EMPLOYMENT AGREEMENT

Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement , (this “ Agreement ”), made this the 31 ^st day of December, 2008, and effective as of the Commencement Date (as defined below) by and between Hampton Roads Bankshares, Inc. , a Virginia corporation (“ Employer ”), with a principal address of 999 Waterside Drive, Suite 200, Norfolk, Virginia (23510) and Daniel B. Berry (“ Officer ”), with an address of 1116 Rose Lane, Virginia Beach, Virginia (23451).

WITNESSETH:

WHEREAS, this Agreement is entered into by Employer as a condition of the closing of a merger pursuant to that certain Agreement and Plan of Merger (the “ Merger Agreement ”) dated September 23, 2008, by and between Employer and Gateway Financial Holdings, Inc. , a North Carolina corporation (“ GFH ”), whereby GFH will be merged into Employer and GFH’s wholly owned subsidiary, Gateway Bank & Trust Co. , a North Carolina chartered commercial bank (“ Gateway ”), will become a wholly owned subsidiary of Employer (the “ Merger ”);

WHEREAS , Officer is being directly and materially benefited as an equity holder in and executive of GFH as a result of the Merger and through this Agreement with Employer;

WHEREAS , Officer desires to render valuable services to Employer and it is the desire of Employer to have the benefit of Officer’s continued and future loyalty, service and counsel;

WHEREAS , Employer is a Virginia bank holding company which currently has two (2) wholly owned bank subsidiaries and as a consequence of the Merger, will become the parent company of Gateway;

WHEREAS , Officer has particular and peculiar knowledge and background in the operation of a business of the nature of Employer’s business, specifically Gateway’s operations; and

WHEREAS , Officer wishes to be employed by Employer.

NOW , THEREFORE , in consideration of the mutual covenants and agreements herein set forth, the parties covenant and agree as follows:

1.                       Employment .    As of the Commencement Date (as defined below) Employer agrees to employ Officer, and Officer agrees to serve Employer, as Employer’s President , upon the terms and conditions herein provided. Officer agrees to perform such managerial duties and responsibilities as shall be assigned to him by Employer’s Board of Directors (the “ Board ”) and/or the Chief Executive Officer of Employer. Officer shall devote his time and attention on a full-time basis to the discharge of the duties undertaken by him hereunder; provided, however, that Officer may serve on the boards of directors of other companies with the prior consent of the Board.

(a)            Term of Agreement . The term (the “ Term ”) of this Agreement shall commence on the date (the “ Commencement Date ”) of the closing of the Merger Agreement; provided, however, that this Agreement shall be null and void ab initio if Officer is not serving as the Chief Executive Officer of GFH on the Commencement Date. On the Commencement Date, Officer’s certain Employment Agreement dated October 1, 2007, with Gateway and certain Salary Continuation Agreement dated October 1, 2006, with Gateway, together with any employment related agreement with either Gateway or GFH, including, but not limited to, any long term incentive plans, severance agreements, change-in-control agreements, cash incentive plans, or split-dollar agreements, shall terminate and be superseded and replaced in their entirety with this Agreement. Officer waives any rights under such agreements and plans arising on account of the transactions contemplated by the Merger Agreement; provided, however, that the foregoing waiver shall specifically exclude the certain Split Dollar Insurance Agreement dated as of March 14, 2008, by and between Gateway and Officer, which shall continue in force. Options granted pursuant to Gateway or GFH equity incentive or stock option plans shall be governed by the Merger Agreement. There shall be no acceleration of vesting of any of Officer’s options, compensation or benefits on account of the Merger, other than his restricted stock, which shall vest. Thereafter, this Agreement shall continue until the first to occur of (i) except as otherwise provided in Section 3 hereof, the end of the thirty-sixth (36 ^th ) consecutive full month following the Commencement Date, (ii) Officer’s death, or (iii) except as provided in Paragraph (e) of this Section 2, Officer's disability. Notwithstanding the foregoing, however, in the event Officer is not informed by Employer, in writing, prior to the last day of the thirtieth ( 30th ) consecutive full month following the Commencement Date, or any subsequent renewal term, that this Agreement will not be renewed, this Agreement will automatically renew itself for additional periods of twelve (12) months (each a “ Renewal Term ”) from the original anniversary date or, as the case may be, any Renewal Term, each of which Renewal Term shall also automatically renew itself in the event that Officer is not informed by Employer, in writing, that this Agreement will not be renewed. For purposes of this Agreement, the “Term” shall include and refer to, as appropriate by the context, any Renewal Term.

(b)             Compensation .    Beginning as of the Commencement Date, Officer shall be paid an annual base salary of $ 500,000 (“ Base Salary ”), payable in accordance with Employer’s normal payroll practices. Subsequent to the initial twenty-four (24) months from the Commencement Date, any increases or decreases in Officer’s annual Base Salary shall be at the discretion of the Board based upon the financial performance of Employer.

(c)             Benefits . Officer shall be eligible for participation in any additional plans, programs or forms of compensation or benefits that Employer might provide from time to time, either directly or through a subsidiary, to the class of employees that includes Officer, or, as allowed, for Officer solely, which benefit plans currently or may include: (i) a 401(k) Retirement Program subject to normal Internal Revenue Service guidelines with respect to the maximum amount of participation; (ii) a non-contributory profit sharing plan where a discretionary contribution made by Employer on behalf of its personnel is allocated based upon Internal Revenue Service allocations for profit sharing plans necessary to insure that it remains a qualified retirement account in accordance with ERISA guidelines; and (iii) a deferred compensation or supplemental retirement arrangement described in Paragraph 2(k) below. The benefits, rights and obligations of Officer under the various plans or arrangements set forth above or in this Agreement shall be exclusively governed by the respective plans or governing

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documents as they may be amended or established from time to time in the event of any conflict with this Agreement.

(e)             Disability .    In the event of the physical or mental disability of Officer by reason of which Officer is unable to perform the duties of his employment hereunder, Employer shall continue to pay or provide to Officer the compensation and benefits provided under Paragraphs (b) and (c) of this Section 2 for the first six (6) months of such disability. If, however, the disability continues beyond such six (6) month period, Employer may, at its election, terminate Officer's employment under this Agreement, in which case Officer may be entitled to receive disability benefits, if any, available to Officer under Employer’s plans in effect at that time.

(f)        Death .   In the event that Officer’s death should occur during the Term of this Agreement, this Agreement shall terminate and Officer or his estate or beneficiaries, as the case may be, shall be entitled only to income earned but not yet paid as of the date of death and any and all retirement or death benefits payable under Employer’s plans in effect at that time and no further compensation will be paid under this Agreement.

(g)        Automobile.     During the Term, Employer will provide Officer with the use of a vehicle which Officer may choose and select within a reasonable budget established by the Board or Employer’s Chief Executive Officer. All fuel, insurance and maintenance shall be paid for by Employer pursuant to Employer’s Automobile Policy as adopted by the Board.

(h)        Vacation.     Officer will be entitled to paid vacation days in accordance with Employer’s vacation policy for senior executive officers as adopted by the Board but in no event less than 20 (twenty) days per year.

(i)        Insurance and other Expenses .     Employer will provide Officer with health insurance, dental insurance and life insurance coverage as are provided to the class of employees that includes Officer, as well as the necessary tools to perform Officer’s duties as an executive officer of Employer, including, but not limited to, reimbursement (aa) for Officer’s current cellular phone plan or participation in Employer’s cell phone plan, (bb) current dues and related expenses for one country club membership, excluding initiation fees and capital calls, and (cc) dues for necessary civic organizations which Officer may join and are used or designed to further enhance Officer’s opportunity to conduct the business of Employer, subject to approval by the Board or Employer’s Chief Executive Officer.

(j)        Perpetual Family Medical Insurance . (i)  After Officer’s employment with Employer is terminated for any reason other than termination by Employer for “good cause,” Employer shall continue to provide medical insurance coverage to Officer and Officer’s spouse for the lifetime of each until Officer becomes eligible to participate in a plan, program, or arrangement provided by a subsequent employer which provides medical insurance benefits to Officer or Officer’s spouse whereupon all of Employer’s obligations under this Paragraph cease. Employer may provide such medical insurance coverage in Employer’s discretion, as part of Employer’s group medical insurance plan for active employees or through individual medical insurance policies. Notwithstanding the foregoing, as of the first date that (i) Officer is no longer employed by Employer and (ii) Officer and Officer’s spouse, respectively, have each attained sixty-five (65) years of age, Employer shall be obligated to only provide such individual with

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supplemental Medicare health insurance in order to meet its obligations under this Paragraph. Employer shall be responsible for paying directly all of the premiums required to meet its obligations under this Paragraph.

(ii)         Employer’s obligation to provide the medical insurance coverage in Paragraph 2(j)(i) above is subject to the condition that no financial statement accrual will be required under GAAP until Officer’s employment is terminated. Officer agrees that Employer’s obligation under Paragraph 2(j)(i) shall be modified by Employer as required so that no amounts are required to be accrued under GAAP until Officer’s employment is terminated.

(k)          Deferred Compensation or Supplemental Retirement Plan . As of the Commencement Date, Employer shall provide to Officer a Deferred Compensation or Supplemental Retirement Plan (the “ SERP ”) which shall provide to Officer a retirement benefit payable annually for fifteen (15) years commencing upon the first month after Officer attaining age 65. The variable benefit shall be an amount equal to seventy percent (70%) of Officer’s average annual base salary for the three (3) years prior to Officer attaining age 65. The benefits shall, to the extent in compliance with applicable law, vest ratably from the Commencement Date through Officer attaining age 65. The benefits and rights of Officer under the SERP shall be exclusively governed by the respective plan document to the extent that same may conflict with this Agreement. The SERP shall provide, among other things, that the benefits payable under the SERP shall become fully vested and be payable upon termination of Officer’s employment hereunder without “good cause” by Employer. Notwithstanding the preceding sentence, Employer shall have no obligation to accelerate vesting and pay any benefit under the SERP upon termination of employment unless GFH and Gateway have provided the appropriate GAAP accrual for the SERP on their financial statements before the Commencement Date.

(l)        Termination of Compensation and Benefits . The foregoing compensation, benefits, and other arrangements described in this Section 2 shall cease when Officer is no longer employed by Employer for any reason or upon termination of this Agreement.

(m)           No Right to Indemnification. Notwithstanding the hiring of Officer under this Agreement or any policy of Employer or any provision to the contrary herein, Officer shall not be entitled to any indemnification, contribution or hold harmless from GFH, Employer or any of their subsidiaries with respect to matters occurring or arising on or prior to the Commencement Date, whether asserted or claimed prior to, at or after the Commencement Date. Officer agrees with Employer that Officer shall not assert any claims to indemnification, contribution or hold harmless for such matters.

(a)            Termination by Employer .     Officer’s employment with Employer may be terminated by Employer in accordance with the following provisions:

(i)             Employer may, at any time, terminate Officer’s employment for “good cause” (as defined below). If such termination is for good cause, then Officer shall be entitled only to receive his base salary in respect of services performed through the Date of Termination and the compensation and benefits of Officer will cease as of the Date of Termination (as defined in Paragraph 3(d)). For purposes of this Agreement, “good cause” means a dismissal of Officer by Employer because of (i) the material failure of Officer, for reasons

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other than disability, to render services to Employer as provided herein; (ii) Officer’s gross misconduct or willful neglect of duty, neglect or refusal to perform all duties assigned to him, in good faith, under this Agreement or by Employer; (iii) imprudent financial management of Employer by Officer not otherwise authorized which causes Employer an extraordinary or material loss; (iv) conviction of or guilty plea to a felony or a crime involving moral turpitude; (v) illegal use of drugs or alcohol; (vi) the material breach of this Agreement; (vii) material waste or misuse of assets of Employer; (viii) embezzlement, dishonesty, fraud or other similar acts reflecting adversely upon Officer’s honesty and integrity; (ix) illegal or intentional acts by Officer demonstrating bad faith toward Employer, including, but not limited to, any conduct by Officer so as to permit, condone or acquiesce in any act or conduct of other persons, which could cause Employer, its parent or any of its subsidiaries, to be in material violation of any law, statute or regulation; or (x) commission by Officer of any other act which causes a material adverse impact on Employer’s standing in the community or with its customers, staff or shareholders, including, but not limited to, if Officer is suspended and/or temporarily prohibited from participating in the conduct of Employer’s business by any regulatory authority governing Employer’s business.

(ii)           Employer may, at any time, terminate Officer’s employment without “good cause” (as defined above). If such termination is without good cause then Employer shall pay Officer a termination allowance in not more than twelve (12) equal monthly payments commencing on the last day of the month in which the date of actual termination occurs, the total amount of which will equal Officer’s Base Salary, but not including any bonuses paid to Officer by Employer in the twelve (12) months preceding the Notice of Termination (as defined in Paragraph 3(c)). Except as provided in this Paragraph, upon the termination herein described, the compensation and benefits of Officer will cease as of the Date of Termination.

(iii)          If Officer’s employment is terminated by Employer without good cause and such termination occurs within one (1) year after a “Change in Control” (as such term is defined below) of Employer then the provisions of Paragraph 4 shall govern the compensation or benefits owed to Officer upon Officer’s termination.

(b)    Termination by Officer .   Officer’s employment with Employer may be terminated by Officer in accordance with the following provisions: 

(i)            Officer shall be entitled to terminate his employment pursuant to this Agreement voluntarily at any time, provided, however, that in the event Officer terminates his employment pursuant to this Agreement without “good reason” (as defined below) or other than in connection with a “Change in Control” as described below, then Officer shall be entitled to no termination allowance and/or no severance allowance and no further compensation or benefits after the “Date of Termination” (as defined Paragraph 3(d)).

(ii)           Officer may terminate his employment for good reason and will be entitled in such event to the payments and other benefits provided in Paragraph 3(a)(ii) in the event of a termination of Officer’s employment without good cause. For purposes of this Agreement, “good reason” shall mean: (aa) the continued assignment to Officer of duties inconsistent with Officer’s position, duty and responsibilities with Employer as of the Commencement Date to which Officer objects, in writing, to the Board; (bb) the relocation of Officer to a primary place of employment which might require Officer to move his residence which, for this purpose, includes any reassignment to a place or employment located more than fifty (50) miles from Virginia Beach, Virginia, without Officer’s express written consent to such

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relocation; or (cc) any failure by Employer or any successor entity following a “Chan