Exhibit 10.6
NOTE: This agreement was amended and
restated on December 31, 2008 to comply with Section 409A
of the Internal Revenue Code.
AMENDED AND RESTATED EMPLOYMENT
AGREEMENT OF JOHN E. HUDSON
THIS EMPLOYMENT AGREEMENT is made
and entered into as of the 1st day of January, 2004, and amended
and restated the 31st day of December, 2008, by and between Eagle
Financial Services, Inc., a Virginia corporation, hereinafter
called the “Corporation”, and John E. Hudson
hereinafter called “Employee”, and provides as
follows:
RECITALS
WHEREAS, the Corporation is a bank
holding company engaged in the operation of a bank; and
WHEREAS, Employee has been involved
in the management of the business and affairs of the Corporation
and, therefore, possesses managerial experience, knowledge, skills
and expertise in such type of business; and
WHEREAS, the employment of Employee
by the Corporation is in the best interests of the Corporation and
Employee;
WHEREAS, the parties have mutually
agreed upon the terms and conditions of Employee’s continued
employment by the Corporation as hereinafter set forth;
and
WHEREAS, the parties intend that
this Agreement, as amended and restated, comply with
Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”) and Treasury Regulations
thereunder.
TERMS OF
AGREEMENT
NOW, THEREFORE, for and in
consideration of the premises and of the mutual promises and
undertakings of the parties as hereinafter set forth, the parties
covenant and agree as follows:
Section 1. Employment .
(a) Employee shall be employed as an executive officer of the
Corporation. He shall perform such services for the Corporation
and/or one or more Affiliates as may be assigned to Employee by the
Corporation from time to time and that are commensurate with his
training and experience upon the terms and conditions hereinafter
set forth.
(b) References in this Agreement to
services rendered for the Corporation and compensation and benefits
payable or provided by the Corporation shall include services
rendered for and compensation and benefits payable or provided by
any Affiliate. References in this Agreement to the
“Corporation” also shall mean and refer to each
Affiliate for which Employee performs services. References in this
Agreement to “Affiliate” shall mean any business entity
that, directly or indirectly, through one or more intermediaries,
is controlled by the Corporation.
Section 2. Term and
Renewal . The initial term of this Agreement shall end
December 31, 2004. However, on each December 31,
beginning with December 31, 2004, the term of this Agreement
shall be renewed and extended by one year unless Employee or the
Corporation gives prior notice to the other in writing that the
term shall not be renewed and extended. This Agreement shall
terminate at the end of its term.
Section 3. Exclusive
Service . Employee shall devote his best efforts and full time
to rendering services on behalf of the Corporation in furtherance
of its best interests. Employee shall comply with all policies,
standards and regulations of the Corporation 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 officers of banks.
Section 4. Salary .
(a) As compensation while employed hereunder, Employee, during
his faithful performance of this Agreement, in whatever capacity
rendered, shall receive an annual base salary of $67,300 payable on
such terms and in such installments as the parties may from time to
time mutually agree upon. The Board of Directors, in its
discretion, may increase Employee’s base salary during the
term of this Agreement.
(b) The Corporation 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 Employee and the Corporation. The
Corporation shall also withhold and remit to the proper party any
amounts agreed to in writing by the Corporation and Employee for
participation in any corporate sponsored benefit plans for which a
contribution is required.
(c) 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 Employee’s employment by the
Corporation.
Section 5. Corporate Benefit
Plans . Employee shall be entitled to participate in or become
a participant in all cash and non-cash employee benefit plans
maintained by the Corporation for its executive
officers.
Section 6. Bonuses .
Employee shall receive only such bonuses as the Board of Directors,
in its discretion, decides to pay to Employee.
Section 7. Expense
Account . The Corporation shall reimburse Employee for
reasonable and customary business expenses incurred in the conduct
of the Corporation’s business. Such expenses will include
business meals, out-of-town lodging and travel expenses and other
items identified in written rules and policies of the Corporation.
Employee agrees to timely submit records and receipts of
reimbursable items and agrees that the Corporation can adopt
reasonable rules and policies regarding such reimbursement. The
Corporation agrees to make prompt payment to Employee following
receipt and verification of such reports. No reimbursement provided
under this Section during one calendar year shall affect the
expenses eligible for reimbursement during another calendar
year.
Section 8. Paid Time Off
. Employee shall be entitled to the same paid time off policies as
the Board of Directors may from time to time designate for all
full-time employees of the Corporation.
Section 9. Termination .
(a) Notwithstanding the termination of Employee’s
employment pursuant to any provision of this Agreement, the parties
shall be required to carry out any provisions of this Agreement
which contemplate performance by them subsequent to such
termination. In addition, no termination shall affect any liability
or other obligation of either party which shall have accrued prior
to such termination, including, but not limited to, any liability,
loss or damage on account of breach. No termination of employment
shall terminate the obligation of the Corporation to make payments
of any vested benefits provided hereunder or the obligations of
Employee under Sections 10, 11 and 12.
(b) Employee’s employment
hereunder may be terminated by Employee upon thirty (30) days
written notice to the Corporation or at any time by mutual
agreement in writing.
(c) This Agreement shall terminate
upon death of Employee; provided, however, that in such event the
Corporation shall pay to the estate of Employee the compensation
including salary and accrued bonus, if any, which otherwise would
be payable to Employee through the end of the month in which his
death occurs.
(d) (1) The Corporation may
terminate Employee’s employment other than for
“Cause”, as defined in Section 9(e), at any time
upon written notice to Employee, which termination shall be
effective immediately. Employee may resign thirty (30) days
after notice to the Corporation for “Good Reason”, as
hereafter defined. In the event the Employee’s employment
terminates pursuant to this Section 9(d);
(i) Employee shall
receive a monthly amount equal to one-twelfth (
1
/
12
) his rate of
annual base salary in effect immediately preceding such termination
in each month for the remainder of the term of this Agreement at
the times such payments would have been made in accordance with
Section 4(a);
(ii) Employee shall receive a
payment in cash on the date his employment terminates equal to the
greater of (a) the amount of the highest cash bonus paid or
payable to him in respect of any of the three (3) fiscal years
of the Corporation prior to the fiscal year in which his employment
terminates, and (b) the amount of cash bonus Employee was
designated to receive under the Corporation’s annual
incentive plan;
(iii) To the to the extent required
because Employee is a “specified employee” for purposes
of Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), on the date of his termination,
the payments described in Section (d)(1)(i) and (ii), above, shall
be made or commence, as the case may be, on the first day of the
month following the six-month anniversary of Employee’s date
of termination. The first payment shall include the payments, if
any, required to be delayed under this sentence; and
(iv) The Corporation shall maintain
in full force and effect for the continued benefit of the Employee
for the remainder of the then current term of this Agreement all
employee welfare benefit plans and programs or arrangements in
which the Employee was entitled to participate immediately prior to
such termination, provided that continued participation is possible
under the general terms and provisions of such plans and programs.
In the event that Employee’s participation in any such or
program is barred, the Corporation shall arrange to provide the
Employee with benefits substantially similar to those which the
Employee was entitled to receive under such plans and programs. To
the extent required by Code Section 409A and Treasury
Regulations thereunder, (i) no reimbursement or in-kind
benefit provided under this Section 9(d)(2)(iv) in one
calendar year shall affect the expenses eligible for reimbursement
or in-kind benefits provided during another calendar year; and
(ii) any such reimbursement shall be paid by December 31
of the calendar year following the calendar year in which the
reimbursed expense was incurred. It is intended and anticipated
that benefits under this Section will qualify as medical
reimbursements exempt from Code Section 409A or as payments
made on a specified date or fixed schedule. Nonetheless, to the
extent required by Code Section 409A and Treasury Regulations
thereunder, benefits (whether through plan participation,
reimbursement, in-kind benefits or otherwise) shall commence on the
first day of the month following the six-month anniversary of the
Employee’s termination or resignation, with any
reimbursements or other payments delayed under this sentence
payable in a single sum on such delayed commencement date;
and
(2) Notwithstanding anything in this
Agreement to the contrary:
(i) If Employee breaches
Section 10 or 11, Employee will not thereafter be entitled to
receive any further compensation or benefits pursuant to this
Section 9(d); and
(ii) If, while he is receiving
payments under this Section 9(d), Employee engages in a
Competitive Business within the area described in
Section 11(i), such payments will cease and he will not
thereafter be entitled to receive any compensation or benefits
pursuant to this Section 9(d) even though such conduct occurs
after the covenants contained in Section 11 have
expired.
(3) The Corporation shall not be
required to make payment of the Termination Compensation or any
portion thereof to the extent such payment is prohibited by the
terms of the regulations presently found at 12 C.F.R. part 359 or
to the extent that any other governmental approval of the payment
required by law is not received.
(4) Except as set forth in Sections
9(d)(2) and 9(d)(3), the Corporation’s obligation to pay the
Employee the compensation provided in Section 9(d)(1) shall be
absolute and unconditional and shall not be affected by any
circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the
Corporation may have against him or anyone else. All amounts
payable by the Corporation hereunder shall be paid without notice
or demand. Each and every payment made hereunder by the Corporation
shall be final and the Corporation will not seek to recover all or
any part of such payment from the Employee or from whosoever may be
entitled thereto, for any reason whatsoever. The Employee shall not
be required to mitigate the amount of any payment provided for in
this Agreement by seeking other employment or otherwise.
(5) For purposes of this Agreement,
“Good Reason” shall mean:
(i) The assignment of duties to the
Employee by the Corporation which result in the Employee having
significantly less authority or responsibility than he has on the
date hereof, without his express written consent;
(ii) Requiring the Employee to
maintain his principal office outside a 25 mile radius of Clarke
County, Virginia unless the Corporation moves its principal
executive offices to a place to which the Employee is required to
move;
(iii) A reduction by the Corporation
of the Employee’s base salary, as the same may have been
increased from time to time;
(iv) The failure of the Corporation
to provide the Employee with substantially the same fringe benefits
that are provided to him at the incept
