Exhibit 10.6
EMPLOYMENT
AGREEMENT
THIS AGREEMENT is entered into as of
June 21, 2002, by and between SUFFOLKFIRST BANK , a
Virginia banking corporation in Organization (hereinafter referred
to as the “Bank”) and Darrell G. Swanigan
(hereinafter referred to as the “Officer”).
For and in consideration of their
mutual promises, covenants and conditions hereinafter set forth,
and other good and valuable consideration, the receipt and
sufficiency of which hereby is acknowledged, the parties agree as
follows:
1. Employment . The Bank
agrees to employ the Officer and the Officer agrees to continue
employment upon the terms and conditions stated herein as the
President and Chief Executive Officer of the Bank. The employment
shall commence on a date mutually agreed by the Officer and the
Bank, but shall be on or before July 31, 2002 (the
“Effective Date”). The Officer shall render such
administrative and management services to the Bank as are
customarily performed by persons situated in a similar executive
capacity. The Officer shall serve on the Board of Directors during
the term of his employment. The Officer shall promote the business
of the Bank and perform such other duties as shall, from time to
time, be reasonably assigned by the Board of Directors of the Bank
(the “Directors”). The Officer shall periodically
disclose all business activities or commercial pursuits in which
Officer is engaged, other than Bank duties.
2. Compensation .
(a) The Bank shall pay the Officer
during the term of this Agreement, as compensation for all services
rendered by him to the Bank, a base salary at the rate of $8,585
per month for the first twelve months of employment, commencing on
the Effective Date. The rate of such salary shall be reviewed by
the Directors not less often than annually and the base salary, as
in effect at any time, shall not be decreased during the term of
this Agreement. Assuming all regulatory approval to open the Bank
is received within one year of the Effective Date and assuming
performance satisfactory to the Directors during the second and
third years, the Officer’s salary shall increase to $8,917
per month during the second year and $9,167 per month during the
third year.
(b) If Officer’s performance
meets the “Standards” set forth in Paragraph 6 of this
Agreement during the second and third years, Officer shall receive
an incentive bonus of not less than $5,000.00 at the end of the
second year, and an incentive bonus of not less than $7,500.00 at
the end of the third year.
3. Participation in Retirement
and Employee Benefit Plans; Fringe Benefits .
(a) The Officer shall be entitled to
participate in any plan relating to deferred compensation, stock
options, stock purchases, pension, thrift, profit sharing, group
life insurance, medical coverage, disability coverage, education,
or other retirement or employee benefits that the Bank has adopted,
or may, from time to time adopt, for the benefit of its executive
employees and for employees generally, subject to the eligibility
rules of such plans. The Officer shall receive at the Bank’s
expense group term life insurance equal to twice his annual base
salary, and the Officer shall also be entitled to purchase
additional insurance coverage, at Officer’s expense, up to a
minimum of $500,000 in total combined life insurance coverage. The
Officer’s participation in welfare and insurance plans shall
commence on the date of employment.
(b) The Officer shall be entitled to
three weeks vacation per year plus such sick leave that may be
reasonably established by the Board.
(c) If the Officer’s
employment is terminated without Cause, on account of a resignation
for Good Reason, or at the expiration of the term, the Officer
shall receive a cash lump sum payment equal to the amount of any
forfeited benefit in the Bank’s 401(k) plan and other
retirement plans, if such plans have been established.
(d) The Officer shall receive a
signing bonus of $15,000 to help with meals, lodging, moving
expenses and costs related to the purchase of a new residence. In
addition, the Officer shall receive reimbursement of reasonable
legal fees in connection with the negotiation and review of this
Agreement.
(e) Bank shall reimburse Officer for
use of his personal vehicle on a mileage basis until the Bank, in
its sole discretion, determines to provide Officer with an
automobile for business use.
4. Term . The Term of the
Contract shall be for one year from the Effective Date, plus an
additional two years thereafter if the Officer’s performance
meets the Standards set forth in Paragraph 6 of this Agreement, or
for 180 days after the date the Board of Directors gives the
Officer a written Notice of Termination, the date of the
Officer’s death, or the date of the Officer’s
disability. The contract shall terminate immediately upon dismissal
of the Officer for Cause in accordance with Paragraph 7 below.
Unless the Directors give notice to terminate at least 6 months
before the expiration of the term of the Agreement, the Agreement
shall automatically extend for another term of one year from the
expiration date. The Officer agrees to give his best and exclusive
(except as permitted in Paragraph 5(b) of this Agreement) services
to the Bank through the termination of the Contract. For purposes
of Paragraph 5 hereafter, the date of termination will be the last
day the Officer is an employee of the Bank, including the period
during which the Officer receives any severance pay in lieu of
salary.
5. Loyalty; Noncompetition
.
(a) The Officer shall devote his
full efforts and entire business time to the performance of his
duties and responsibilities under this Agreement.
(b) During the term of this
Agreement, or any renewals thereof, and for a period of one year
after the date of termination, the Officer agrees he will not
directly or indirectly, own, manage, operate, join, control or
participate in the management, operation or control of or be
employed by or connected in any manner with any depository
financial institution which competes with the Bank or any of its
subsidiaries, whose main office is headquartered within the Cities
of Suffolk or Chesapeake or the County of Isle of Wight, Virginia,
or at any office of a depository financial institution that is
located within 25 miles of any office of the Bank open at the
termination of this Agreement, without the prior written consent of
the Bank; provided, however, that the provisions of this Paragraph
shall not apply in the event the Officer terminates his employment
with the Bank for Good Reason (as such term is
2
defined in Paragraph 7(b) hereto). During the
term of Officer’s employment, Officer may serve as a
consultant to groups organizing new banks outside of the
Bank’s trade area; provided, however, that such consulting
services do not conflict with the Officer’s banking duties,
in the Bank’s discretion, and is not conducted during the
Bank’s operating hours.
Officer shall receive financial
assistance equal to Officer’s monthly payment or rental of a
home in Suffolk, not to exceed $1,400.00 per month, during the
period of time Officer requires to dispose of his present home.
Such financial assistance shall not exceed the lesser of nine
(9) months period of time or the period of time required for
Officer to dispose of his present home. Should Officer elect to
lease or rent his present home as an investment/income property,
financial assistance under this provision shall cease.
(c) The Officer agrees he will hold
in confidence all knowledge or information of a confidential nature
with respect to the business of the Bank or any subsidiary received
by him during the term of this Agreement and will not disclose or
make use of such information without the prior written consent of
the Bank. The Officer agrees that he will be liable to the Bank for
any damages caused by unauthorized disclosure of such information.
Upon termination of his employment, the Officer agrees to return
all records or copies thereof of the Bank or any subsidiary in his
possession or under his control which relate to the activities of
the Bank or any subsidiary.
(d) The Officer acknowledges that it
would not be possible to ascertain the amount of monetary damages
in the event of a breach by the Officer under the provisions of
this Paragraph 5. The Officer agrees that, in the event of a breach
of this Paragraph 5, injunctive relief enforcing the terms of this
Paragraph is an appropriate remedy. If the scope of any restriction
contained in this Paragraph 5 is determined to be too broad by any
court of competent jurisdiction, then such restriction shall be
enforced to the maximum extent permitted by law and the Officer
consents that the scope of this restriction may be modified
judicially.
6. Standards . The Officer
agrees to accept and shall perform his managerial duties and
responsibilities of President and Chief Executive Officer under
this Agreement in accordance with such reasonable standards
expected of employees with comparable positions in comparable
organizations and as may reasonably be established from time to
time by the Directors. The Bank will provide the Officer with the
working facilities and staff customary for similar executives and
necessary for him to perform his duties. As President and CEO, the
Officer shall have general supervision over, responsibility for and
control over the other officers, agents and employees of the Bank,
shall have the power to hire and terminate employees except the
Executive Vice President, chief internal auditor, and Ben
Wainwright, Jr., whose employment and any changes thereto must be
approved by the Board. The Officer may accept any elective or
appointed positions or offices with any duly re
