EXHIBIT 10.2(d)
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, made as of January 1, 2001, by and between
XXXXXXX X. XXXXXX (the "Employee") and MSM ACQUISITION CO., a Virginia
corporation (the "Company"), provides:
In consideration of the mutual covenants herein contained, and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Employee and the Company agree as follows:
1. EMPLOYMENT.
The Company hereby employs the Employee, and the Employee hereby accepts
such employment, to serve as President and Chief Executive Officer of the
Company, upon and subject to the terms and conditions hereafter set forth.
2. TERM OF EMPLOYMENT.
The initial term of this Agreement and of the Employee's
employment by the Company shall be for the period beginning on the date hereof
and ending on December 31, 2005, unless sooner terminated in the manner herein
provided. At the expiration of such initial term, this Agreement shall
automatically renew from year to year unless terminated by either party hereto
by written notice at least sixty (60) days before the end of such initial term
or of any renewal term hereof.
3. DUTIES.
The Employee shall perform to the very best of his ability and in the best
interests of the Company all executive, managerial and other duties that are (i)
mandated for the office of President and/or Chief Executive Officer pursuant to
the bylaws of the Company as in force and effect from time to time, (ii)
assigned to him by the Board of Directors of the Company or (iii) as assigned to
him by the Chairman of the Bank of Powhatan, N.A. ("Bank"). The Employee shall
perform his duties hereunder on a full time and exclusive basis.
4. COMPENSATION.
4.1 The Company shall pay a salary to the Employee at the annual rate
of $120,000. At any time during the term of this Agreement, the Company
and the Employee may mutually agree to modify the aforementioned annual salary
rates. The Company during the term of the Employee's employment, shall pay to
the Employee his salary in installments on the first and fifteenth days of each
month or at such other intervals as the Company and the Employee shall mutually
agree, from which shall be withheld federal and state income taxes, social
security taxes and such other amounts as may be required to be withheld under
applicable law.
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4.2 Bonus. (a)(i) As used in this Agreement, the term
"Determination Year" shall mean each fiscal year of the Company ending December
31, starting December 31, 2001 and ending prior to the Termination Date (as
defined in Section 7 below), [Reference Column 1 on Schedule A (defined below)].
(ii) As used in this Agreement, the term "Annual Profit" shall mean
the "net income or loss" of the Company for each Determination Year
after provision for state and federal and state income taxes. For the purposes
of determining Annual Profit (A) the Company shall be considered an independent
entity, which files separate and not consolidated income tax returns for each
Determination Year; (B) the "net income or loss" of the Company shall be reduced
by (1) the total amount of interest accrued for each Determination Year under
that certain line of credit note, a copy of which is attached hereto as Exhibit
1, with an aggregate borrowing limit of $200,000 established by the Bank on the
date of this Agreement for the benefit of the Company, whether paid or unpaid,
to the extent not already taken into account in calculating such "net income or
loss," and (2) any payments made by the Bank to the Company for services
rendered or products sold to the Bank by the Company, which are not fees for the
providing of mortgage broker services by the Company; and (C) the "net income or
loss" of the Company shall be net of all expenses, including commissions and all
costs of sales. [Reference Column 2 on Schedule A].
(iii) As used in this Agreement, the term "Unadjusted Cumulative
Investment" shall mean an amount equal to the sum of all actual cash
contributions to the capital of the Company made by the Bank at any time prior
to the end of a given Determination Year, without any offsets. The principal of
any loans (as evidenced by an executed promissory note) made by the Bank to the
Company, together with any interest accrued therewith, shall not be considered
cash contributions to the capital of the Company. [Reference Column 3 on
Schedule A].
(iv) As used in this Agreement, the term "Adjusted
Required Investment Return as of the End of Such Given Determination Year Before
AIR Calculation" shall mean an amount calculated by multiplying (A) the
difference between the sum of the actual cash contributions to the capital of
the Company by the Bank, calculated on a weighted average basis, at any time
prior to the end of a given Determination Year and the sum of the Actual
Investment Returns calculated for all periods ending prior to the given
Determination Year against, (B) an annual rate of return on a compounded basis
of ten percent (10%). Such calculation for actual cash contributions shall
commence as of January 1, 2001 and be made up to and including the end of each
Determination Year. Such calculation shall be adjusted to account for capital
contributions that have not been made for an entire year. [Reference Column 4 on
Schedule A].
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(v) As used in this Agreement, the term "Adjusted
Required Investment Return as of the End of Such Given Determination Year After
AIR Calculation" shall mean an amount calculated by multiplying (A) the
difference between the sum of the actual cash contributions to the capital of
the Company by the Bank, calculated on a weighted average basis, at any time
prior to the end of a given Determination Year and the sum of the Actual
Investment Returns calculated for all periods ending prior to and including such
given Determination Year against, (B) an annual rate of return on a
compounded basis of ten percent (10%). Such calculation for actual cash
contributions shall commence as of January 1, 2001 and be made up to and
including the end of each Determination Year. Such calculation shall be adjusted
to account for capital contributions that have not been made for an entire year.
[Reference Column 8 on Schedule A].
(vi) As used in this Agreement, the term "Actual
Investment Return" shall mean an amount equal to eighty percent (80%) of the
Excess Return (as defined below). [Reference Column 6 on Schedule A].
(vii) As used in this Agreement, the term "Excess Return" shall mean
the positive amount by which (A) the positive Annual Profit (that is, the Annual
Profit must be a positive number) for a given Determination Year exceeds (B) the
sum of (1) any cumulative negative Annual Profit for Determination Years
consecutively and immediately preceding the current Determination Year (if any)
and (2) the Adjusted Required Investment Return as of the End of Such Given
Determination Year Before AIR Calculation (if any). [Reference Columns 5 and 6
on Schedule A].
(b) For any Determination Year as to which the Annual Profit is
greater than $0, the Employee shall be entitled to a bonus of twenty percent
(20%) times the Excess Return (if any) for such Determination Year. For any
Determination Year as to which the Annual Profit is $0 or less (negative), the
Employee shall not be entitled to a bonus.
(c) Within sixty (60) days after the end of each Determination Year,
the Company shall deliver a writing to the Employee describing in reasonable
detail the amount of bonus, if any, calculated for purposes of this Section 4.2.
(d) The amount of bonus will be calculated by the regularly engaged
independent certified public accountants of the Bank (the "Accountants") in a
manner consistent with generally accepted accounting principles. Each bonus
calculation made by the Accountants shall be final and binding on the Company
and the Employee, except if the Accountants act in bad faith. If a bonus is
payable for a given Determination Year, the Company shall make payment thereof
to the Employee not later than ninety (90) days after the end of such given
Determination Year.
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(e) For purposes only of giving an example as to the bonus
calculation, Schedule A is attached hereto and incorporated by reference
herein and uses hypothetical factors. Using Schedule A as a reference, the
procedural steps to calculate the Employee's bonus are: (1) first, determine the
given Determination Year [see Column 1 on Schedule A]; (ii) second, determine
the Annual Profit for such given Determination Year [see Column 2]; (iii) third,
determine the Adjusted Required Investment Return as of the end of such given
Determination Year before AIR calculation [see Column 4 - for
each given Determination Year, this column is effected by the results of Column
8 after the calculation of the bonus for the immediately preceding Determination
Year]; (iv) fourth, determine the Bonus Calculation and Amount for such given
Determination Year [see Column 5, which uses the factors of Column 2 and 4] and
which is the amount payable to the Employee under Section 4.2 as his bonus; (v)
fifth, calculate the Actual Investment Return as of the end of such given
Determination Year [see Column 6, which uses the factors of Columns 2 and 4];
(vi) sixth, determine the Adjusted Required Investment Return as of the end of
such given Determination Year after AIR calculation [see Column 7, which looks
back at Column 6 to determine if there is sufficient Annual Profit for the given
Determination Year (see Column 2) to cover the Adjusted Required Investment
Return as of the end of such given Determination Year before AIR calculation
(see Column 4); (vii) seventh, determine the Adjusted Cumulative Investment as
of the end of such given Determination Year after AIR calculation [see Column 8
which uses the factor of Column 8 for the immediately preceding Determination
Year plus the amount of any new capital contributions made during the current
Determination Year and then deducts the amount of the Actual Investment Return
as of the end of such given Determination Year (see Column 6)]; and then, repeat
the process for the next Determination Year.
5. VACATION LEAVE.
During the term of this Agreement, the Employee shall be entitled to
twenty (20) business days of vacation each year, without loss of pay, provided,
however, the Board of Directors of the Company may allow such additional
vacation as it deems reasonable. Such vacation shall be non-cumulative in that
unused vacation may not be carried over to a subsequent year.
6. INSURANCE, EXPENSES AND BENEFITS.
6.1 Generally, during the term of the Employee's employment, Employee
shall receive and be entitled to participate in all benefits offered to
executive employees of the Company, the Bank and any bank holding company that
becomes affiliated with the Bank (the "Holding Company"). Notwithstanding the
foregoing, at all times, during the term of this Agreement, the Company, at its
sole expense, shall provide to the Employee (a) a hospitalization policy
covering the Employee and his spouse and (b) a disability policy covering the
Employee.
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6.2 The Company shall reimburse the Employee for all reasonable
travel, entertainment and similar expenses incurred in the promotion of the
Company's business upon presentation by such Employee from time to time of
written itemized accounts and vouchers for such expenditures, provided, however,
that such expenditures would not cause the Company to exceed the amount budgeted
for such expenses for all employees of the Company as such figure appears in the
Company's annual budget approved by the Company's Board of Directors.
7. TERMINATION OF EMPLOYMENT.
7.1. Upon the occurrence of any of the following events and the expiration
of the period, if any, indicated (the "Termination Date"), this Agreement and
the Employee's employment hereunder shall terminate:
(a) Immediately upon the death of the Employee.
(b) Immediately upon the delivery by the Company to the Employee
of written notice of termination of his employment by reason of (i) his gross
incompetence, gross negligence, misconduct in office or breach of a fiduciary
duty to the Company, the Bank or Holding Company, (ii) breach of any of the
terms of this Agreement including the failure to perform his duties and
responsibilities hereunder, (iii) his dishonesty with respect to the Company,
the Bank or the Holding Company, (iv) his conviction of a felony or crime of
moral turpitude, embezzlement or fraud or (v) any conduct by Employee that
jeopardizes the normal operation of the Bank or Holding Company (collectively,
"Cause").
(c) On the day that the term of this Agreement or any renewal
thereof expires in the event that proper notice is given pursuant to Section 2
above.
(d) On the date which is thirty days after the Company provides
written notice to the Employee that the Employee's employment has been
terminated for reasons other than "Cause" or for no reason whatsoever.
7.2. (a) Upon such termination of this Agreement pursuant to any of
Section 7.1(a), (b) or (c), the Company shall have no further obligations to the
Employee (including, but not limited to, under Sections 4, 5 and 6 above) except
for the payment of the Employee's accrued and unpaid salary as of the
Termination Date.
(b) Upon termination of this Agreement pursuant to
Section 7.1(d), the Company shall have no further obligation to the Employee
(including, but not limited to, under Sections 4, 5 and 6 above) except for the
payment to the Employee of an amount equal to the sum of all accrued and unpaid
salary as of Termination Date and $60,000.
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8. CONFIDENTIAL INFORMATION. As consideration for and to induce the
employment of the Employee by the Company, the Employee hereby
covenants and agrees that:
(a) All information relating to or used in the business and
operation of the Company (including but not limited to xxxxxxxx, identities of
accounts, customers and prospects, mortgage product development information,
computer and computer software design information), whether
prepared, compiled, developed, or obtained by the Employee or by other employees
or the Company, prior to or during the term of the employment of the Employee,
are and shall be confidential information and/or the trade secrets and the
exclusive property of the Company.
(b) All data and information relating to the businesses and
operations of customers of the Company, whether prepared, compiled, developed,
or obtained by the Employee or by other employees or the Company or by customers
of the Company prior to or during the term of the employment of the Employee,
are and shall be confidential information and the exclusive property of
the Company or its customers, or both.
(c) All records of and materials relating to trade
secrets of the Company and to confidential information which are the property of
the Company or its customers, or both, whether in written form or in a form
produced or stored by any electrical or mechanical means or process (including,
but not limited to, drawings, diagrams, work notes, cards, tapes, diskettes, run
books, studies, reports and correspondence), whether prepared, compiled or
obtained by the Employee or by other employees of the Company or by the
customers of the Company prior to or during the term of the employment of the
Employee, shall be the exclusive property of the Company or its customers, or
both.
(d) Except in the regular course of his employment by the
Company or as the Company may expressly authorize or direct in writing, and in
both cases, for the sole benefit of the Company, the Employee shall not, during
or after the term of his employment, copy, reproduce, disclose or divulge to
others, use or permit others to use any trade secrets of the Company or any
confidential information which is the property of the Company or its customers,
or any records of or materials relating to any such trade secrets or
confidential information. The Employee further covenants and agrees that
during the term of his employment he shall not remove from the custody and
control of the Company any records or any materials relating to such trade
secrets and confidential information and that upon the termination of his
employment he shall deliver all such material to the Company. Notwithstanding
anything to the contrary, the Employee shall not be deemed in violation of this
Section 8(d) if he is required to testify or produce documents pursuant to any
court order, notice of deposition or subpoena related to any litigation or
governmental proceeding or investigation provided that the Employee has
given the Company reasonable prior written notice of such testimony
or document production so that the Company may take such action as it desires to
protect its trade secrets and confidential information.
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9. COVENANT NOT TO COMPETE.
As consideration for and to induce the employment of the Employee by the
Company, the Employee hereby covenants and agrees that:
(a) During the term of this Agreement and for the period from
the date of termination or expiration hereof until December 31, 2005, the
Employee will not (i) directly or indirectly provide mortgage broker services to
persons or entities domiciled in the Commonwealth of Virginia and/or (ii)
directly or indirectly, manage, or operate, or participate in the management or
operation, or serve as an employee, agent, or representative of, any
corporation, association, partnership, proprietorship or other business entity
that (A) provides mortgage broker services to persons or entities domiciled in
the Commonwealth of Virginia and (B) employs or uses the Employee in any
capacity directly or indirectly related to the providing of mortgage broker
services to persons or entities domiciled in the Commonwealth of Virginia.
(b) Nothing herein prohibits the Employee from engaging in any
activity which cannot reasonably be construed to be competitive with the
Company.
(c) Each of the prohibited aspects of conduct under Section
9(a) above shall be deemed independent covenants and separately enforceable.
10. RESERVED.
11. SPECIAL REMEDIES.
The Employee hereby covenants and agrees that:
(a) A remedy at law for any breach or threatened breach by him
of Sections 8 and 9 above will be inadequate by its nature because the duties
which he renders to the Company as an employee are of a special, unique and
extraordinary character. Accordingly, if the Employee violates any of the
provisions of Sections 8 and 9 above, the Company shall be entitled to
injunctive and other appropriate remedies otherwise available to it at law or in
equity.
(b) The geographical area, activity and time period
restrictions imposed upon him in Sections 9 above, as the case may be, are fair
and reasonably required for the protection of the Company. However, if a court
of competent jurisdiction shall refuse to enforce all of the separate covenants
of the aforementioned Sections, then such unenforceable covenants shall be
separated from the provisions hereof to the extent necessary to permit the
remaining covenants to be enforced. In the event that a court of competent
jurisdiction determines that the geographical area, activity or
time period restrictions exceed whatever standards which the
court deems enforceable, then such restrictions shall be reformed by such
court and be applicable for such lesser geographical area, activity or time
period. The parties agree to be bound by such judicial modification with the
same force and effect as if such modification were contained in the covenants in
the first issuance of this Agreement.
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(c) If (i) the Company initiates a lawsuit or proceeding to
enforce the provisions of any of Sections 8, 9 and/or 11 and (ii) the Company
substantially prevails in such lawsuit or proceeding, then, the Employee shall
reimburse the Company for its court costs and reasonable attorneys' fees
incurred in connection therewith promptly upon request by the Company to the
Employee.
12. SURVIVAL.
The agreements and covenants made by the Employee in and the obligations
of the Employee under separate sub-sections of Sections 8 and 9 and under
Section 11 above shall survive the expiration of this Agreement and the
termination of the employment of the Employee hereunder. Each such agreement and
covenant by the Employee shall be construed as a covenant and agreement
independent of any other provisions herein, and the existence of any claim
or cause of action by the Employee against the Company shall not constitute a
defense to the enforcement of provisions of any such covenant or agreement.
13. ASSIGNMENT.
The Employee acknowledges that this Agreement is personal
services contract. Accordingly, this Agreement may not be assigned by the
Employee, without the prior written consent of the Company.
14. NOTICES.
All notices, consents, and other communications to, upon, and between the
respective parties hereto shall be in writing and shall be deemed to have been
given, delivered, or made when sent or mailed by registered or certified mail,
postage prepaid, and return receipt requested and addressed to the Company at
its principal office in Richmond, Virginia, and to the Employee at his residence
as shown upon the employment records of the Company.
15. MODIFICATION.
No provision of this Agreement, including any provision of this Section,
may be modified, deleted or amended in any manner except by an agreement in
writing executed by the parties hereto.
16. BENEFIT.
All of the terms of this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the Company and its successors and assigns and
by the Employee and his personal representatives.
17. SEVERABILITY.
In the event that any part of this Agreement shall be held to be
unenforceable or invalid, the remaining parts shall nevertheless
continue to be valid and enforceable as though the unenforceable or invalid
portions were not a part hereof.
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18. CONSTRUCTION.
This Agreement is executed and delivered in the Commonwealth of Virginia,
without reference to that jurisdiction's conflict of law provisions. This
Agreement supercedes all other agreements, whether oral or written, between the
Employee and the Company, or any of its affiliated or parent companies, with
respect to the terms of Employee's employment by the Company or any of its
affiliated or parent companies. All such prior agreements are null and void.
19. HEADINGS.
The headings provided herein are for convenience only and shall
not affect the interpretation of this Agreement
20. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
MSM ACQUISITION CO.,
a Virginia corporation
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Xxxxxxx X. Xxxxx, Director
/s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx
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SCHEDULE A
(1) (2) (3) (4) (5) (6) (7) (8)
Adjusted Adjusted Adjusted
Unadjusted Required Actual Required Cumulative
Cumulative Investment Investment Investment Investment
Investment Return as of Bonus Return as of Return as as of
Date of End Annual as of End Calculation End of End End of Such
of a Profit for End of Such of Such Given and Amount of Such Given of Such Given
Given Such Given Given Determination for Determination Given Determination
Determination Determination Determination Year Before Such Given Year (the "AIR Determination Year After
Year Year Year 1 AIR Determination Calculation") Year After AIR
Calculation 1 Year AIR Calculation
Calculation
12/31/01 -75,000 230,000 10% x 230,000 = No Bonus 0 23,000 230,000
23,000
12/31/02 225,000 230,000 + (10% x 230,000) (.2 x (225,000 (.8 x (225,000 57,500 - 345,000 -
115,000 + (10% x 230,000) - (75,000 + - (75,000 + 57,500 = 74,000 =
= 345,000 + (10% x 115,000) + 57,500))) 57,500) 0 271,000
= 57,500 = 18,500 = 74,000
12/31/03 150,000 345,000 10% x (271,000 (.2 x (150,000 (.8 x (150,000 38,600 - (271,000 +
+ 115,000 + 115,000) = - 38,600)) = - 38,600)) 38,600 = 115,000) -
= 460,000 38,600 22,280 = 89,120 0 89,120 =
@296,900
12/31/04 300,000 460,000 10% x 296,900 (.2 x (300,000 (.8 x (300,000 29,690 - 296,900 -
29,690 - 29,690)) = - 29,690)) = 29,690 = 216,248 =
54,062 216,248 0 @80,700
12/31/05 -100,000 460,000 10% x 80,700 = No Bonus N/A N/A 80,700
8,070
12/31/06 200,000 460,000 (10% x 80,700) (.2 x (200,000 (.8 x (200,000 16,140 - 80,700 -
+ (10% x - (100,000 + - (100,000 16,140 = 67,088 =
80,700) = 16,140))) = + 16,140))) 0 @13,600
16,140 16,772 = 67,088
12/31/07 300,000 460,000 10% x 13,600 (.2 x (300,000 (.8 x 300,000 1,360 - 13,600 -
= 1,360 - 1,360)) = - 1,360)) = 1,360 = 238,912 =
59,728 238,912 0 less than 0
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1 Assume the Bank made capital contributions to the Company of $230,000,
$115,000 and $115,000 on 1/1/01, 1/1/02 and 1/1/03, respectively
