This Employment Agreement involves
Title: EMPLOYMENT AGREEMENT
Governing Law: Virginia Date: 8/24/2016
Industry: Regional Banks Sector: Financial
This Employment Agreement (the “Agreement”) is made as of August 23, 2016, by and between Union Bankshares Corporation, a Virginia corporation (the “Company”), and John C. Asbury.
The parties, intending to be legally bound, agree as follows:
1. Employment and Acceptance . You shall be employed as President of the Company and, effective as of January 2, 2017, as Chief Executive Officer of the Company on the terms and subject to the conditions of this Agreement. You shall have the duties and responsibilities that are commensurate with your position and shall also render such other managerial services as may be reasonably assigned to you from time to time by the Company, consistent with your position. You accept such employment and agree to carry out your duties and responsibilities to the best of your ability in a competent, efficient and businesslike manner. You further agree to comply with all the policies, standards and codes of conduct of the Company now or hereafter adopted. You shall also serve as a member of the Board of Directors of the Company. In accordance with the Company’s current practice, as an employee of the Company you will not be eligible for any additional fees or compensation for your service as a member of the Board of Directors.
References in this Agreement to services rendered for the Company and compensation and benefits payable or provided by the Company shall include services rendered for, and compensation and benefits payable or provided by, any Affiliate (as defined below) of the Company. Unless the context otherwise requires, references in this Agreement to the “Company” also shall mean and refer to any business entity, that, directly or indirectly through one or more intermediaries, is controlled by the Company (each, an “Affiliate”).
2. Term of Employment . The term of your employment with the Company will commence on or before October 1, 2016, (the “Commencement Date”) and will expire on December 31, 2019; provided that on January 1, 2020 and on each January 1 st thereafter (each such January 1 st is referred to as the “Renewal Date”), the term of your employment will be automatically extended for an additional calendar year. The term of your employment will not, however, be extended if the Company gives you written notice (“Nonrenewal Notice”) of such nonrenewal no later than September 30 th before the Renewal Date (the initial and any extended term of your employment is referred to as the “Employment Period”). Notwithstanding anything in this Agreement to the contrary, the Employment Period will not be automatically extended beyond, and will expire on, December 31 st of the year in which you attain age 65. The last day of the Employment Period, as extended from time to time, is sometimes referred to as the “Expiration Date.”
3. Compensation and Benefits .
(a) Base Salary . You will receive for your services an initial annual base salary of $650,000 (the “Base Salary”), which will be payable in accordance with the payroll practices of the Company applicable to all officers. The Base Salary will be reviewed annually by the Company’s Board of Directors and may be adjusted upward or downward in the sole discretion of the Company’s Board of Directors. In no event, however, will the Base Salary be less than $650,000.
(b) Short-Term and Long-Term Incentives . During the Employment Period, you may participate in such short-term and/or long-term cash and/or equity incentive plan(s) in such manner and subject to such terms and conditions as the Compensation Committee or the Board of Directors of the Company in its sole discretion may determine. Any annual cash bonus will be paid no later than two and one-half months after the end of the year for which the annual bonus is awarded. To be eligible to receive any bonus, you must be employed by the Company on the date such bonus is paid, unless you have retired in accordance with the Company’s retirement policy after the date on which you were deemed to have earned any bonus under the applicable incentive plan.
(c) Signing Bonus and Stock Awards . You will receive a cash signing bonus of $300,000 on or about the Commencement Date. In addition, you will be granted an award of restricted shares of the Company’s common stock and an award of performance share units with a combined market value of $1,050,000 as of the grant dates pursuant to the Company Stock and Incentive Plan. The award of restricted shares will have a market value of $420,000 and will vest over a three year period, with 25% of the restricted shares vesting on each of the first and second anniversaries of the grant date and 50% of the restricted shares vesting on the third anniversary of the grant date. The performance share units will have a market value of $630,000 and will vest upon the achievement of the financial metrics set forth in the performance share unit agreement which will measure the total shareholder return of the Company over a three year period relative to a selected peer group. The stock awards will be granted within thirty (30) days after the Commencement Date pursuant to the standard form agreements the Company currently uses for its stock awards.
(d) Benefits . You will be entitled to participate in and receive the benefits of any retirement benefit plan, life insurance, profit sharing, employee stock ownership, and other plans, benefits and privileges of the Company that may be in effect from time to time, to the extent you are eligible under the terms of those plans and programs. It is understood that the Board of Directors may, in its sole discretion, establish, modify or terminate such plans, programs or benefits.
(e) Business Expenses . The Company will reimburse you or otherwise provide for or pay for all reasonable expenses incurred by you in furtherance of, or in connection with, the business of the Company, including, but not by way of limitation, travel expenses, and memberships in professional organizations, subject to such reasonable documentation and other limitations as may be established by the Board of Directors of the Company. You will also be provided with an appropriate automobile and the Company will cover the costs associated with the operation of the automobile, including insurance, maintenance and fuel, as provided for in the Company’s policies. All reimbursements provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A of the Internal Revenue Code of 1986 (the “Code”) to the extent that such reimbursements are subject to Section 409A of the Code, including, where applicable, the requirements that (i) any reimbursement is for expenses incurred during your lifetime (or during a shorter period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred and (iv) the right to reimbursement is not subject to set off or liquidation or exchange for any other benefit.
(f) Paid Time Off . You will be entitled to paid time off in accordance with the Company’s paid time-off policies as in effect from time to time. Under the Company’s current policy, you will be entitled to five weeks of paid time-off annually (prorated for the first year of your employment), including vacation, sick leave and personal leave.
(g) Relocation Expenses . The Company will provide you with relocation assistance in accordance with the terms and conditions set forth in the Company’s offer letter, dated July 14, 2016, to you.
4. Termination and Termination Benefits . Notwithstanding the provisions of Section 2, your employment hereunder shall terminate under the following circumstances and shall be subject to the following provisions:
(a) Death . If you die while employed by the Company, the Company will continue to pay an amount equal to your then current Base Salary to your beneficiary designated in writing to the Company prior to your death (or to your estate, if you fail to make such designation) for six months after your death, with such payments to be made on the same periodic dates as salary payments would have been made to you had you not died. If a timely election for COBRA coverage is made, for twelve (12) months following your death your qualified dependents will receive benefits under the Company’s group health and dental plans at the same rates as immediately prior to your death, and the Company will continue to pay its portion of such health and dental premiums.
(b) Disability . Your employment may be terminated at any time because of your inability to perform the essential functions of your position with the Company on a full time basis for 180 consecutive days or a total of at least 240 days in any twelve month period as a result of your incapacity due to physical or mental illness as determined pursuant to the Company’s long-term disability policy. If you timely elect COBRA coverage, your current benefits under group health and dental plans will continue. In such case, (a) you will receive such benefits at the rates paid by active participants, and (b) for twelve (12) months the Company will continue to pay its portion of such health and dental premiums.
(c) Termination for Cause . Your employment may be terminated at any time by the Company effective immediately for Cause (as defined below) upon written notice to you setting forth in reasonable detail the nature of such Cause. If the Company terminates you for Cause, this Agreement will terminate without any further obligation of the Company to you other than to pay you any accrued but unpaid Base Salary, which shall be paid on the payroll date immediately following the date of termination, and to reimburse you for any unreimbursed expenses properly incurred by you (collectively, the “Accrued Amounts”). Only the following shall constitute “Cause” for such termination:
(i) your willful failure to perform any of the duties and responsibilities required of your position (other than by reason of your disability) or your willful failure to follow reasonable instructions or policies of the Company, after being advised in writing of such failure and being given a reasonable opportunity and period (as determined by the Board of Directors of the Company) to remedy such failure;
(ii) your breach of fiduciary duties owed to the Company or its Affiliates;
(iii) your conviction of or entering of a guilty plea or a plea of no contest with respect to a felony (or state law equivalent) or a crime of moral turpitude or your misappropriation or embezzlement of funds or property of the Company or its Affiliates;
(iv) your breach of a material term of this Agreement or violation in any material respect of any code or standard of conduct generally applicable to employees of the Company, after being advised in writing of such breach or violation and being given a reasonable opportunity and period (as determined by the Board of Directors of the Company) to remedy such breach or violation;
(v) your fraud or dishonesty with respect to Company or its Affiliates;
(vi) your willful engaging in conduct that, if it became known by any regulatory or governmental agency or the public, is reasonably likely to result, or has resulted, in material injury to the Company or its Affiliates, reputational, financial, or otherwise.
(d) Termination Without Cause and Nonrenewal of Term of Employment. The Company may terminate your employment hereunder without Cause by written notice to you effective thirty (30) says after receipt of such notice by you. In the event of your termination of employment by (i) the Company without Cause or (ii) the failure of the Company to renew the term of your employment pursuant to a Nonrenewal Notice as set forth in Section 2 of this Agreement with respect to the nonrenewal of the term of this Agreement for 2020 or 2021, you shall be entitled to the benefits specified in Section 4(g) of this Agreement, subject to your satisfaction of the requirements set forth in Section 4(g).
(e) Termination by You Without Good Reason . You may terminate your employment hereunder without Good Reason (as defined below) by written notice to the Company effective thirty (30) days after receipt of such notice by the Company. In the event you terminate your employment hereunder without Good Reason, you will be entitled to receive the Accrued Amounts as provided in Section 4(c). It shall not constitute a breach of this Agreement for the Company to suspend your duties and to place you on paid leave during the notice period.
(f) Termination by You for Good Reason . You may voluntarily terminate your employment under this Agreement at any time for Good Reason and be entitled to receive the compensation and benefits set forth in Section 4(g), subject to the satisfaction of the requirements set forth in Section 4(g). You must provide written notice to the Board of Directors of the Company of the existence of the event or condition constituting such Good Reason within ninety (90) days of the initial occurrence of the event or condition alleged to constitute Good Reason. Upon delivery of such notice by you, the Company shall have a period of thirty (30) days during which it may remedy in good faith the event or condition constituting Good Reason, and your employment shall continue in effect during such time so long as the Company is making diligent efforts to cure. In the event the Company shall remedy in good faith the event or condition constituting Good Reason, then such notice of termination shall be null and void, and the Company shall not be required to pay the amount due to you under this Section 4(f). If the Company has not remedied the event or condition constituting Good Reason during the thirty (30) day cure period and you do not terminate your employment for Good Reason within ninety (90) days thereafter, then you will deemed to have waived your right to terminate for Good Reason with respect to such grounds.
For purposes of this Agreement, Good Reason shall mean: (i) the failure by the Company to comply with the provisions of Section 3 or material breach by the Company of any other provision of this Agreement; (ii) the assignment to you, without your consent, to a position or of responsibilities and duties of a materially lesser status or degree of responsibility than your position, responsibilities, or duties at the Commencement Date; (iii) the requirement by the Company that you be based at any office that is greater than fifty miles from where your office is located at the Commencement Date; or (iv) the failure of the Company to nominate you for election to the Board of Directors of the Company and to use its best efforts to have you re-elected. Notwithstanding the above, Good Reason shall not include your removal as an officer of any Affiliate of the Company in order that you might concentrate your efforts on the Company or any resignation by you where Cause for your termination by the Company exists.
(g) Certain Termination Benefits . In the event of termination of your employment by the Company without Cause or the failure of the Company to renew the term of your employment for 2020 and 2021 pursuant to a Nonrenewal Notice as set forth in Section 2 of this Agreement, and other than for death or disability, or by you for Good Reason, you shall receive the Accrued Amounts and, provided you sign a release and waiver of claims in favor of the Company and its Affiliates and their respective officers and directors in a form provided by the Company and it becomes effective (the “Release”), the following payments and benefits.
(i) Any earned but unpaid incentive bonus with respect to any completed calendar year immediately preceding the date of termination, which shall be paid on the applicable payment date;
(ii) Subject to subsections (v) and (vii) below, for a two-year period immediately following the date of termination, the Company shall continue to pay you your Base Salary at the rate in effect on the date of termination, such payments to be made on the same periodic dates as salary payments would have been made had your employment not been terminated (the “Severance Benefit”), subject to compliance with Section 19 of this Agreement regarding the requirements of Section 409A of the Code;
(iii) The Company shall pay you a welfare continuance benefit (the “Welfare Continuance Benefit”) in an amount equal to the product of (x) the amount of the Company’s monthly contribution pursuant to its current plan, or plans, in effect as of the date of termination of employment to provide group health insurance and certain related benefits made available to similarly situated officers of the Company (for purposes of illustration only, that monthly contribution is $522 as of the date of this Agreement), times (y) twenty-four (24). The Welfare Continuance Benefit will be paid to you in a lump sum cash payment not later than thirty (30) days following the effective date of the Release, subject to compliance with Section 19 of this Agreement regarding the requirements of Section 409A of the Code.
(iv) As of the date of termination all outstanding Awards (as defined in the Company’s Stock and Incentive Plan) shall automatically vest, any unvested share units shall be deemed earned and vested, and any restrictions on any outstanding Awards shall lapse; provided, however, the terms of any separate award agreement or other governing document pursuant to which an Award is granted shall control and not be superseded by this subparagraph (iv) concerning whether the Award shall automatically vest or be deemed earned as a result of a termination of employment covered by this Section 4(g).
(v) During the twelve month period that begins on the first anniversary date of the termination of employment and ends on the second anniversary date, the Company’s obligation to continue to pay you the Severance Benefit during such second twelve month period shall terminate thirty (30) days after you obtain full-time employment with another employer that provides an annualized base salary that is at least equal to 75% of the Base Salary being paid by the Company;
(vi) During the two-year period following the date of termination, you shall provide the Company with at least ten days written notice before the starting date of any employment, identifying the prospective employer and its affiliated companies and the job description, including a description of the proposed geographic market area associated with the new position. You shall notify in writing any new employer of the existence of the restrictive covenants set forth in Section 5 of this Agreement.
(vii) The obligation of the Company to continue to pay you the Severance Benefit for the period after the Noncompete Period (as defined in Section 5(a)) has expired and prior to the completion of the twenty-four (24) month period specified in (ii) above shall cease effective upon your engaging in any conduct or activity that otherwise would have been prohibited under Section 5(a). (By way of illustration only, if you elect to engage in a Competitive Business within the Market Area (as those terms are defined in Section 5(d)) upon expiration of the one-year Noncompete Period, the Company will not be obligated to continue to pay the Severance Benefit for the remaining balance of the twenty-four (24) month period specified in (ii) above.).
The Release referenced in this Section 4(g) to be effective must be delivered by you to the Company no later than forty-five (45) days following your termination of employment and must not be revoked during the seven (7) days following such delivery. If such Release is not executed in a timely manner or is revoked, all such payments and benefits shall immediately cease and you shall be required to repay to the Company any such payments that have already been paid to you.
(h) Nonrenewal of the Employment Period After 2021 . In the event of your termination of employment following the failure of the Company to renew the term of your employment for any annual period beginning on or after January 1, 2022 pursuant to a Nonre