMINATION, AMENDMENT OR MODIFICATION OF PLAN
6.01 | Amendment or Termination |
Except as otherwise specifically provided, the Corporation reserves the right to terminate, amend or modify this Plan, wholly or partially, at any time and from time to time. Such right to terminate, amend or modify the Plan shall be exercised by the Board. The Board may delegate to its Executive Committee all or part of its authority to amend or terminate the Plan. The Plan shall not be terminated unless such termination is permitted and administered in accordance with Treasury Regulation section 1.409A-3(j)(4)(ix).
6.02 | Notice |
Any notice which shall be or may be given under the Plan shall be in writing and shall be mailed by United States mail, postage prepaid. If notice is to be given to the Corporation such notice shall be addressed to it at Eastern Virginia Bankshares, Inc., P. 0. Box 1455, Tappahannock, Virginia 22560; addressed to the attention of the Corporate Secretary. If notice is to be given to a Participant, such notice shall be addressed to the Participant’s last known address.
6.03 | Limitation on Amendment, Termination, etc. |
The rights of the Corporation set forth in Plan section 6.01 are subject to the condition that the Board or its delegate shall take no action to decrease the benefit that has vested through the date of amendment or termination.
6.04 | Effect of Plan Termination |
Except as provided in Plan sections 6.01 and 6.03 upon the termination of this Plan by the Board, the Plan shall no longer be of any further force or effect, and neither the Corporation, any Affiliate nor any Participant shall have any further obligation or right under this Plan. Likewise, the rights of any individual who was a Participant and whose designation as a Participant is revoked or rescinded by the Board shall cease upon such action.
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ARTICLE VII
FUNDING
7.01 | Unfunded Plan |
All Plan Participants and Beneficiaries are general unsecured creditors of the Corporation with respect to the benefits due hereunder and the Plan constitutes a mere promise by the Corporation to make benefit payments in the future. It is the intention of the Corporation that the Plan be considered unfunded for tax purposes.
7.02 | Life Insurance |
The Corporation may, but is not required to, purchase life insurance in amounts sufficient to provide some or all of the benefits provided under this Plan or may otherwise segregate assets for such purpose.
7.03 | Trust |
The Corporation may, but is not required to, establish a grantor trust which may be used to hold assets of the Corporation which are maintained as reserves against the Corporation’s unfunded, unsecured obligations hereunder. Such reserves shall at all times be subject to the claims of the Corporation’s creditors. To the extent such trust or other vehicle is established, and assets contributed, for the purpose of fulfilling the Corporation’s obligation hereunder, then such obligation of the Corporation shall be reduced to the extent such assets are utilized to meet its obligations hereunder. Any such trust and the assets held thereunder are intended to conform in substance to the terms of the model trust described in Revenue Procedure 92-64.
ARTICLE VIII
RESTRICTIONS ON TRANSFER OF BENEFITS
No right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to do so shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities, or torts of the person entitled to such benefit. If any Participant or Beneficiary under the Plan should become bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber or charge any right to a benefit hereunder, then such right or benefit, in the discretion of the Board, shall cease and terminate, and, in such event, the Board may hold or apply the same or any part thereof for the benefit of such Participant or Beneficiary, his or her spouse, children, or other dependents, or any of them, in such manner and in such portion as the Board may deem proper.
ARTICLE IX
ADMINISTRATION OF THE PLAN
9.01 | The Board |
The Plan shall be administered by the Board. Subject to the provisions of the Plan, the Board may adopt such rules and regulations as may be necessary to carry out the purposes hereof. The Board’s interpretation and construction of any provision of the Plan shall be final and conclusive. The Board in its sole discretion may delegate ministerial duties with respect to the administration of the Plan to employees of the Corporation or to third parties.
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9.02 | Indemnification of the Board |
The Corporation shall indemnify and save harmless each member of the Board against any and all expenses and liabilities arising out of membership on the Board related to any shareholder or similar action involving the Plan, excepting only expenses and liabilities arising out of a member’s own willful misconduct. Expenses against which a member of the Board shall be indemnified hereunder shall include without limitation, the amount of any settlement or judgment, costs, counsel fees, and related charges reasonably incurred in connection with a claim asserted, or a proceeding brought or settlement thereof. The foregoing right of indemnification shall be in addition to any other rights to which any such member may be entitled.
9.03 | Powers of the Board |
In addition to the powers hereinabove specified, the Board shall have the power to compute and certify the amount and kind of benefits from time to time payable to Participants and their Beneficiaries under the Plan, to authorize all disbursements for such purposes, and to determine whether a Participant is entitled to a benefit under Plan section 3.01.
9.04 | Information |
To enable the Board to perform its functions, the Corporation shall supply full and timely information to the Board on all matters relating to the compensation of all Participants, their retirement, death or other cause for termination of employment, and such other pertinent facts as the Board may require.
9.05 | Claims Procedure |
All claims for benefits shall be in writing in a form satisfactory to the Board. If the Board wholly or partially denies a Participant’s or Beneficiary’s claim for benefits, the Board shall review the Participant’s claim in accordance with applicable procedures described in the Employee Retirement Income Security Act of 1974.
ARTICLE X
MISCELLANEOUS
10.01 | Binding Nature |
The Plan shall be binding upon the Corporation, any participating Affiliates and its successors and assigns, subject to the powers set forth in Article VI, and upon a Participant, his or her Beneficiary, and either of their assigns, heirs, executors and administrators.
10.02 | Governing Law |
To the extent not preempted by federal law, the Plan shall be governed and construed under the laws of the Commonwealth of Virginia (including its choice of law rules, except to the extent those rules would require the application of the law of a state other than Virginia) as in effect at the time of their adoption and execution, respectively.
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10.03 | Construction |
Masculine pronouns wherever used shall include feminine pronouns and the use of the singular shall include the plural.
10.04 | Other Benefits and Agreements |
The benefits provided for a Participant and his Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program of the Corporation for its employees, and, except as may otherwise be expressly provided for, the Plan shall supplement and shall not supersede, modify or amend any other plan or program of the Corporation in which a Participant is participating.
10.05 | Severability |
If any provision of the Plan should for any reason be declared invalid or unenforceable by a court of competent jurisdiction, the remaining provisions shall nevertheless remain in full force and effect.
10.06 | Gender and Number |
In the construction of the Plan, the masculine shall include the feminine or neuter and the singular shall include the plural and vice-versa in all cases where such meanings would be appropriate.
10.07 | Titles and Captions |
Titles and captions and headings herein have been inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof.
10.08 | Omnibus Provisions |
(a) Any benefit, payment or other right provided by the Plan shall be provided or made in a manner, and at such time, in such form and subject to such election procedures (if any), as complies with the applicable requirements of Code section 409A to avoid a plan failure described in Code section 409A(a)(1), including without limitation, deferring payment until the occurrence of a specified payment event described in Code section 409A(a)(2). Notwithstanding any other provision hereof or document pertaining hereto, the Plan shall be so construed and interpreted to meet the applicable requirements of Code section 409A to avoid a plan failure described in Code section 409A(a)(1).
(b) It is specifically intended that all elections, consents and modifications thereto under the Plan will comply with the requirements of Code section 409A (including any transition or grandfather rules thereunder). The Company is authorized to adopt rules or regulations deemed necessary or appropriate in connection therewith to anticipate and/or comply the requirements of Code section 409A (including any transition or grandfather rules thereunder) and to declare any election, consent or modification thereto void if non-compliant with Code section 409A.
ARTICLE XI
ADOPTION
The Corporation has adopted this Plan pursuant action taken by the Board.
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As evidence of its adoption of the Plan, Eastern Virginia Bankshares, Inc. has caused this document to be signed by its , this day of 2007, as effective January 1, 2008.
EASTERN VIRGINIA BANKSHARES, INC. | ||
By: |
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FIRST AMENDMENT TO
EASTERN VIRGINIA BANKSHARES, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(As Adopted Effective January 1, 2008)
Eastern Virginia Bankshares, Inc. (the “Corporation”) hereby amends the Eastern Virginia Bankshares, Inc. Supplemental Executive Retirement Plan (as adopted effective January 1, 2008) (the “Plan”), effective as of November 20, 2014 as follows:
1. The Plan is hereby amended by adding the following new Section 3.01 to Article III of the Plan and renumbering the remaining sections of Article III to follow the new Section 3.01:
3.01 Benefit Determination . A Participant shall have a right to receive benefits under the Plan as calculated in the remaining sections of this Article III unless a schedule to the Plan has been adopted by the Corporation that provides otherwise. In the event a schedule has been adopted by the Corporation that provides for a Participant’s benefit to be calculated therein, then the Participant’s benefits under the Plan shall be determined under such schedule. A Participant shall in no event have a right to receive benefits under both the remaining sections of this Article III and any such schedule.
2. The Plan is hereby amended by adding the following new Schedule A to the end:
SERP BENEFIT
SCHEDULE A
The Corporation entered into an Employment Agreement, effective as of November 20, 2014 (the “Hanna Employment Agreement”), between the Corporation and Mark C. Hanna (the “Executive”). Section 5 of the Hanna Employment Agreement requires the Corporation to amend the Plan to add the Executive as an Eligible Employee eligible to participate as a Participant in the Plan and which provides special provisions relating to the calculation of his benefits under the Plan. The provisions of this Schedule A set forth the benefits under the Plan to be provided to Executive in full compliance with the requirements of Section 5 of the Hanna Employment Agreement. The numbering of the sections below follows the numbering of the sections in the Plan replaced by this Schedule A . All provisions of the Plan not inconsistent with this Schedule shall continue to apply to the Participant and his benefit determined under the Plan.
1.09 Normal Retirement Age
Normal Retirement Age means the attainment of age 65.
3.02 Normal Retirement Benefit
(a) Upon his Separation from Service on or after his Normal Retirement Age, a Participant shall be entitled to a Retirement benefit equal to $3,333 per month.
(b) A Participant’s benefit under subsection (a) above shall be payable in equal or substantially equal monthly installments for two hundred (200) months commencing on the first day of the month following the Participant’s Separation from Service, provided that with respect to a Participant who is a Specified Employee on his Separation from Service, such monthly benefits shall commence on the first day of the month following the six-month
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anniversary of the Participant’s Separation from Service. The first payment shall include a “catch up” amount equal to the sum of payments that would have been made to the Participant during the period preceding the first payment date if no six-month delay applied, plus interest compounded monthly using the prime rate as published in the Wall Street Journal in effect as of the first day of each month.
3.03 Separation from Service Prior to Normal Retirement Age
(a) Subject to subsection (c) below, the Participant who Separates from Service prior to his Normal Retirement Age shall forfeit the nonvested portion of the benefit provided in Section 3.02. Additional vesting occurs based on the date the Participant reaches the age set forth below. A Participant shall vest in his Normal Retirement Benefit in accordance with the following schedule:
Age | Percentage Vested |
Cumulative Vested
Percentage |
||||||
46 and 8 months | 5.00 | % | 5.00 | % | ||||
47 and 8 months | 5.02 | % | 10.02 | % | ||||
48 and 8 months | 5.05 | % | 15.07 | % | ||||
49 and 8 months | 5.07 | % | 20.14 | % | ||||
50 and 8 months | 5.09 | % | 25.23 | % | ||||
51 and 8 months | 5.12 | % | 30.35 | % | ||||
52 and 8 months | 5.14 | % | 35.49 | % | ||||
53 and 8 months | 5.16 | % | 40.65 | % | ||||
54 and 8 months | 5.19 | % | 45.84 | % | ||||
55 and 8 months | 5.21 | % | 51.05 | % | ||||
56 and 8 months | 5.23 | % | 56.28 | % | ||||
57 and 8 months | 5.26 | % | 61.54 | % | ||||
58 and 8 months | 5.28 | % | 66.82 | % | ||||
59 and 8 months | 5.30 | % | 72.12 | % | ||||
60 and 8 months | 5.33 | % | 77.45 | % | ||||
61 and 8 months | 5.35 | % | 82.80 | % | ||||
62 and 8 months | 5.37 | % | 88.17 | % | ||||
63 and 8 months | 5.40 | % | 93.57 | % | ||||
64 and 8 months | 5.43 | % | 99.0 | % | ||||
65 | 1.00 | % | 100.0 | % |
(b) (i) A Participant who Separates from Service after attainment of age sixty-two (62) but prior to his Normal Retirement Age shall be entitled to the vested percentage of his Normal Retirement Benefit payable in equal or substantially equal monthly installments for two hundred (200) months commencing on the first day of the month following the Participant’s Separation from Service, and such benefits shall be provided that with respect to a Participant who is a Specified Employee on his Separation from Service, such monthly benefits shall commence on the first day of the month following the six-month anniversary of Participant’s Separation of Service. The first payment shall include a “catch up” amount equal to the sum of payments that would have been made to the Participant during the period preceding the first payment date if no six-month delay applied, plus interest compounded monthly using the prime rate as published in the Wall Street Journal in effect as of the first day of each month.
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(ii) If a Participant Separates from Service prior to attainment of age sixty-two (62), he shall be entitled to the vested percentage of his Normal Retirement Benefit payable on the first day of the month following the Participant’s attainment of age sixty-two (62) in a lump sum calculated using the same factors used by the Corporation to determine the value of the Participant’s Normal Retirement Benefit for corporate financial accounting purposes, provided that if the Participant is a Specified Employee on his Separation from Service, his benefit shall be payable no earlier than the first day of the month following the six-month anniversary of his Separation of Service. If payment is delayed to a Specified Employee due solely to the six-month delay rule, the delayed lump sum payment shall include interest compounded monthly using the prime rate as published in the Wall Street Journal in effect as of the first day of each month of the six-month delay period (to the extent it applies). No interest shall be due under this subsection (ii) if payment is not delayed past age sixty-two (62).
(c) Upon a Change in Control, a Participant shall be fully vested in his Normal Retirement Benefit.
3.04 Disability
If a Participant becomes Disabled prior to his Separation from Service and during his employment with the Corporation or an Affiliate, he shall be entitled to receive the vested percentage of his Normal Retirement Benefit as set forth in 3.03(a) based on his age as of the date he became Disabled. Such benefit shall be payable commencing on the first day of the month following the date the Participant becomes Disabled and shall be payable in equal or substantially equal monthly payments for two hundred (200) months.
3.05 Death Benefits
(a) If a Participant dies prior to his Separation from Service, no benefits shall be payable under the Plan.
(b) If a Participant dies after his Separation from Service and either (i) on or after benefit payments begin under Section 3.02 or Section 3.03(b)(i) or (ii) before payment of the lump sum payment under Section 3.03(b)(ii), a Participant’s Beneficiary shall be entitled to any payments remaining in the two hundred (200) month payment period or the lump sum benefit, whichever is applicable, payable in a lump sum within 60 days following his death.
3.06 Anti-Acceleration
Notwithstanding anything in the Plan to the contrary, no payment may be made which accelerates the time over which distributions shall be made to the Participant (except as other permitted under Code Section 409A).
Notwithstanding the preceding, the Corporation, in its discretion, may accelerate distributions under the Plan in accordance with each of the payment events contained in Treasury Regulation Section 1.409A-3(j)(4)(ii) through (xiv) to the extent allowed thereunder.
3. Except to the extent changed as provided above, all other provisions of the Plan shall continue to apply.
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IN WITNESS WHEREOF, the Corporation, pursuant to the authorization of its Board of Directors on November 20, 2014, has caused its name to be signed to this First Amendment by its duly authorized officer, effective as of the date and year above written.
EASTERN VIRGINIA BANKSHARES, INC. | ||
By: | /s/ Joe A. Shearin | |
Its: | President and CEO | |
Date: | March 11, 2015 |
Attest: | |
/s/ Cheryl Wood | |
Its: CBW |
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AMENDMENT
TO THE
EASTERN VIRGINIA BANKSHARES, INC.
Supplemental Executive Retirement Plan
WHEREAS , effective as of the consummation of the mergers contemplated under the Agreement and Plan of Merger by and among Southern National Bancorp of Virginia, Inc. (“ SONA ”), Sonabank, Eastern Virginia Bankshares, Inc. and EVB, dated December 13, 2016, as amended (the “ Merger Agreement ”), SONA assumed the Eastern Virginia Bankshares, Inc. Supplemental Executive Retirement Plan (the “ Plan ”); and
WHEREAS , SONA wishes to amend the Plan to reflect the assumption of the Plan by SONA at the Effective Date.
NOW, THEREFORE , the Plan is hereby amended as follows to be effective upon the Effective Date:
1. | The title of the Plan shall be revised to “Southern National Bancorp of Virginia, Inc. Supplemental Executive Retirement Plan”. |
2. | All references to “Eastern Virginia Bankshares, Inc.” in the Plan shall be replaced with references to “Southern National Bancorp of Virginia, Inc.”. |
3. | Except as expressly modified by this Amendment, all the terms and provisions of the Plan shall continue to remain in full force and effect. |
IN WITNESS WHEREOF , SONA has caused this Amendment to be executed by its undersigned officer, thereunto duly authorized as of the day and year set forth below.
SOUTHERN NATIONAL BANCORP OF VIRGINIA, INC. | ||
/s/ Joe A. Shearin | ||
By: Joe A. Shearin | ||
Title: President and Chief Executive Officer | ||
Date: | June 23, 2017 |
15
Exhibit 10.10
EASTERN VIRGINIA BANKSHARES, INC.
EXECUTIVE SEVERANCE PLAN AND SUMMARY PLAN DESCRIPTION
Effective January 1, 2015
1. | Purpose of the Plan; General. The purpose of the Executive Severance Plan (the “Plan”) of Eastern Virginia Bankshares, Inc. (the “Company”) is to describe the circumstances under which a “Senior Executive” will be entitled to severance compensation and benefits upon termination of service. For purposes of the Plan, a “Senior Executive” means any officer at the Executive Vice President level or above employed by the Company or by its wholly-owned subsidiary EVB (the “Bank”), provided in any event that an employee who has an employment agreement with the Company or the Bank is not eligible to participate in the Plan. |
The Plan is an unfunded welfare benefit plan for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and a severance pay plan within the meaning of United States Department of Labor Regulations Section 2510.3-2(b). This document serves as both the Plan document and the summary plan description for the Plan. The Plan supersedes any prior severance plans, programs or policies sponsored by the Company or the Bank covering Senior Executives under this Plan, both formal and informal.
2. | Definitions. |
a. | “Cause” means a Senior Executive’s (i) personal dishonesty, (ii) incompetence, (iii) willful misconduct, (iv) breach of a fiduciary duty involving personal profit, (v) intentional failure to perform stated duties, (vi) willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, (vii) conviction of a felony or of a misdemeanor involving moral turpitude, (viii) misappropriation of the Company’s assets (determined on a reasonable basis) or those of the Bank, (ix) death, or (x) disability as defined in a policy of long-term disability insurance maintained by the Company or the Bank for the benefit of the Senior Executive. |
b. | A “Change of Control” occurs if, after the effective date of the Plan, (i) any person, including a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the owner or beneficial owner of Company securities having 50% or more of the combined voting power of the then outstanding Company securities that may be cast for the election of the Company’s directors other than a result of an issuance of securities initiated by the Company, or open market purchases approved by the Board of Directors, as long as the majority of the Board of Directors approving the purchases is a majority at the time the purchases are made; or (ii) as the direct or indirect result of, or in connection with, a tender or exchange offer, a merger or other business combination, a sale of assets, a contested election of directors, or any combination of these events, the persons who were directors of the Company before such events cease to constitute a majority of the Company’s Board, or any successor’s board, within two years of the last of such transactions. For purposes of the Plan, a Change of Control occurs on the date on which an event described in (i) or (ii) occurs. If a Change of Control occurs on account of a series of transactions or events, the Change of Control occurs on the date of the last of such transactions or events. |
c. | “Constructive Discharge” means the occurrence of one or more of the following (i) a material diminution in the Senior Executive’s base compensation, (ii) a material diminution of the Senior Executive’s authority, duties or responsibility, or (iii) a material change in the geographic location at which the Senior Executive must perform the services; provided in any event that the Senior Executive delivers written notice to the Company of the existence of the condition described in this section within thirty (30) days of the initial existence of the condition, and the Company shall have thirty (30) days during which it may remedy the condition without the condition constituting a Constructive Discharge. |
3. | Severance Pay upon Involuntary Termination. A Senior Executive whose employment is terminated involuntarily by the Company and/or the Bank other than for Cause will be entitled to the following severance pay and benefits, provided the Senior Executive executes and does not revoke a general release of claims in favor of the Company and its affiliated entities in substantially the form attached to the Plan as Exhibit A (the “Release”), subject to the timing limitations set forth in Section 6: |
a. | Six (6) months of base salary continuation at the rate in effect on the date of termination, payable in accordance with the established payroll practices of the Senior Executive’s employer (but not less frequently than monthly and in equal installments); |
b. | For a period of six (6) months, payment in accordance with the established payroll practices of the Senior Executive’s employer (but not less frequently than monthly) of an amount equal to the regular employer-paid portion of the monthly premium for the Senior Executive’s then-currently elected medical insurance for himself and, if applicable, his spouse and eligible dependents who are covered under the medical plan at the time of termination, provided the Senior Executive elects and receives medical coverage under the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) during the six (6) month period. |
4. | Severance Pay upon Termination following a Change of Control. A Senior Executive whose employment is terminated involuntarily by the Company and/or the Bank other than for Cause within one (1) year following a Change of Control or who experiences a Constructive Discharge within one (1) year following a Change of Control will be entitled to the following severance pay and benefits in lieu of, and not in addition to, any severance pay or benefits provided under Section 3 of the Plan, provided the Senior Executive executes and does not revoke the Release (as defined in Section 3), subject to the timing limitations set forth in Section 6: |
a. | Twelve (12) months of base salary continuation at the rate in effect on the date of termination, payable in accordance with the established payroll practices of the Senior Executive’s employer (but not less frequently than monthly and in equal installments); |
b. | For a period of twelve (12) months, payment in accordance with the established payroll practices of the Senior Executive’s employer (but not less frequently than monthly) of an amount equal to the regular employer-paid portion of the monthly premium for the Senior Executive’s then-currently elected medical insurance for himself and, if applicable, his spouse and eligible dependents who are covered under the medical plan at the time of termination, provided the Senior Executive elects and receives medical coverage under COBRA during the twelve (12) month period. |
The severance pay and benefits set forth in this Section 4 that may be due upon a termination following a Change of Control shall supersede all severance pay and benefits of the Senior Executive under Section 3; the severance pay and benefits set forth in this Section 4 replace those under Section 3 and are not cumulative thereof.
5. | No Duplicate Payments. Any benefits or amounts owed hereunder will be reduced by any other severance payment to which the Senior Executive is entitled under any applicable laws or regulations, including payments made by the Company or the Bank pursuant to any statutory or regulatory obligation to provide severance or similar payments, including payments under the Worker Adjustment Retraining and Notification Act, or any similar state or local statute. |
6. | Release . Payment of the severance pay and benefits described under the Plan is contingent upon the Senior Executive executing the Release, and the applicable revocation period having expired (the Release “become effective”), before the sixtieth (60 th ) day after the effective date of termination. A Senior Executive may revoke a signed Release within seven (7) days of signing the Release. Any such revocation must be made in writing and received by the Plan Administrator (defined in Section 7) within such seven (7) day period. A Senior Executive who does not submit a signed Release or, having submitted one, timely |
2
revokes the Release shall not be eligible to receive, and shall forfeit all rights to, any severance pay or benefits under the Plan. A Senior Executive who timely submits a signed Release and who does not exercise his right of revocation shall be eligible to receive severance pay and benefits under the Plan only after the applicable period for revoking such Release has expired. If any payments are due to be paid in accordance with established payroll practices during the sixty (60) day period during which the Release may become effective, then such payments shall be accumulated and paid on the first regularly scheduled payroll date that occurs on or after the date that the Release has become effective.
7. | Plan Administration; Authority of Plan Administrator. |
a. | The Company shall act as the Plan Administrator of the Plan and the “named fiduciary” within the meaning of such terms as defined in ERISA. It shall be the principal duty of the Plan Administrator to see that the Plan is carried out, in accordance with its terms, and operated uniformly for similarly situated individuals. The Plan Administrator shall have the power to appoint an administrative committee to manage the day-to-day affairs of the Plan. |
b. | The Plan Administrator shall administer the Plan in accordance with its terms and shall have the power to determine all questions arising in connection with the administration, interpretation and application of the Plan. Any such determination by the Plan Administrator will be conclusive and binding upon all persons. The Plan Administrator may establish procedures, correct defects, supply information, or reconcile inconsistencies in any manner and to whatever extent is deemed necessary or advisable to carry out the purposes of this Plan. However, any procedure, discretionary act, interpretation or construction will be adopted or performed in a nondiscriminatory manner based upon uniform principles consistently applied. The Plan Administrator will have all powers necessary or appropriate to accomplish its duties under this Plan. |
c. | The Plan Administrator may delegate to other persons responsibilities for performing certain of the duties of the Plan Administrator under the Plan and may seek expert advice as the Plan Administrator deems reasonably necessary with respect to the Plan. The Plan Administrator shall be entitled to rely upon the information and advice furnished by such persons and experts, unless actually knowing such information and advice to be inaccurate or unlawful. |
d. | Neither the Plan Administrator nor anyone acting on its behalf shall be liable in any manner for any action taken or determination made under the Plan in good faith. Nevertheless, as permitted by law, the Company will indemnify and save the Plan Administrator’s designees harmless against expenses, claims and liabilities arising out of his or their actions on behalf of the Company in connection with the administration of the Plan, except expenses, claims and liabilities arising out of such person’s own gross negligence or bad faith or for which applicable law does not permit such indemnification. |
8. | Claim Procedure. |
a. | The Plan Administrator shall maintain a procedure by which a Senior Executive shall claim benefits and such procedure shall be communicated to each Senior Executive in the Plan. Such procedure shall include rules for determining the date on which a claim is deemed filed. |
b. | Any Senior Executive, former Senior Executive or other person claiming an interest in the Plan (the “Claimant”) who has not been granted severance pay or benefits under the Plan from his employer in connection with a termination described in the Plan or who disputes the amount of such payments or benefits granted may file a claim with the Plan Administrator. The claim must be in writing and must be received by the Plan Administrator within ninety (90) |
3
days after the date as of which the Claimant’s employment is terminated. Failure to submit a claim within ninety (90) days after the date as of which the Claimant’s employment is terminated shall bar the Claimant’s claim for benefits.
c. | The denial of any claim shall be communicated in writing or in electronic form by the Plan Administrator to the Claimant (or the Claimant's authorized representative) within ninety (90) days of receipt of the claim, unless the Plan Administrator determines that special circumstances require an extension of time, in which case the Plan Administrator may have up to an additional ninety (90) days to process the claim. If the Plan Administrator determines that an extension of time for processing is required, the Plan Administrator shall furnish written or electronic notice of the extension to the Claimant before the end of the initial 90-day period. Any notice of extension shall describe the special circumstances necessitating the additional time and the date by which the Plan Administrator expects to render its decision on the claim. |
d. | The written or electronic notice of denial shall be set forth in a manner designed to be understood by the Claimant, and shall include specific reasons for the denial, specific references to the Plan provision(s) upon which the denial is based, a description of any information or material necessary for the Claimant to perfect his claim, an explanation of why such material or information is necessary, and an explanation of the Plan’s review procedures and the time limits applicable to such procedures, including a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse determination on review. If a Claimant has not received notification within ninety (90) days (or such extended period as may be applicable) that his claim has been allowed, the Claimant will be considered to have exhausted the Plan’s internal claims procedure and will be entitled to pursue any remedies available to him under ERISA. |
e. | Any Claimant whose claim is denied in accordance with paragraph (c) shall have the right to request the review of such denial within sixty (60) days of receipt of written or electronic notice of the denial. Such request for review shall be in writing and directed to the Plan Administrator. The Claimant shall have the right to be represented at such review, to review all documents relevant to the denial, and to submit written comments, documents, records and other information relating to the claim for benefits. The Claimant shall be provided upon request and free of charge reasonable access to and copies of all documents, records and other information relevant to the Claimant’s claim for benefits. Any review requested by the Claimant of a determination by the Plan Administrator shall take into account all comments, documents, records and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. The Plan Administrator shall respond electronically or in writing within sixty (60) days after the receipt of the request for such review, unless the Plan Administrator determines that special circumstances require an extension of time, in which case the Plan Administrator may have up to an additional sixty (60) days to respond. If the Plan Administrator determines that an extension of time for processing is required, the Plan Administrator shall furnish written or electronic notice of the extension to the Claimant before the end of the initial 60-day period. Any notice of extension shall describe the special circumstances necessitating the additional time and the date by which the Plan Administrator expects to render its decision on review. |
f. | The decision on review shall include specific reasons for the decision, written in a manner calculated to be understood by the Claimant and with specific references to the relevant Plan provisions on which the decision is based. The decision on review also shall include a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the Claimant’s claim for benefits and a statement of the Claimant’s right to bring an action under Section 502(a) of ERISA. In no event shall a Claimant be entitled to challenge a decision of the Plan Administrator, in court or in any other administrative proceeding, until the claim procedures provided herein are exhausted. The Plan Administrator’s decision shall be final and binding for all employees, Senior Executives and other parties. |
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g. | Any person submitting a claim in accordance with this section may withdraw the claim at any time or, with the consent of the Senior Executive’s employer, defer the date on which such claim shall be deemed filed for purposes of this Section. |
h. | For purposes of this section, a document, record or other information is considered “relevant” to the Claimant’s claim if such document, record or other information (i) was relied upon by the Plan Administrator in making the benefit determination; (ii) was submitted, considered or generated in the course of making the benefit determination, without regard to whether such document, record or other information was relied upon in making the benefit determination; or (iii) demonstrates compliance with the administrative processes and safeguards designed to ensure and to verify that that benefit claim determinations are made in accordance with governing Plan documents and that, where appropriate, the Plan provisions have been applied consistently with respect to similarly situated Claimants. A document, record, or other information that constitutes privileged attorney-client material or attorney work-product, or that is otherwise protected from disclosure on the basis of privilege or immunity shall not be considered “relevant” to the Claimant's claim. |
9. | Amendment and Termination . The Company reserves the right, in its sole discretion, to amend or terminate the Plan at any time. On and after the termination of the Plan, no further awards of severance pay or other benefits shall be made or accrue under the Plan; provided, however, that any Senior Executive whose employment terminated and whose Release had become effective before the effective date of the termination of the Plan shall receive the severance pay and benefits set forth in either Section 3 or Section 4 of the Plan, notwithstanding the termination of the Plan. |
10. | Plan Funding . The Plan is funded entirely through Company or Bank payments from its operating assets. Severance pay and benefits are not held under any trust, are paid from the general assets of the participating employer, are unsecured, and are subject to the claims of the participating employer’s general creditors. The rights of a Senior Executive under the Plan are no greater than those of an unsecured general creditor of the applicable employer. |
11. | Coordination with Other Employment Benefits . Severance pay and benefits under the Plan are not considered eligible earnings for the 401(k) plan or any other benefit program offered by the Senior Executive’s employer. |
12. | Employment At-Will . The Plan does not change the at-will nature of any Senior Executive's employment with the Company or the Bank. |
13. | Restriction against Assignment . Severance pay and benefits under the Plan may not be assigned, pledged or encumbered in any manner, and any attempt to do so shall be void. The Company and the Bank shall make deductions from Plan severance payments to the extent required by court-ordered garnishment, wage assignment, or similar law. |
14. | Governing Law . Except to the extent superseded by the laws of the United States, the laws of the Commonwealth of Virginia shall be controlling in all matters relating to the Plan. |
15. | Compliance with Code Section 409A . The Plan and all payments to be made or benefits to be provided hereunder are intended to be exempt from the applicable requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), under the “two years/two times” limitation set forth in Treasury Regulation Section 1.409A-1(b)(9)(iii)(A), and shall be construed and interpreted in accordance therewith. No payments will be made or benefits provided that are in excess of the limits, or are paid or provided at a time later than that which is, set forth in Treasury Regulation Section 1.409A-1(b)(9)(iii)(A). Neither the Company nor the Bank will be liable to any employee or other person for any liability or damages incurred if the Internal Revenue Service or any other court or other authority having jurisdiction over such matter determines for any reason that any amount under the Plan is subject to taxes, penalties or interest as a result of failing to comply with Code Section 409A. |
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16. | ERISA Rights Statement . |
As a Senior Executive in the Plan, you are entitled to certain rights and protections under ERISA. ERISA provides that all Senior Executives shall be entitled to:
· | examine, without charge at the Plan Administrator’s office and at other specified locations, such as worksites, all documents governing the Plan and a copy of the latest Annual Report (Form 5500 series), if any, filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration. |
· | obtain copies of all documents governing the operation of the Plan and copies of the latest Annual Report (Form 5500 series), if any, and an updated summary plan description, by making a written request to the Plan Administrator and paying a reasonable charge for the copies. |
· | receive a summary of the Plan’s annual financial report, if such summary is required by law. |
In addition to creating rights for Senior Executives, ERISA imposes duties upon the people who are responsible for the operation of the Plan. The people who operate the Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in your interest and in the interest of the other Senior Executives and beneficiaries.
No one, including your employer or any other person, may fire you or otherwise discriminate against you, in any way solely to prevent you from getting a benefit or exercising your rights under ERISA. If your claim for a benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.
Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of Plan documents or the latest Annual Report from the Plan and do not receive them within thirty (30) days, you may file suit in federal court. In such a case, the court may require the Plan Administrator to provide the documents and pay you up to $110 a day until you receive them, unless they were not sent because of reasons beyond the control of the Plan Administrator.
If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or federal court. If it should happen that Plan fiduciaries misuse the Plan’s money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If your suit is successful, the court may order the person you have sued to pay costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.
If you have any questions about the Plan, you should contact the Plan Administrator. If you have any questions about your rights under ERISA, or if you need assistance in obtaining documents from the Plan Administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.
6
General Plan Information
Plan Name
Eastern Virginia Bankshares, Inc. Executive Severance Plan
Plan Sponsor
Eastern Virginia Bankshares, Inc.
P.O. Box 1455
330 Hospital Road
Tappahannock, Virginia 22560
804-443-8400
Employer Identification Number (EIN)
54-1866052
Plan Number
502
Plan Type
The Plan is a welfare benefit plan that pays severance benefits.
Plan Administrator
Eastern Virginia Bankshares, Inc.
P.O. Box 1455
330 Hospital Road
Tappahannock, Virginia 22560
804-443-8400
Agent for Service of Legal Process
Eastern Virginia Bankshares, Inc.
P.O. Box 1455
330 Hospital Road
Tappahannock, Virginia 22560
804-443-8400
Plan Year
The calendar year.
7
Exhibit A
GENERAL RELEASE AGREEMENT
For good and valuable consideration, the receipt of which is hereby acknowledged, _________________ (“Employee”), hereby irrevocably and unconditionally releases, acquits, and forever discharges Eastern Virginia Bankshares, Inc. (the “Company”) and each of its current and former agents, directors, members, affiliated entities, officers, executives, 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 arising out of alleged violations or breaches of any contracts, express or implied, or any tort, or any legal restrictions on their right to terminate Employee’s employment, or 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; and (8) the Employee Retirement Income Security Act (“ERISA”) (“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 General Release Agreement (“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. | This Release given by Employee is given solely in exchange for the consideration set forth in the Eastern Virginia Bankshares, Inc. Executive Severance Plan 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 Release is executed; |
c. | Employee has been advised to consult an attorney prior to entering into this Release, and this provision of this Release satisfies the requirements of the Older Workers Benefit Protection Act that Employee be so advised in writing; |
d. | Employee has been offered twenty-one (21) 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 by delivering or mailing the revocation to [______________] and this Release shall not become effective or enforceable until such seven (7) day period has expired. |
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.
Date |
8
AMENDMENT
TO THE
EASTERN VIRGINIA BANKSHARES, INC. EXECUTIVE SEVERANCE PLAN
WHEREAS , effective as of the consummation of the mergers contemplated under the Agreement and Plan of Merger by and among Southern National Bancorp of Virginia, Inc. (“ SONA ”), Sonabank, Eastern Virginia Bankshares, Inc. and EVB, dated December 13, 2016, as amended (the “ Merger Agreement ”), SONA assumed the Eastern Virginia Bankshares, Inc. Executive Severance Plan (the “ Plan ”);
WHEREAS , pursuant to the terms of the Merger Agreement, SONA has agreed that the Plan shall not be terminated for at least twelve (12) months following the Effective Date (as defined in the Merger Agreement): and
WHEREAS , SONA wishes to amend the Plan to reflect the assumption of the Plan by SONA at the Effective Date.
NOW, THEREFORE , the Plan is hereby amended as follows to be effective upon the Effective Date:
1. | The title of the Plan shall be revised to “Southern National Bancorp of Virginia, Inc. Executive Severance Plan”. |
2. | All references to “Eastern Virginia Bankshares, Inc.” in the Plan shall be replaced with references to “Southern National Bancorp of Virginia, Inc.”. |
3. | Except as expressly modified by this Amendment, all the terms and provisions of the Plan shall continue to remain in full force and effect. |
IN WITNESS WHEREOF , SONA has caused this Amendment to be executed by its undersigned officer, thereunto duly authorized as of the day and year set forth below.
SOUTHERN NATIONAL BANCORP OF VIRGINIA, INC. | ||
/s/ Joe A. Shearin | ||
By: Joe A. Shearin | ||
Title: President and Chief Executive Officer | ||
Date: | June 23, 2017 |
9
Exhibit 99.1
Southern National Bancorp of Virginia, Inc. and Eastern Virginia Bankshares, Inc. Announce Closing of Merger
Contact: R. Roderick Porter, Executive Vice Chairman Phone: 202-464-1130 ext. 2406 Fax: 202-464-1134 Southern National Bancorp, NASDAQ Symbol SONA Website: www.sonabank.com |
Contact: Joe A. Shearin, President & CEO Phone: 804-528-4752 Southern National Bancorp, NASDAQ Symbol SONA Website: www.sonabank.com |
For immediate release
June 23, 2017
McLean, VA & Richmond, VA, June 23, 2017 – Southern National Bancorp of Virginia, Inc. (NASDAQ: SONA) (“Southern National”) and Eastern Virginia Bankshares, Inc. (NASDAQ: EVBS) (“Eastern Virginia”) jointly announced today the completion of the merger of Eastern Virginia with and into Southern National and the completion of the merger of Eastern Virginia’s wholly-owned bank subsidiary, EVB, with and into Southern National’s wholly-owned bank subsidiary, Sonabank. The combination brings together two banking companies with complementary business lines, creating one of the premier banking institutions headquartered in the Commonwealth of Virginia.
The combined company has approximately $2.6 billion in total assets, $2.0 billion in total deposits, and $1.8 billion in total loans. The holding company will continue to operate under the name “Southern National Bancorp of Virginia, Inc.” and will maintain its corporate headquarters in McLean, Virginia. All banking operations will be conducted through Sonabank with its headquarters in Richmond, Virginia. The combined bank has 47 branch locations covering markets in both Maryland and Virginia, including the Washington, D.C. and Richmond, Virginia MSAs. These attractive markets are often cited as having some of the best demographic and income profiles in the country, frequently characterized by low unemployment, strong population growth, new business starts and consistent capital expenditure.
Pursuant to the merger agreement, the holders of shares of Eastern Virginia capital stock have the right to 0.6313 shares of Southern National common stock for each share of Eastern Virginia capital stock held immediately prior to the effective date of the merger.
The executive management team of the combined company will be comprised of Joe A. Shearin as President and CEO, Georgia S. Derrico as Executive Chairman and R. Roderick Porter as Executive Vice Chairman.
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Southern National was advised in the transaction by FIG Partners LLC as financial advisor, and Alston & Bird LLP, as legal counsel. Eastern Virginia was advised by Sandler O’Neill + Partners, L.P. as financial advisor, and Troutman Sanders LLP, as legal counsel.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 regarding Southern National’s expectations or predictions of future financial or business performance or conditions. These forward-looking statements are based on the current beliefs and expectations of the management of Southern National and are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are beyond its control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Forward-looking statements may be identified by words such as “may,” “could,” “will,” “expect,” “believe,” “anticipate,” “forecast,” “intend,” “plan,” “prospects,” “estimate,” “potential,” or by variations of such words or by similar expressions. Forward-looking statements in this report (including in the exhibits hereto) may include, but are not limited to, statements about projected impacts of and financial results generated by the transaction. Forward-looking statements speak only as of the date they are made and Southern National assumes no duty to update forward-looking statements, except as required by law.
In addition to factors previously disclosed in Southern National’s and Eastern Virginia’s reports filed with the Securities and Exchange Commission and those identified elsewhere in this release, the following factors, among others, could cause actual results to differ materially from the results expressed in or implied by forward-looking statements and historical performance: changes in asset quality and credit risk; changes in interest rates and capital markets; the introduction, timing and success of business initiatives; competitive conditions; and the inability to recognize cost savings or revenues or to implement integration plans associated with the transaction. Annualized, pro forma, projected, and estimated numbers are used for illustrative purposes only, may not reflect actual results and may not be relied upon.
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