Exhibit 10.7

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of this 23rd day of June,
2017, is made by and between (i) Southern National Bancorp of Virginia, Inc.
(“Company”) and Sonabank (the “Bank”) (collectively, the “Employer”) and (ii)
Joe A. Shearin (the “Executive”).

 

WHEREAS, the Company and Eastern Virginia Bankshares, Inc. (“EVBS”) have entered
into an Agreement and Plan of Merger dated December 13, 2016 (the “Merger
Agreement”) whereby EVBS will merge with and into the Company (the “Merger”).

 

WHEREAS, Executive is currently employed as the President and Chief Executive
Officer of EVBS and its wholly-owned banking subsidiary, EVB.

 

WHEREAS, effective upon the closing of the Merger (the “Effective Date”), the
Company and the Bank wish to employ Executive as the President and Chief
Executive Officer (“CEO”) of the Company and the Bank, on the terms and
conditions herein contained.

 

WHEREAS, Executive wishes to accept such employment on the terms and subject to
the conditions set forth herein.

 

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, conditioned upon the closing of the Merger, the parties agree as
follows:

 

1.            Employment and Duties.

 

(a)          Executive shall be employed as President and Chief Executive
Officer of the Company and the Bank (the “Position”) on the terms and subject to
the conditions of this Agreement. Executive accepts such employment and agrees
to perform the managerial duties and responsibilities of the Position, as may be
assigned to Executive by the Board of Directors of the Company or the Bank.
Unless otherwise specified hereafter, any services performed by Executive shall
be for the benefit of the Bank and, therefore, any payments or benefits paid to
Executive pursuant to this Agreement shall be the sole responsibility of the
Bank; provided, however, the Bank’s obligation to make any payments owed to
Executive under this Agreement shall be discharged to the extent compensation
payments are made by the Company.

 

(b)          Executive shall devote his best efforts and full time to rendering
services on behalf of the Employer in furtherance of its best interests.
Executive shall comply with all policies, standards and regulations of the
Employer 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 chief executive officers of banks.

 

2.            Term. The Term (as defined below) of this Agreement is effective
as of the Effective Date and will continue through the earlier of (i) December
31, 2020 (the “Initial Term”) or (ii) the date this Agreement otherwise
terminates pursuant to Section 6 or Section 16 below; provided, however, that,
at the end of the Initial Term, if this Agreement has not been previously
terminated pursuant to Section 6 or Section 16 below, this Agreement shall be
automatically extended for a two-year term (a “Renewal Term”), commencing at the
end of the

 

 

 

 

Initial Term, unless either party gives written notice of non-renewal no later
than ninety (90) days prior to the end of the Initial Term. This Agreement shall
continue to be further extended for an additional two-year term at the end of
each Renewal Term, unless either party gives written notice of non-renewal no
later than ninety (90) days prior to the end of the applicable Renewal Term.
During the Initial Term or any Renewal Term, this Agreement may be terminated at
any time pursuant to Section 6 or Section 16 below. The term of this Agreement,
including all Renewal Terms, if any, is referred to herein as the “Term.”

 

3.            Compensation.

 

(a)          Base Salary. During the Term, the Employer shall cause Executive to
be paid an annual base salary as determined by the Company’s Board of Directors
(the “Board of Directors”) or its Compensation Committee (the “Compensation
Committee”), which total base salary shall not be less than $424,200 per year,
subject to all applicable withholdings. The base salary shall be paid in equal
installments to Executive in accordance with the Employer’s established payroll
practices (but no less frequently than monthly). The Board of Directors or a
committee thereof, in its discretion, may increase Executive’s base salary
during the Term. Without limiting the foregoing, the Compensation Committee
shall review Executive’s base salary at its first meeting immediately following
the Effective Date and may increase, but not decrease, such base salary in
connection with such review. The Employer 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 Executive and
the Employer. The Employer shall also withhold and remit to the proper party any
amounts agreed to in writing by the Employer and Executive for participation in
any corporate sponsored benefit plans for which a contribution is required.
Except as otherwise expressly set forth in this Agreement, no compensation shall
be paid pursuant to this Agreement in respect of any month or portion thereof
subsequent to any termination of Executive’s employment by the Employer.

 

(b)          Annual Bonuses. Executive shall receive only such annual bonuses as
the Board of Directors or the Compensation Committee, in its sole discretion,
decides to pay to Executive. Any such bonus shall be paid annually by March 15
of the year following the fiscal year for which performance is being evaluated.

 

(c)          Equity Awards. Executive will be eligible to receive equity awards
from the Company, in such manner and subject to such terms and conditions as the
Board of Directors or the Compensation Committee, in its sole discretion, may
determine.

 

(d)          Clawback. Executive agrees that any incentive compensation
(including both equity and cash incentive compensation) that Executive receives
from the Employer or a related entity is subject to repayment (i.e., clawback)
to the Employer or such related entity as determined by the Board of Directors
or the Compensation Committee in the event (i) of a restatement of the Company’s
or the Bank’s financial results (other than a restatement caused by a change in
applicable accounting rules or interpretations) the result of which is that the
financial statements were materially inaccurate and any incentive compensation
paid would have been a materially lower amount had it been calculated based on
such restated results or (ii) the repayment is otherwise required by applicable
federal or state law or regulation or stock exchange requirement, or by a
separate “clawback” policy, as may be adopted from time to time

 

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by the Board of Directors. Except where offset of, or recoupment from, incentive
compensation covered by Code Section 409A (as defined in Section 19 below) is
prohibited by Code Section 409A, to the extent allowed by law and as determined
by the Compensation Committee, Executive agrees that such repayment may, in the
discretion of the Compensation Committee, be accomplished by withholding of
future compensation to be paid to Executive by the Employer. Any recovery of
incentive compensation covered by Code Section 409A shall be implemented in a
manner which complies with Code Section 409A.

 

4.            Benefits.

 

(a)          Corporate Benefit Plans. Executive shall be entitled to participate
in or become a participant in any employee benefit plan maintained by the
Employer for which he is or will become eligible on such terms as the Board of
Directors or the Compensation Committee may, in its discretion, establish,
modify or otherwise change.

 

(b)          SERP. Executive shall be entitled to the benefits under the Eastern
Virginia Bankshares, Inc. Supplemental Executive Retirement Plan effective
January 1, 2008, as amended effective November 20, 2014 (the “EVBS SERP”), as
amended from time to time in accordance with its terms.

 

(c)          Personal and Sick Leave. Executive shall be entitled to the same
personal and sick leave as the Board of Directors may from time to time
designate for all full-time employees of the Employer.

 

(d)          Vacations. Executive shall be entitled to thirty (30) weekdays of
vacation leave each year, which shall be taken at such time or times as may be
approved by the Employer and during which Executive’s compensation hereunder
shall continue to be paid.

 

(e)          Club Dues. The Employer shall pay (or reimburse Executive for)
Executive’s assessment fees and membership dues at a private club selected by
Executive in Richmond, Virginia incurred during the Term. To the extent the
Employer reimburses Executive for any such fees or dues, such reimbursements
shall be made no later than the last day of the calendar month following the
calendar month in which Executive submits the request for payment of the
reimbursable expense, which shall be submitted no later than sixty (60) days
after the expense is incurred.

 

(f)          Automobile. The Employer shall provide Executive with the use of an
automobile that is appropriate for Executive’s Position during the Term and
shall pay (or reimburse Executive for) all operational expenses, including
taxes, insurance, gasoline, oil, maintenance, repairs and other similar
expenses. Executive shall be entitled to a new automobile every three (3) years
during the Term. To the extent the Employer reimburses Executive for any such
operational expenses, such reimbursements shall be made no later than the last
day of the calendar month following the calendar month in which Executive
submits the request for payment of the reimbursable expense, which shall be
submitted no later than sixty (60) days after the expense is incurred.

 

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5.            Reimbursement of Expenses. Executive shall be reimbursed upon
Executive’s incurring reasonable and customary business expenses in connection
with the performance of his duties, subject to presentation of adequate
substantiation, including receipts, for the reasonable business travel,
entertainment, lodging, and other business expenses incurred by Executive. In no
event will such reimbursements be made later than the last day of the calendar
month following the calendar month in which Executive submits the request for
payment of the reimbursable expense, which shall be submitted no later than
sixty (60) days after the expense is incurred.

 

6.            Termination of Employment.

 

(a)          Death or Incapacity. Executive’s employment under this Agreement
shall terminate automatically upon Executive’s death. Executive’s spouse, if she
survives Executive, or, if not, Executive’s estate shall receive (i) any unpaid
base salary which otherwise would be payable to Executive through the date of
termination payable in a lump sum as soon as administratively feasible following
termination, but not later than thirty (30) days thereafter; (ii) any annual
bonus compensation earned and awarded pursuant to Section 3(b) above or any
other incentive compensation for the prior fiscal year, but not yet paid as of
the date of termination, payable on the earlier of (A) the thirtieth (30th) day
after the date of termination, or (B) when otherwise due; (iii) any benefits or
awards vested, due and owing pursuant to the terms of any other plans, policies
or programs, payable when otherwise due (hereinafter subsections (i) – (iii)
collectively are referred to as the “Accrued Obligations”). Executive’s spouse,
if she survives Executive, or, if not, Executive’s estate shall also receive an
amount equal to Executive’s base salary from the date of his death through the
end of the month in which his death occurs, payable in a lump sum as soon as
administratively feasible following his death, but not later than thirty (30)
days thereafter. If the Employer determines that Incapacity (as defined below)
of Executive has occurred, it may terminate Executive’s employment and this
Agreement upon ninety (90) days’ written notice, provided that, within ninety
(90) days after receipt of such notice, Executive shall not have returned to
full-time performance of Executive’s assigned duties. In the event of a
termination due to “Incapacity,” the Employer shall pay the Accrued Obligations
to Executive. For purposes of this Agreement, “Incapacity” shall occur if (i)
Executive is unable to perform the material functions of his position for
thirteen (13) consecutive weeks and is then deemed to be permanently unable to
continue in the Position by a physician selected by the Employer or its insurer,
and acceptable to Executive or his legal representative, which consent shall not
be unreasonably withheld, or (ii) Executive is deemed disabled as defined in the
policy of disability insurance maintained by the Employer for the benefit of
Executive (and others if a group policy). Notwithstanding any other provision in
this Agreement, the Employer shall comply with all requirements of the Americans
with Disabilities Act. Further, if Executive’s employment is terminated due to
death or “Incapacity,” then no payments (other than the Accrued Obligations and
spousal death benefit described above) shall be owed or paid, including those
under Section 7(a) or Section 9(a).

 

(b)          Termination by Employer With or Without Cause. The Employer may
terminate Executive’s employment at any time during the Term of this Agreement,
with or without notice (unless otherwise required herein) and with or without
Cause. For purposes of this Agreement, “Cause” shall mean:

 

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(i)          Executive’s willful misconduct in connection with the performance
of Executive’s duties;

 

(ii)         Executive’s misappropriation or embezzlement of funds or material
property of the Employer or any affiliate;

 

(iii)        Executive’s fraud or dishonesty with respect to the Employer or any
affiliate;

 

(iv)        Executive’s failure to perform any of the material duties and
responsibilities required by the Position (other than by reason of Incapacity),
or Executive’s failure to follow reasonable instructions or policies of the
Employer, in either case after being advised in writing of such failure and
being given a reasonable opportunity and period (as determined by the Employer
in its reasonable business judgment) to remedy such failure (if such breach or
violation is capable of being remedied), which period shall be not less than
thirty (30) days;

 

(v)         Executive’s conviction of, indictment for (or the procedural
equivalent), or entering of a guilty plea or plea of no contest with respect to
any felony or any misdemeanor involving moral turpitude;

 

(vi)        Executive’s breach of a material term of this Agreement, or
violation in any material respect of any policy, code or standard of behavior
generally applicable to officers of the Company and the Bank, after being
advised in writing of such breach or violation and being given a reasonable
opportunity and period (as determined by the Employer in its reasonable business
judgment) to remedy such breach or violation (if such breach or violation is
capable of being remedied), which period shall be not less than thirty (30)
days;

 

(vii)       Executive’s willful violation of any final cease and desist order;

 

(viii)      Executive’s breach of any fiduciary duty owed to the Employer or its
affiliates; or

 

(ix)         Executive’s engaging in conduct that, if it became known by any
regulatory or governmental agency or the public, would be or is reasonably
likely to result, in the good faith judgment of the Employer, in material injury
to the Company or the Bank, monetarily or otherwise.

 

(c)           Termination by Executive for Good Reason. Executive may terminate
employment for Good Reason. For purposes of this Agreement, “Good Reason” shall
mean:

 

(i)          The assignment of duties to Executive by the Employer which result
in Executive having significantly less authority or responsibility than he has
on the Effective Date, without his express written consent;

 

(ii)         The removal of Executive from the Position or any failure to
nominate Executive for election to the Board of Directors, without his express
written consent;

 

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(iii)         Requiring Executive to maintain his principal office outside of
the Commonwealth of Virginia unless the Employer moves its principal executive
offices to the place to which Executive is required to move;

 

(iv)        A reduction by the Employer of Executive’s base salary, as the same
may have been increased from time to time;

 

(v)         The failure of the Employer to provide Executive with substantially
the same fringe benefits that are provided to him on the Effective Date;

 

(vi)        The failure of the Employer to comply with any material term of this
Agreement;

 

(vii)       The failure of the Employer to obtain the assumption of, and
agreement to perform, this Agreement by any successor as contemplated in Section
17 below; or

 

(viii)      Notice by the Employer to Executive that the Employer does not
intend to renew the Term of this Agreement for a Renewal Term upon the
expiration of the Initial Term or the then-current Renewal Term.

 

Executive is required to provide written notice to the Employer detailing the
existence of a condition described above in this Section 6(c) within a thirty
(30) day period after the initial existence of the condition, and the Employer
shall have thirty (30) days after notice to remedy the condition without
liability. In addition to the foregoing requirements, to trigger payment under
this Section 6(c), Executive must also terminate employment within ninety (90)
days after the initial occurrence of the event constituting “Good Reason” and
the Employer must have been allowed the full opportunity to cure, as set forth
above.

 

Notwithstanding the above, “Good Reason” shall not include any resignation by
Executive where Cause for Executive’s termination by the Employer exists under
Section 6(b), or there is an isolated, insubstantial or inadvertent action by
the Employer (provided that such action is remedied by the Employer after
written notice by Executive); and shall not include any action by the Employer
taken before the Effective Date of this Agreement.

 

(d)          Other. Executive’s employment hereunder may be terminated
voluntarily by Executive upon ninety (90) days’ written notice to the Employer
or at any time by mutual agreement in writing. In the event of such voluntary
termination notice by Executive, the Employer may terminate Executive’s
employment prior to the expiration of the notice period without incurring any
liability under Section 7, and the Employer shall be required only to pay
Executive’s base salary through the balance of the notice period (with such
payments to be made in accordance with the Employer’s established payroll
practices (but no less frequently than monthly)), not to exceed ninety (90)
days, plus any Accrued Obligation (as defined Section 6(a)).

 

7.            Obligations Upon Termination.

 

(a)           Without Cause or for Good Reason. If either the Employer
terminates Executive’s employment without Cause (including termination of
employment upon the expiration or non-renewal of this Agreement at the end of
the Initial Term or any Renewal Term)

 

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or Executive terminates his employment for Good Reason, Executive shall be
entitled to receive, subject to any applicable delay set forth in Section 19
below:

 

(i)           The Accrued Obligations (as defined in Section 6(a));

 

(ii)         Subject to Executive's signing, delivering and not revoking the
Release attached as Exhibit A, which Release must be signed, delivered and not
revoked within the period set forth in the Release:

 

(A)        Payment of a monthly amount equal to one-twelfth (1/12) his rate of
annual base salary in effect immediately preceding such termination for
thirty-six (36) months beginning upon his termination of employment, with such
payments to be made in accordance with the Employer’s established payroll
practices (but no less frequently than monthly) (the “Severance Benefit”);

 

(B)        For thirty-six (36) months after the date of termination, Executive
shall receive coverage under all employee health insurance programs or plans
(medical, dental and vision) (“Health Care Plans”) in which Executive and/or his
spouse and any of his dependents were entitled to participate immediately prior
to such termination, with the Employer paying the full monthly cost of the
premium therefor (the “Heath Care Continuance Benefit”), provided that the
continued participation of Executive and/or his spouse and any of his dependents
is possible under the general terms and provisions of the Health Care Plans. If
the Employer cannot maintain such coverage for Executive or his spouse or
dependents under the terms and provisions of the Health Care Plans (or where
such continuation would adversely affect the tax status of the Health Care Plans
pursuant to which the coverage is provided), the Employer shall provide the
Health Care Continuance Benefit by either providing substantially identical
benefits directly or through an insurance arrangement or by paying Executive the
estimated cost of the expected premium for thirty-six (36) months after the date
of termination with such payments to be made in accordance with the Employer’s
established payroll practices (but no less frequently than monthly) for
employees generally for the period during which such cash payments are to be
provided. To the extent allowed by applicable law, the 36-month Health Care
Continuance Benefit period shall run concurrently with the period for which
Executive and/or his spouse and any of his dependents would be eligible for
continuation coverage under the Consolidated Omnibus Reconciliation Act of 1985
(the “COBRA Period”), although the 36-month Health Care Continuance Benefit
period will continue to run after the COBRA Period has ended;

 

(C)         Complete out-placement services, including job search services, paid
by the Employer up to a total of Ten Thousand Dollars ($10,000.00). The services
will be provided by a recognized out-placement organization selected by
Executive with the approval of the Employer (which approval will not be
unreasonably withheld). The services will be provided for up to two (2) years
after the date Executive’s employment by the Employer terminates (“Outplacement
Services”); and

 

(D)        An additional amount, payable in a lump sum on the date of
termination, equal to the average of the annual bonus compensation pursuant to
Section 3(b) above earned by Executive for the three (3) immediately preceding
complete fiscal years or such fewer number of complete fiscal years as Executive
may have been employed by the Employer. For the

 

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avoidance of any doubt, if the Employer makes a determination to award no annual
bonus compensation to Executive for a year, such determination shall be
considered to result in a bonus award of Zero Dollars ($0.00) and that shall be
the amount used in calculating the average of the annual bonus compensation for
purposes of this Section 7(a)(ii)(D).

 

Notwithstanding the foregoing, and in addition to the Employer’s remedies set
forth in Section 7(f), all such payments and benefits under Section 7(a)
otherwise to be made after Executive’s termination of employment shall cease to
be paid, and the Employer shall have no further obligation with respect thereto,
in the event Executive, without the consent of the Employer, engages in any
activity prohibited in Section 7 or any of its sub-parts.

 

(b)          Non-Competition. In consideration for the Employer’s entering into
this Agreement and in exchange for the benefits promised herein, and other
valuable consideration, Executive agrees that Executive will not engage in
“Competition” for a period of twelve (12) months after Executive’s employment
with the Employer ceases for any reason, including termination of employment
upon the expiration or non-renewal of this Agreement at the end of the Initial
Term or any Renewal Term. For purposes hereof, “Competition” means Executive’s
performing duties that are the same as or substantially similar to those duties
performed by Executive for the Company or the Bank or its affiliates during the
twelve (12) months prior to the cessation of Executive’s employment, as an
officer, a director, an employee, a partner or in any other capacity, within a
twenty-five (25) mile radius of the headquarters of the Company and the
headquarters of the Bank (or any Virginia headquarters of any successor of any
of them in the event of a merger consummated as of the last day of employment),
as such locations exist as of the date Executive’s employment ceases, if those
duties are performed for a bank holding company of, or for, a bank or other
financial institution that provides products or services that are the same as or
substantially similar to, and competitive with, any of the products or services
provided by the Bank at the time Executive’s employment ceases.

 

(c)          Non-Piracy. In consideration for the Employer’s entering into this
Agreement and in exchange for the benefits promised herein, and other valuable
consideration, Executive agrees that for a period of twelve (12) months after
Executive’s employment ceases for any reason, including termination of
employment upon the expiration or non-renewal of this Agreement at the end of
the Initial Term or any Renewal Term, Executive will not, directly or
indirectly, solicit, divert from the Bank or transact business with any
“Customers” of the Bank with whom Executive had “Material Contact” during the
last twelve (12) months of Executive’s employment or about whom Executive
obtained information not known generally to the public while acting within the
scope of his employment during the last twelve (12) months of employment, if the
purpose of such solicitation, diversion or transaction is to provide products or
services that are the same as or substantially similar to, and competitive with,
those offered by the Bank at the time Executive’s employment ceases. “Material
Contact” means that Executive personally communicated with the Customer, either
orally or in writing, for the purpose of providing, offering to provide or
assisting in providing products or services of the Bank during the last twelve
(12) months of Executive’s employment. “Customer” means any person or entity
with whom the Bank had a depository or other contractual relationship, pursuant
to which the Bank provided products or services within twelve (12) months prior
to the cessation of Executive’s employment.

 

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(d)          Non-Solicitation. In consideration for the Employer’s entering into
this Agreement and in exchange for the benefits promised herein, and other
valuable consideration, Executive agrees that for a period of twelve (12) months
after employment ceases for any reason, including termination of employment upon
the expiration or non-renewal of this Agreement at the end of the Initial Term
or any Renewal Term, Executive will not, directly or indirectly, hire any person
employed by the Employer or solicit for hire or induce any person to terminate
employment with the Employer, if the purpose is to compete with the Employer.
The parties agree that Executive will not be in violation of this sub-paragraph
(d) if he has no personal involvement, directly or indirectly, in the hiring,
solicitation or inducement of the Employer’s employee(s), as referenced above.

 

(e)           For Cause; Other Than for Good Reason. If Executive’s employment
is terminated for Cause or if Executive voluntarily terminates his employment
other than for Good Reason, this Agreement shall terminate without any further
obligation of the Employer to Executive other than the payment to Executive of
the Accrued Obligations and as provided in Section 6(d) above.

 

(f)           Remedies. Executive acknowledges that the covenants set forth in
Sections 7 and 8 of this Agreement are just, reasonable, and necessary to
protect the legitimate business interests of the Employer. Executive further
acknowledges that if Executive breaches or threatens to breach any provision of
Sections 7 and 8, the Employer’s remedies at law will be inadequate, and the
Employer will be irreparably harmed. Accordingly, the Employer shall be entitled
to an injunction, both preliminary and permanent, restraining Executive from
such breach or threatened breach, such injunctive relief not to preclude the
Employer from pursuing all available legal and equitable remedies, and being
entitled to all reasonable attorney’s fees and costs incurred in connection with
the breach, threatened breach, or any challenge to the enforceability of
Sections 7 or 8.

 

8.            Confidentiality. As an employee of the Employer, Executive will
have access to and may participate in the origination of non-public, proprietary
and confidential information relating to the Company and the Bank and/or their
affiliates and Executive acknowledges a fiduciary duty owed to the Employer and
its affiliates not to disclose any such information. Confidential information
may include, but is not limited to, trade secrets, customer lists and
information, internal corporate planning, methods of marketing and operation,
and other data or information of or concerning the Employer and its affiliates
or their customers that is not generally known to the public or generally in the
banking industry. Executive agrees that for a period of five (5) years following
the cessation of employment, Executive will not use or disclose to any third
party any such confidential information, either directly or indirectly, except
as may be authorized in writing specifically by the Employer; provided, however
that to the extent the information covered by this Section 8 is otherwise
protected by the law, such as “trade secrets,” as defined by the Virginia
Uniform Trade Secrets Act, or customer information protected by banking privacy
laws, that information shall not be disclosed or used for however long the legal
protections applicable to such information remain in effect.

 

Nothing in this Agreement restricts or prohibits Executive or Executive’s
counsel from initiating communications directly with, responding to any inquiry
from, volunteering information to, or providing testimony before a
self-regulatory authority or a governmental, law

 

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enforcement or other regulatory authority, including the U.S. Equal Employment
Opportunity Commission, the Department of Labor, the National Labor Relations
Board, the Department of Justice, the Securities and Exchange Commission, the
Financial Industry Regulatory Authority, the Congress, and any Office of
Inspector General (collectively, the “Regulators”), from participating in any
reporting of, investigation into, or proceeding regarding suspected violations
of law, or from making other disclosures that are protected under or from
receiving an award for information provided under the whistleblower provisions
of state or federal law or regulation.  Executive does not need the prior
authorization of the Company to engage in such communications with the
Regulators, respond to such inquiries from the Regulators, provide confidential
information or documents containing confidential information to the Regulators,
or make any such reports or disclosures to the Regulators.  Executive is not
required to notify the Employer that Executive has engaged in such
communications with the Regulators. Executive recognizes and agrees that, in
connection with any such activity outlined above, Executive must inform the
Regulators that the information Executive is providing is confidential.

 

Federal law provides certain protections to individuals who disclose a trade
secret to their attorney, a court, or a government official in certain,
confidential circumstances.  Specifically, federal law provides that an
individual shall not be held criminally or civilly liable under any federal or
state trade secret law for the disclosure of a trade secret under either of the
following conditions:

 

·Where the disclosure is made (a) in confidence to a federal, state or local
government official, either directly or indirectly, or to an attorney; and (b)
solely for the purpose of reporting or investigating a suspected violation of
law; or

 

·Where the disclosure is made in a complaint or other document filed in a
lawsuit or other proceeding, if such filing is made under seal. 

 

Federal law also provides that an individual who files a lawsuit for retaliation
by an employer for reporting a suspected violation of law may disclose the trade
secret to the attorney of the individual and use the trade secret information in
the court proceeding, if the individual (a) files any document containing the
trade secret under seal; and (b) does not disclose the trade secret, except
pursuant to court order. 

 

9.          Termination After Change of Control.

 

(a)          Without Cause or for Good Reason. If Executive’s employment is
involuntarily terminated without Cause within one (1) year after a Change of
Control (as defined below) shall have occurred or if Executive resigns for Good
Reason within one (1) year after a Change of Control shall have occurred,
Executive shall be entitled to receive, subject to any applicable delay set
forth in Section 19 below:

 

(i)          The Accrued Obligations (as defined in Section 6(a));

 

(ii)         Subject to Executive's signing, delivering and not revoking the
Release attached as Exhibit A, which Release must be signed, delivered and not
revoked within the period set forth in the Release:

 

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(A)         The Severance Benefit (as defined in Section 7(a)(ii)(A));

 

(B)         The Heath Care Continuance Benefit (as defined in Section
7(a)(ii)(B));

 

(C)         The Outplacement Services (as defined in Section 7(a)(ii)(C)); and

 

(D)         An additional amount, payable in a lump sum on the date of
termination, equal to three (3) times the highest annual bonus compensation
pursuant to Section 3(b) above earned by Executive for the three (3) immediately
preceding complete fiscal years or such fewer number of complete fiscal years as
Executive may have been employed by the Employer. For the avoidance of any
doubt, if the Employer makes a determination to award no annual bonus
compensation to Executive for the three (3) immediately preceding complete
fiscal years or such fewer number of complete fiscal years as Executive may have
been employed by the Employer, then no amount is payable under this Section
9(a)(ii)(D).

 

(b)           Covenants Cease to Apply. Notwithstanding any other provision in
this Agreement, Executive’s obligations under Section 7(b), Section 7(c) and
Section 7(d) above shall not apply (i) for the one (1) year period beginning on
the Effective Date, and (ii) following a Change of Control that occurs after the
Effective Date.

 

(c)           Modified Cutback of Compensation Deemed to be Contingent on a
Change of Control. If any benefits or payments are to be made under the terms of
this Agreement or any other agreement between Executive and the Employer
following a transaction that constitutes a change in the ownership or effective
control of the Employer or in the ownership of a substantial portion of the
assets of the Employer such that the provisions of Section 280G of the Internal
Revenue Code of 1986, as amended, and any regulations thereunder (“Code Section
280G”) or Section 4999 of the Internal Revenue Code and any regulations
thereunder could potentially apply to such compensation, then the following
provisions shall be applicable:

 

(i)           In the event the independent accountants serving as auditors for
the Employer on the date of a change of control within the meaning of Code
Section 280G (or any other accounting firm designated by the Employer) determine
that some or all of the payments or benefits scheduled under this Agreement, as
well as any other payments or benefits on such change of control, would be
nondeductible by the Employer under Code Section 280G, then the payments
scheduled under this Agreement and all other agreements between Executive and
the Employer will be reduced to one dollar less than the maximum amount which
may be paid without causing any such payment or benefit to be nondeductible. Any
reduction of benefits or payments required to be made under this Section 9(c)(i)
shall be taken in the following order: first from cash compensation and then
from payments or benefits not payable in cash, in each case in reverse order
beginning with payments or benefits which are to be paid the farthest in time
from the date of determination.

 

(ii)          Notwithstanding the foregoing Section 9(c)(i), in the event the
independent accountants serving as auditors for the Employer on the date of a
change of control within the meaning of Code Section 280G (or any other
accounting firm designated by the Employer) determine that the net economic
benefit to Executive after

 

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payment of all income and excise taxes is greater without giving effect to
Section 9(c)(i) than Executive’s net economic benefit after a reduction by
reason of the application of Section 9(c)(i), then Section 9(c)(i) shall be a
nullity and without any force or effect. Any decisions regarding the requirement
or implementation of the reductions to compensation described in Section 9(c)(i)
shall be made by the independent accountants serving as auditors for the
Employer on the date of a change of control within the meaning of Code Section
280G (or any other accounting firm designated by the Employer), shall be made at
the Employer’s expense and shall be binding on the parties.

 

(d)          Superseding Provisions. The benefits and payments set forth in
Section 9(a) that may be due in connection with a Change of Control shall
supersede all payments, entitlements and benefits of Executive otherwise payable
under Section 7(a). The benefits and payments due under Section 9(a) replace
those in Section 7(a), and are not cumulative thereof.

 

(e)          For Cause; Other Than for Good Reason. If Executive’s employment is
terminated for Cause or if Executive voluntarily terminates his employment other
than for Good Reason, within one (1) year after a Change of Control, this
Agreement shall terminate without any further obligation of the Employer to
Executive other than the payment to Executive of the Accrued Obligations.

 

10.          Change of Control Defined. For purposes of this Agreement, a
“Change of Control” occurs if (a) any person, including persons acting as a
group, as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
becomes the owner or beneficial owner of securities of the Company having fifty
percent (50%) or more of the combined voting power of the then outstanding
securities of the Company that may be cast for the election of the Company’s
directors other than a result of an issuance of securities initiated by the
Company, or open market purchases approved by the Board of Directors, as long as
the majority of the Board of Directors approving the purchases constitutes a
majority of the Board of Directors at the time the purchases are made; (b)
during any twelve-month period, as the direct or indirect result of, or in
connection with, a tender or exchange offer, a merger or other business
combination, a sale of assets, a contested election of directors, or any
combination of these events, the persons who were directors of the Company
before such events cease to constitute a majority of the Board of Directors or
any successor’s board, as applicable. For purposes of this Agreement, a Change
of Control occurs on the date on which an event described in (a) – (b) occurs.
If a Change of Control occurs on account of a series of transactions or events,
the Change of Control occurs on the date of the last of such transactions or
events. The above definition of Change of Control is intended to, and shall be
interpreted in a manner as to, comply with the requirements of Code Section
409A. For the avoidance of any doubt, for all purposes under this Agreement
except as specifically provided otherwise in Section 9(b), a Change of Control
shall include the Merger or any related transaction.

 

11.          Documents. All documents, records, tapes and other media of any
kind or description relating to the business of the Employer or any of its
affiliates or subsidiaries (the “Documents”), whether or not prepared by
Executive, shall be the sole and exclusive property of the Employer. The
Documents (and any copies) shall be returned to the Employer upon

 

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Executive’s termination of employment for any reason or at such earlier time or
times as the Board of Directors of the Company or the Bank or its designee may
specify.

 

12.          Suspension or Temporary Prohibition of Services; Permanent
Prohibition of Services. If Executive is suspended and/or temporarily prohibited
from participating in the conduct of the Employer’s affairs by a notice served
pursuant to the Federal Deposit Insurance Act, the Employer’s obligations under
this Agreement shall be suspended as of the date of service unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
Employer may in its discretion (a) pay Executive all or part of the compensation
withheld while its contract obligations were suspended, and (b) reinstate (in
whole or in part) any of its obligations which were suspended. If Executive is
removed and/or permanently prohibited from participating in the conduct of the
Employer’s affairs by an order issued under the Federal Deposit Insurance Act or
the Code of Virginia, all obligations of the Employer under this Agreement shall
terminate as of the effective date of the order, but vested rights of the
parties shall not be affected.

 

13.          Severability. If any provision of this Agreement, or part thereof,
is determined to be unenforceable for any reason whatsoever, it shall be
severable from the remainder of this Agreement and shall not invalidate or
affect the other provisions of this Agreement, which shall remain in full force
and effect and shall be enforceable according to their terms. No covenant shall
be dependent upon any other covenant or provision herein, each of which stands
independently.

 

14.          Governing Law/Venue. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia. The
parties further agree that venue in the event of a dispute shall be exclusively
in the Circuit Court of Henrico, Virginia, or the applicable federal court
encompassing that jurisdiction, at the sole option of the Employer, and
Executive agrees not to object to venue.

 

15.          Notices. All written notices required by this Agreement shall be
deemed given when delivered personally or sent by registered or certified mail,
return receipt requested, to the parties at the following addresses (or to such
other address as the party entitled to notice shall hereafter designate in
accordance with the terms hereof):

 

To the Employer: Chairman of the Board of Directors   Southern National Bancorp
of Virginia, Inc.   6830 Old Dominion Drive   McLean, Virginia 22101     To
Executive: Joe A. Shearin   At your home address as shown on the records of the
Employer.

 

16.          Amendment and Termination of Agreement. This Agreement may not be
varied, altered, modified or in any way amended except by an instrument in
writing executed by the parties hereto or their legal representatives. Except as
specifically set forth herein, including pursuant to the provisions of Section 6
above, this Agreement may not be terminated except by an instrument in writing
executed by the parties hereto or their legal representatives, provided,

 

13 

 

 

however, and notwithstanding anything in this Agreement to the contrary, the
Employer or its successor has the unilateral right to terminate this Agreement
and pay out the full value of all benefits hereunder in one lump sum payment in
connection with a Change of Control pursuant to, and in compliance with,
Treasury Regulation § 1.409A-3(j)(4)(ix)(B).

 

17.          Binding Effect. This Agreement shall be binding upon Executive and
on the Employer, its successors and assigns on the Effective Date, subject to
the approval by the Boards of Directors of the Company and the Bank. The
Employer will require any successor to all or substantially all of the business,
stock or assets of the Employer to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Employer would be
required to perform it if no such succession had taken place. Failure of the
Employer to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement by the Employer. This Agreement
shall be freely assignable by the Employer.

 

18.          No Construction Against Any Party. This Agreement is the product of
informed negotiations between Executive and the Employer. If any part of this
Agreement is deemed to be unclear or ambiguous, it shall be construed as if it
were drafted jointly by all parties. Executive and the Employer agree that
neither party was in a superior bargaining position regarding the substantive
terms of this Agreement.

 

19.          Code Section 409A Compliance.

 

(a)          The intent of the parties is that payments and benefits under this
Agreement comply with Section 409A of the Internal Revenue Code of 1986, as
amended, and applicable guidance thereunder (“Code Section 409A”) or comply with
an exemption from the application of Code Section 409A and, accordingly, all
provisions of this Agreement shall be construed in a manner consistent with the
requirements for avoiding taxes or penalties under Code Section 409A.

 

(b)          A termination of employment shall not be deemed to have occurred
for purposes of any provision of this Agreement providing for the form or timing
of payment of any amounts or benefits upon or following a termination of
employment unless such termination is also a “separation from service” (within
the meaning of Code Section 409A) and, for purposes of any such provision of
this Agreement under which (and to the extent) deferred compensation subject to
Code Section 409A is paid, references to a “termination” or “termination of
employment” or like references shall mean separation from service. A “separation
from service” shall not occur under Code Section 409A unless such Executive has
completely severed Executive’s relationship with the Employer or Executive has
permanently decreased Executive’s services to twenty percent (20%) or less of
the average level of bona fide services over the immediately preceding
thirty-six (36) month period (or the full period if Executive has been providing
services for less than thirty-six (36) months). A leave of absence shall only
trigger a termination of employment that constitutes a separation from service
at the time required under Code Section 409A. If Executive is deemed on the date
of separation from service with the Employer to be a “specified employee”,
within the meaning of that term under Code Section 409A(a)(2)(B) and using the
identification methodology selected by the Employer from time to time, or if
none, the default methodology, then with regard to any payment or benefit that
is required to be delayed for six (6) months in compliance with Code Section
409A(a)(2)(B), such

 

14 

 

 

payment or benefit shall be paid with interest on the earlier of (i) the first
day of the seventh (7th) month measured from the date of Executive’s separation
from service or (ii) the date of Executive’s death. The amount of interest to be
paid shall be based on the prime rate of interest in effect on the first day of
the month following the Executive's separation from service as reported in the
Wall Street Journal. In the case of benefits required to be delayed under Code
Section 409A, however, Executive may pay the cost of benefit coverage, and
thereby obtain benefits, during such six (6) month delay period and then be
reimbursed by the Employer thereafter on the first day of the seventh (7th)
month following the date of Executive’s separation from service or, if earlier,
on the date of Executive’s death.

 

(c)          With regard to any provision herein that provides for reimbursement
of expenses or in-kind benefits subject to Code Section 409A, except as
permitted by Code Section 409A, (i) the right to reimbursement or in-kind
benefits is not subject to liquidation or exchange for another benefit, and (ii)
the amount of expenses eligible for reimbursement, or in-kind benefits, provided
during any taxable year shall not affect the expenses eligible for
reimbursement, or in-kind benefits to be provided, in any other taxable year,
provided that the foregoing clause (ii) shall not be violated with regard to
expenses reimbursed under any arrangement covered by Code Section 105(b) solely
because such expenses are subject to a limit related to the period the
arrangement is in effect. All reimbursements shall be reimbursed in accordance
with the Employer’s reimbursement policies but in no event later than the
calendar year following the calendar year in which the related expense is
incurred.

 

(d)          When, if ever, a payment under this Agreement specifies a payment
period with reference to a number of days (e.g., “payment shall be made within
ten (10) days following the date of termination”), the actual date of payment
within the specified period shall be within the sole discretion of the Employer.

 

(e)          Notwithstanding any other provision of this Agreement, Executive
shall be solely liable, and the Employer shall not be liable in any way to
Executive if any payment or benefit which is to be provided pursuant to this
Agreement and which is considered deferred compensation subject to Code Section
409A otherwise fails to comply with, or be exempt from, the requirements of Code
Section 409A.

 

20.          Regulatory Limitation. Notwithstanding any other provision of this
Agreement, neither the Employer nor any subsidiary shall be obligated to make,
and Executive shall have no right to receive, any payment, benefit or amount
under this Agreement that would violate any law, regulation or regulatory order
applicable to the Employer or the subsidiary at the time such payment is due,
including without limitation, any regulation or order of the Federal Deposit
Insurance Corporation or the Board of Governors of the Federal Reserve System.
Executive agrees that compliance by the Employer with such regulatory
restrictions, even to the extent that compensation or other benefits paid to
Executive are limited, shall not be a breach of this Agreement by the Employer.

 

21.          Waiver of Breach.  The failure at any time to enforce or exercise
any right under any of the provisions of this Agreement or to require at any
time performance by the other parties of any of the provisions of this Agreement
shall in no way be construed to be a waiver of such provisions or to affect
either the validity of this Agreement or any part of this Agreement,

 

15 

 

 

or the right of any party hereafter to enforce or exercise its rights under each
and every provision in accordance with the terms of this Agreement.

 

22.          No Attachment.  Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to
execution, attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect; provided, however, that nothing in this
Section 22 shall preclude the assumption of such rights by executors,
administrators or other legal representatives of Executive or Executive’s estate
and their assigning any rights under this Agreement to the person or persons
entitled hereto.

 

23.          Full Capacity.  The persons signing this Agreement represent that
they have full authority and representative capacity to execute this Agreement
in the capacities indicated below and to perform all obligations under this
Agreement.

 

24.          Representation and Warranty of Executive.  Executive represents and
warrants to the Employer that Executive is not under any obligation, contractual
or otherwise, to any other firm or corporation, which would prevent Executive
from entering into the employ of the Employer under this Agreement or prevent
Executive from performing the terms of this Agreement.

 

25.          Entire Agreement. Except as otherwise provided herein, this
Agreement constitutes the entire agreement of the parties with respect to the
matters addressed herein and, upon the Effective Date, it supersedes all other
prior agreements and understandings, both written and oral, express or implied,
with respect to the subject matter of this Agreement, including but not limited
to Executive’s Amended and Restated Employment Agreement, effective January 1,
2008, as amended, effective March 19, 2015 (the “Prior Agreement”). Executive
expressly waives all rights and entitlements, if any, under the Prior Agreement,
including but not limited to any rights under Section 14 thereunder. Provided,
however, nothing herein is intended to, or does, waive any restricted stock
award granted to Executive prior to the closing of the Merger, vested or
unvested, in effect prior to the execution of this Agreement, or Executive's
rights under the EVBS SERP or any successor thereto.

 

26.          Survivability. The provisions of Section 7 and 8 shall survive the
termination, expiration or non-renewal of this Agreement.

 

27.          Counterparts/Facsimile. This Agreement may be executed in
counterparts (including by facsimile), each of which shall be deemed an original
and all of which together shall constitute one and the same instrument.

 

28.          Case and Gender. Wherever required by the context of this
Agreement, the singular or plural case and the masculine, feminine and neuter
genders shall be interchangeable.

 

29.          Title. The titles and sub-headings of each Section and Sub-Section
in this Agreement are for convenience only and should not be considered part of
this Agreement to aid in interpretation or construction.

 

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[Signature Block on Next Page]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

  SOUTHERN NATIONAL BANCORP OF VIRGINIA, INC.           /s/ Georgia S. Derrico  
By: Georgia S. Derrico   Its: Chairman of the Board of Directors and Chief
Executive Officer         SONABANK           /s/ Georgia S. Derrico   By:
Georgia S. Derrico   Its: Chairman of the Board of Directors and Chief Executive
Officer         JOE A. SHEARIN         /s/ Joe A. Shearin

 

[Shearin Employment Agreement]

 

18 

 

 

EXHIBIT A

 

RELEASE

 

In consideration of the benefits promised in the Employment Agreement to which
this Release is attached as Exhibit A (and further defined below), Joe A.
Shearin (“Executive”), hereby irrevocably and unconditionally releases, acquits,
and forever discharges Southern National Bancorp of Virginia, Inc. and Sonabank,
and each of their agents, directors, members, shareholders, affiliated entities,
officers, employees, former employees, attorneys, and all persons acting by,
through, under or in concert with any of them (collectively “Releasees”) from
any and all charges, complaints, claims, liabilities, grievances, obligations,
promises, agreements, controversies, damages, policies, actions, causes of
action, suits, rights, demands, costs, losses, debts and expenses of any nature
whatsoever, known or unknown, suspected or unsuspected, including, but not
limited to, any rights arising out of alleged violations or breaches of any
contracts, express or implied, or any tort, or any legal restrictions on
Releasees’ right to terminate employees, or any federal, state or other
governmental statute, regulation, law or ordinance, including without limitation
(1) Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights
Act of 1991; (2) the Americans with Disabilities Act; (3) 42 U.S.C. § 1981; (4)
the federal Age Discrimination in Employment Act (age discrimination); (5) the
Older Workers Benefit Protection Act; (6) the Equal Pay Act; (7) the Family and
Medical Leave Act; and (8) the Employee Retirement Income Security Act (“ERISA”)
(“Claim” or “Claims”), which Executive now has, owns or holds, or claims to
have, own or hold, or which Executive at any time heretofore had owned or held,
or claimed to have owned or held, against each or any of the Releasees at any
time up to and including the date of the execution of this Release.

 

Executive hereby acknowledges and agrees that the execution of this Release and
the cessation of Executive’s employment and all actions taken in connection
therewith are in compliance with the federal Age Discrimination in Employment
Act and the Older Workers Benefit Protection Act and that the releases set forth
above shall be applicable, without limitation, to any claims brought under these
Acts. Executive further acknowledges and agrees that:

 

a.           The Release given by Executive is given solely in exchange for the
benefits set forth in the Employment Agreement dated as of June 23, 2017 between
Southern National Bancorp of Virginia, Inc., Sonabank and Executive (the
“Employment Agreement”) to which this Release was initially attached and such
consideration is in addition to anything of value which Executive was entitled
to receive prior to entering into this Release;

 

b.           By entering into this Release, Executive does not waive rights or
claims that may arise after the date this Release is executed;

 

c.           Executive has been advised to consult an attorney prior to entering
into this Release, and this provision of the Release satisfies the requirements
of the Older Workers Benefit Protection Act that Executive be so advised in
writing;

 

19 

 

 

d.           Executive has been offered twenty-one (21) days [or 45 days if
applicable] from receipt of this Release within which to consider whether to
sign this Release; and

 

e.           For a period of seven (7) days following Executive’s execution of
this Release, Executive may revoke this Release by delivering the revocation to
a Sonabank officer and it shall not become effective or enforceable until such
seven (7) day period has expired.

 

This Release shall be binding upon the heirs and personal representatives of
Executive and shall inure to the benefit of the successors and assigns of
Southern National Bancorp of Virginia, Inc. and Sonabank.

 

      Date   JOE A. SHEARIN

  

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