Exhibit 10.2

 

CHANGE-IN-CONTROL SEVERANCE AGREEMENT

 

This CHANGE-IN-CONTROL SEVERANCE AGREEMENT (this “Agreement”) is made and
entered into this 29th day of October, 2018 by and by and between (i) Southern
National Bancorp of Virginia, Inc. (the “Company”) and Sonabank (the “Bank”)
(collectively, the Company and the Bank shall be referred to as the “Employer”),
and Jeffrey L. Karafa (“Employee”), to be effective as of October 29, 2018 (the
“Effective Date”).

 

BACKGROUND

 

WHEREAS, Employee is currently serving as the Chief Financial Officer of the
Employer; and

 

WHEREAS, the Employer desires to promote the retention of Employee by offering
certain protections in the event his employment is involuntarily terminated
under certain circumstances in connection with a Change in Control (as defined
herein).

 

NOW, THEREFORE, in consideration of the payments, consents and acknowledgements
described below, in consideration of Employee’s employment with the Employer,
and in consideration of other good and valuable consideration, the receipt and
sufficiency of all of which is hereby acknowledged, the parties agree as
follows:

 

1.       Term of Agreement. This Agreement shall terminate (subject to the
survival of Section 6 hereof) on the earliest of (i) if Employee is entitled to
benefits under Section 3 hereof and complies with the terms thereof, the date
that the Employer satisfies its obligations pursuant to Section 3 hereof; (ii)
the date of Employee’s termination of employment with the Employer for any
reason other than a Qualifying Termination; or (iii) the first anniversary of a
Change in Control.

 

2.       Employment At-Will. Employee shall continue to be employed at-will and
for no definite term. This means that either party may terminate the employment
relationship at any time for any or no reason.

 

3.       Termination of Employment due to a Qualifying Termination. In the event
of Employee’s Qualifying Termination, Employer shall pay to Employee in a lump
sum in cash within thirty (30) days after the date of termination, Employee’s
Base Salary and any earned but unused paid-time off, in each case through the
date of termination to the extent not theretofore paid (the “Accrued Benefits”)
and the following severance benefits (the benefits provided in Section 3(a)(i),
(ii) and (iii) being collectively referred to as the “Severance Benefits”):

 

(i) the Employer shall pay to Employee an amount equal to one and one-quarter
(1¼) times Employee’s annual base salary at the rate in effect immediately prior
to the Qualifying Termination, payable during the 15-month period immediately
following Employee’s date of termination in approximately equal installments in
accordance with the Bank’s regular payroll practices, commencing with the first
regular payroll date to occur after the sixtieth (60th) day after the date of
termination; provided that the first such payment shall consist of all amounts
payable to Employee pursuant to this Section 3(a)(i) between the date of
termination and the first payroll date to occur after the sixtieth (60th) day
following the date of termination;

 

(ii) if Employee elects to continue participation in any group medical, dental,
vision and/or prescription drug plan benefits to which Employee and/or
Employee’s eligible dependents would be entitled under Section 4980B of the Code
(COBRA), then for the 15-month period following Employee’s date of termination
(the “Group Health Benefits Continuation Period”), the Employer shall pay the
excess of (1) the COBRA cost of such coverage over (2) the amount that Employee
would have had to pay for such coverage if he had remained employed during the
Group Health Benefits Continuation Period and paid the active employee rate for
such coverage, provided, however, that (A) if Employee becomes eligible to
receive group health benefits under a program of a subsequent employer or
otherwise, the Employer’s obligation to pay any portion of the cost of health
coverage as described herein shall cease, except as otherwise provided by law;
(B) the Group Health Benefits Continuation Period shall run concurrently with
any period for which Employee is eligible to elect health coverage under COBRA;
(C) during the Group Health Benefits Continuation Period, the benefits provided
in any one calendar year shall not affect the amount of benefits provided in any
other calendar year (other than the effect of any overall coverage benefits
under the applicable plans); (D) the reimbursement of an eligible taxable
expense shall be made as soon as practicable but not later than December 31 of
the year following the year in which the expense was incurred; and (E)
Employee’s rights pursuant to this Section 3(a)(ii) shall not be subject to
liquidation or exchange for another benefit.

 

 

 

 

(iii) Employee’s unvested equity awards outstanding on the Date of Termination,
shall become fully vested and exercisable on the Date of Termination and shall
otherwise remain subject to the terms and conditions of the equity plan pursuant
to which they were granted and the award agreements evidencing the grant
thereof.

 

Notwithstanding the foregoing, the Employer shall be obligated to provide the
Severance Benefits only if (A) within forty-five (45) days after the date of
termination Employee shall have executed a separation and full release of
claims/covenant not to sue agreement in the form provided by the Employer (the
“Release Agreement”) and such Release Agreement shall not have been revoked
within the revocation period specified in the Release Agreement, and (B)
Employee fully complies with the obligations set forth in Section 6 hereof. For
the avoidance of doubt, if Employee does not comply with the obligations set
forth in Section 6 hereof, then any obligation of the Employer to pay the
Severance Benefits shall cease immediately upon Employee’s breach thereof.

 

4.       Termination of Employment other than a Qualifying Termination. If
Employee’s employment is terminated for any reason other than a Qualifying
Termination, then the Employer shall have no further obligations to Employee or
Employee’s legal representatives under this Agreement, other than for payment of
Accrued Benefits, which shall be paid to Employee or Employee’s estate or
beneficiary, as applicable, in a lump sum in cash within thirty (30) days after
the date of termination.

 

5.       Definitions.

 

(a)       “Cause” means a good faith determination by the Employer that any of
the following has occurred: (i) Employee’s willful violation of any laws, rules
or regulations applicable to banks or the banking industry generally; (ii)
Employee’s material failure to comply with the Employer’s policies or guidelines
of employment or corporate governance policies or guidelines, including, without
limitation, any business code of ethics adopted by the Employer, that, if
capable of being cured, is not cured by Employee within ten (10) days of written
notice by the Employer of the failure; (iii) any act of fraud, misappropriation
or embezzlement by Employee; (iv) a material breach of this Agreement that, if
such breach is capable of being cured, is not cured by Employee within ten (10)
days of written notice by the Employer of the breach; or (v) Employee’s
conviction of, or Employee’s pleading guilty or nolo contendere to, a felony or
a crime involving moral turpitude (including pleading guilty or nolo contendere
to a felony or lesser charge which results from plea bargaining).

 

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(b)       “Change in Control” shall have the same meaning as set forth in the
Southern National Bancorp of Virginia, Inc. 2017 Equity Compensation Plan, as
such plan may be amended from time to time.

 

(c)       “Code” means the Internal Revenue Code of 1986, as amended from time
to time. For purposes of this Agreement, references to sections of the Code
shall be deemed to include references to any applicable regulations thereunder
and any successor or similar provision.

 

(d)       “Disability” means the inability of Employee, as reasonably determined
by the Employer, to perform the essential functions of his regular duties and
responsibilities, with or without reasonable accommodation, due to a medically
determinable physical or mental illness which has lasted (or can reasonably be
expected to last) for a period of six (6) consecutive months.

 

(e)       “Good Reason” means the occurrence of any of the following, without
Employee’s consent: (i) a material diminution in Employee’s Base Salary; (ii) a
material diminution in Employee’s authority, duties, or responsibilities; (iii)
the relocation of Employee’s principal office to a facility or location more
than fifty (50) miles away from Employee’s principal place of work immediately
prior to the relocation; provided, however, that Good Reason shall not include
(A) any relocation of Employee’s principal office which is proposed or initiated
by Employee; or (B) any relocation that results in Employee’s principal place
office being closer to Employee’s then-principal residence; or (iv) any
intentional, material breach by the Employer of this Agreement. A termination by
Employee shall not constitute termination for Good Reason unless Employee shall
first have delivered to the Employer written notice setting forth with
specificity the occurrence deemed to give rise to a right to terminate for Good
Reason (which notice must be given no later than thirty (30) days after the
initial occurrence of such event), and there shall have passed a reasonable time
(not less than thirty (30) days) within which the Employer may take action to
correct, rescind or otherwise substantially reverse the occurrence supporting
termination for Good Reason as identified by Employee. Good Reason shall not
include Employee’s death or Disability.

 

(f)       “Qualifying Termination” means Employee’s termination of employment
during the Qualifying Termination Window by (A) the Employer without Cause
(other than by reason of Employee’s death or Disability), or (B) Employee for
Good Reason within a period of 90 days after the occurrence of the event giving
rise to Good Reason. For the avoidance of doubt, in no event shall Employee be
deemed to have experienced a Qualifying Termination as a result of Employee’s
termination of employment with the Employer for any reason or no reason outside
of the Qualifying Termination Window or as a result of Employee’s termination of
employment with the Employer during the Qualifying Termination Window by reason
of his (i) death, (ii) Disability, or (iii) voluntary resignation for any reason
or no reason.

 

(g)       “Qualifying Termination Window” means the sixty (60) day period
immediately preceding a Change in Control or the one-year period immediately
following a Change in Control.

 

6.       Restrictions on Competition and Disclosure and Use of Confidential
Information.

 

(a)       Confidential Information. Employee agrees that Employee shall not,
directly or indirectly, use any Confidential Information (as defined herein) on
Employee’s own behalf or on behalf of any Person (as defined herein) other than
the Employer, or reveal, divulge, or disclose any Confidential Information to
any Person not expressly authorized by the Employer to receive such Confidential
Information. This obligation shall remain in effect for as long as the
information or materials in question retain their status as Confidential
Information. Employee further agrees that he shall fully cooperate with the
Employer in maintaining the Confidential Information to the extent permitted by
law. The parties acknowledge and agree that this Agreement is not intended to,
and does not, alter either the Employer’s rights or Employee’s obligations under
any state or federal statutory or common law regarding trade secrets and unfair
trade practices. Anything herein to the contrary notwithstanding, Employee shall
not be restricted from disclosing information that is required to be disclosed
by law, court order or other valid and appropriate legal process; provided,
however, that in the event such disclosure is required by law, Employee shall
provide the Employer with prompt notice of such requirement so that the Employer
may seek an appropriate protective order prior to any such required disclosure
by Employee.

 

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Employee understands and acknowledges that nothing in this section limits his
ability to initiate communications directly with, respond to any inquiry from,
volunteer information to, or provide testimony before any government agency or
otherwise participate 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.  Employee does
not need the prior authorization of the Employer to engage in such
communications with any government agency, respond to such inquiries from any
government agency, provide Confidential Information or documents containing
Confidential Information to any government agency, or make any such reports or
disclosures to any government agency.  Employee is not required to notify the
Employer that Employee has engaged in such communications with a government
agency. Employee recognizes and agrees that, in connection with any such
activity outlined above, Employee must inform the government agency that the
information Employee 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 state or
federal 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.

 

For purposes of this Section 6, “Confidential Information” means any and all
data and information relating to the Employer, their activities, business, or
clients that (i) is disclosed to Employee or of which Employee becomes aware as
a consequence of his employment with the Employer; (ii) has value to the
Employer; and (iii) is not generally known outside of the Employer.
“Confidential Information” shall include, but is not limited to the following
types of information regarding, related to, or concerning the Employer: trade
secrets (as defined by Virginia Uniform Trade Secrets Act); financial plans and
data; management planning information; business plans; operational methods;
market studies; marketing plans or strategies; pricing information; product
development techniques or plans; customer lists; customer files, data and
financial information; details of customer contracts; current and anticipated
customer requirements; identifying and other information pertaining to business
referral sources; past, current and planned research and development; computer
aided systems, software, strategies and programs; business acquisition plans;
management organization and related information (including, without limitation,
data and other information concerning the compensation and benefits paid to
officers, directors, employees and management); personnel and compensation
policies; new personnel acquisition plans; and other similar information.
“Confidential Information” also includes combinations of information or
materials which individually may be generally known outside of the Employer, but
for which the nature, method, or procedure for combining such information or
materials is not generally known outside of the Employer. In addition to data
and information relating to the Employer, “Confidential Information” also
includes any and all data and information relating to or concerning a third
party that otherwise meets the definition set forth above, that was provided or
made available to the Employer by such third party, and that the Employer has a
duty or obligation to keep confidential. This definition shall not limit any
definition of “confidential information” or any equivalent term under state or
federal law. “Confidential Information” shall not include information that has
become generally available to the public by the act of one who has the right to
disclose such information without violating any right or privilege of the
Employer. For purposes of this Section 6, “Person” means any individual or any
corporation, partnership, joint venture, limited liability company, association
or other entity or enterprise.

 

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(b)       Non-competition. Beginning on the Effective Date and for a period
continuing through the twelve (12) months following cessation of Employee’s
employment with the Employer (the “Restricted Period”), Employee shall not,
directly or indirectly, within any State in the United States where the Employer
has a retail bank branch at the time Employee’s employment ceases, own any
interest in, control or participate in the ownership or control of, or perform
services that are the same as or substantially similar to the services Employee
performed for the Employer pursuant to this Agreement for any company, person or
entity engaged in a Competitive Business (as defined herein). A “Competitive
Business” shall mean any person or entity that is providing deposits, money
market accounts, certificates of deposit or other typical retail banking
deposit-type services or loans on a retail level, to individuals, businesses or
non-profit entities in any State in the United States in which the Employer has
a retail bank branch at the time Employee’s employment ceases. Notwithstanding
the foregoing, nothing in this Agreement shall prevent Employee from owning for
passive investment purposes not intended to circumvent this Agreement, less than
five percent (5%) of the publicly-traded voting securities of any company
engaged in the banking, financial services, insurance, brokerage or other
business similar to or competitive with the Employer (so long as Employee has no
power to manage, operate or control the competing enterprise and no power, alone
or in conjunction with other affiliated parties, to select a director, manager,
general partner, or similar governing official of the competing enterprise other
than in connection with the normal and customary voting powers afforded Employee
in connection with any permissible equity ownership).

 

(c)       Non-solicitation of Employees. During the Restricted Period, Employee
shall not, directly or indirectly solicit, induce or hire, or attempt to
solicit, induce or hire, any person who is an employee of the Employer at the
time Employee’s employment ceases or within six (6) months prior thereto, to
leave his or his employment with the Employer or join or become affiliated with
any Competitive Business.

 

(d)       Non-solicitation of Customers. During the Restricted Period, Employee
shall not, directly or indirectly solicit or induce or attempt to solicit or
induce, any customer, lender, supplier, licensee, licensor or other business
relation of the Employer to terminate its relationship or contracts with the
Employer, to cease doing business with the Employer, or in any way interfere
with the relationship between any such customer, lender, supplier, licensee,
licensor or business relation and the Employer.

 

(e)       Rights and Remedies Upon Breach. The parties specifically acknowledge
and agree that the remedy at law for any breach of the covenants in Section 6
will be inadequate, and that in the event Employee breaches any such covenant,
the Employer shall have the right and remedy, without the necessity of proving
actual damage or posting any bond, to enjoin, preliminarily and permanently,
Employee from violating the covenant and to have the covenant specifically
enforced by any court of competent jurisdiction, it being agreed that any breach
would cause irreparable injury to the Employer and that money damages would not
provide an adequate remedy to the Employer. Such rights and remedies shall be in
addition to, and not in lieu of, any other rights and remedies available to the
Employer at law or in equity. The Employer and Employee understand and agree
that, if the parties become involved in legal action regarding the enforcement
of the covenants in Section 6, the prevailing party in such legal action will be
entitled, in addition to any other remedy, to recover its reasonable costs and
attorneys’ fees incurred in enforcing or defending action with respect to such
covenants. The Employer’s ability to enforce its rights under the covenants in
Section 6 or applicable law against Employee shall not be impaired in any way by
the existence of a claim or cause of action on the part of Employee based on, or
arising out of, this Agreement or any other event or transaction.

 

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7.       Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit Employee’s continuing or future participation in any employee benefit
plan, program, policy or practice provided by the Employer or its affiliated
companies and for which Employee may qualify. Amounts that are vested benefits
or which Employee is otherwise entitled to receive under any plan, policy,
practice or program of the Employer or any of its affiliated companies at or
subsequent to the date of termination shall be payable in accordance with such
plan, policy, practice or program.

 

8.       Full Settlement; No Mitigation. The Employer’s obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Employer may have against
Employee or others. In no event shall Employee be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to Employee under any of the provisions of this Agreement and such amounts shall
not be reduced whether or not Employee obtains other employment.

 

9.       Successors. This Agreement is personal to Employee and shall not be
assignable by Employee otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
Employee’s legal representatives. This Agreement can be assigned by the Employer
and shall be binding and inure to the benefit of the Employer, and their
successors and assigns.

 

10.     Code Section 409A.

 

(a)       General. This Agreement shall be interpreted and administered in a
manner so that any amount or benefit payable hereunder shall be paid or provided
in a manner that is either exempt from or compliant with the requirements of
Section 409A of the Code and applicable Internal Revenue Service guidance and
Treasury Regulations issued thereunder (and any applicable transition relief
under Section 409A of the Code) (“Section 409A of the Code”). Nevertheless, the
tax treatment of the benefits provided under the Agreement is not warranted or
guaranteed. Neither the Employer nor its directors, officers, employees or
advisers, shall be held liable for any taxes, interest, penalties or other
monetary amounts owed by Employee as a result of the application of Section 409A
of the Code.

 

(b)       Definitional Restrictions. Notwithstanding anything in this Agreement
to the contrary, to the extent that any amount or benefit that would constitute
non-exempt “deferred compensation” for purposes of Section 409A of the Code
(“Non-Exempt Deferred Compensation”) would otherwise be payable or distributable
hereunder by reason of Employee’s termination of employment, such Non-Exempt
Deferred Compensation will not be payable or distributable to Employee by reason
of such circumstance unless the circumstances giving rise to such termination of
employment meet any description or definition of “separation from service,” in
Section 409A of the Code and applicable regulations (without giving effect to
any elective provisions that may be available under such definition). If this
provision prevents the payment or distribution of any Non-Exempt Deferred
Compensation, then, subject to subsection (c) below, such payment or
distribution shall be made at the time and in the form that would have applied
absent the non-409A-conforming event.

 

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(c)       Six-Month Delay in Certain Circumstances. Notwithstanding anything in
this Agreement to the contrary, if any amount or benefit that would constitute
Non-Exempt Deferred Compensation would otherwise be payable or distributable
under this Agreement by reason of Employee’s separation from service during a
period in which he is a Specified Employee (as defined below), then, subject to
any permissible acceleration of payment by the Employer under Treas. Reg.
Section 1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of
interest), or (j)(4)(vi) (payment of employment taxes): (i) the amount of such
Non-Exempt Deferred Compensation that would otherwise be payable during the
six-month period immediately following Employee’s separation from service will
be accumulated through and paid or provided on the first day of the seventh
month following Employee’s separation from service (or, if Employee dies during
such period, within 30 days after Employee’s death) (in either case, the
“Required Delay Period”); and (ii) the normal payment or distribution schedule
for any remaining payments or distributions will resume at the end of the
Required Delay Period.

 

(d)       Timing of Release of Claims. Whenever in this Agreement a payment or
benefit is conditioned on Employee’s execution of a release of claims, such
release must be executed and all revocation periods shall have expired within 60
days after the date of termination; failing which such payment or benefit shall
be forfeited. If such payment or benefit constitutes Non-Exempt Deferred
Compensation, then such payment or benefit (including any installment payments)
that would have otherwise been payable during such 60-day period shall be
accumulated and paid on the 60th day after the date of termination provided such
release shall have been executed and such revocation periods shall have expired.
If such payment or benefit is exempt from Section 409A of the Code, the Employer
may elect to make or commence payment at any time during such period.

 

(e)       Timing of Reimbursements and In-kind Benefits. If Employee is entitled
to be paid or reimbursed for any taxable expenses under this Agreement, and such
payments or reimbursements are includible in Employee’s federal gross taxable
income, the amount of such expenses reimbursable in any one calendar year shall
not affect the amount reimbursable in any other calendar year, and the
reimbursement of an eligible expense must be made no later than December 31 of
the year after the year in which the expense was incurred. No right of Employee
to reimbursement of expenses under this Agreement shall be subject to
liquidation or exchange for another benefit.

 

11.       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 Employee 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:

 

(a)       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 Employee 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 11(a)
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.

 

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(b)       Notwithstanding the foregoing Section 11(a), 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 Employee after payment of all income and excise taxes is greater
without giving effect to Section 11(a) than Employee’s net economic benefit
after a reduction by reason of the application of Section 11(a), then Section
11(a) 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 11(a) 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.

 

12.       Regulatory Action.

 

(a)       If Employee is removed and/or permanently prohibited from
participating in the conduct of the Employer’s affairs by an order issued under
Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act (“FDIA”) (12
U.S.C. 1818(e)(4) and (g)(1)), all obligations of the Employer under this
Agreement shall terminate, as of the effective date of such order.

 

(b)       If Employee is suspended and/or temporarily prohibited from
participating in the conduct of the Employer’s affairs by a notice served under
Section 8(e)(3) or 8(g)(1) of the FDIA (12 U.S.C. 1818(e)(3) and (g)(1)), all
obligations of the Employer 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 shall reinstate (in whole or in part) any of
its obligations which were suspended.

 

(c)       If the Employer is in default (as defined in Section 3(x)(1) of the
FDIA), all obligations under this Agreement shall terminate as of the date of
default.

 

(d)       All obligations under this Agreement shall be terminated, except to
the extent a determination is made that continuation of the Agreement is
necessary for the continued operation of the Employer (1) by the director of the
FDIC or his or his designee (the “Director”), at the time the FDIC enters into
an agreement to provide assistance to or on behalf of the Employer under the
authority contained in 13(c) of the FDIA; or (2) by the Director, at the time
the Director approves a supervisory merger to resolve problems related to
operation of the Employer when the Employer is determined by the Director to be
in an unsafe and unsound condition.

 

(e)       Notwithstanding anything contained in this Agreement to the contrary,
no payments shall be made pursuant to any provision herein in contravention of
the requirements of Section 2[18(k)] of the FDIA (12 U.S.C. 1828(k)). In
particular, the provisions pertaining to the potential for payments shall have
no force or effect as long as either the agreement concerning the potential for
payments or the actual payment of such amounts would be considered a “golden
parachute payment,” with the meaning of 12 C.F.R. Section 359.1(f).

 

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13.       Miscellaneous.

 

(a)       Applicable Law; Forum Selection; Consent to Jurisdiction. The Employer
and Employee agree that this Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of Virginia without giving
effect to its conflicts of law principles. Employee agrees that the exclusive
forum for any action to enforce this Agreement, as well as any action relating
to or arising out of this Agreement, shall be the Circuit Court of Fairfax
County or the federal court encompassing that jurisdiction, at the option of the
Employer. With respect to any such court action, Employee hereby irrevocably
submits to the personal jurisdiction of such courts. The parties hereto further
agree that the courts listed above are convenient forums for any dispute that
may arise herefrom and that neither party shall raise as a defense that such
courts are not convenient forums.

 

(b)       Non-Duplication. Notwithstanding anything to the contrary in this
Agreement, and except as specifically provided below, any severance payments or
benefits received by Employee pursuant to this Agreement shall be in lieu of any
general severance policy or other severance plan maintained by the Employer
(other than a stock option, restricted stock, share or unit, performance share
or unit, supplemental retirement, deferred compensation or similar plan or
agreement which may contain provisions operative on a termination of Employee’s
employment or may incidentally refer to accelerated vesting or accelerated
payment upon a termination of employment).

 

(c)       Captions. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.

 

(d)       Amendments. This Agreement may not be amended or modified otherwise
than-by a written agreement executed by the parties hereto or their respective
successors and legal representatives.

 

(e)       Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

 

If to Employee:

On file with the Employer

If to the Employer:

6830 Old Dominion Drive

McLean, Virginia 22101

Attention: CEO

 

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

 

(f)       Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.

 

(g)      Withholding. The Employer may withhold from any amounts payable under
this Agreement such federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.

 

(h)      Waivers. Failure of either party to insist, in one or more instances,
on performance by the other in strict accordance with the terms and conditions
of this Agreement shall not be deemed a waiver or relinquishment of any right
granted in this Agreement or of the future performance of any such term or
condition or of any other term or condition of this Agreement, unless such
waiver is contained in a writing signed by the party making the waiver.

 

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(i)       Entire Agreement. This Agreement contains the entire agreement between
the Employer and Employee with respect to the subject matter hereof and, from
and after the date hereof, this Agreement shall supersede any other agreement,
written or oral, between the parties relating to the subject matter of this
Agreement, including but not limited to any prior discussions, understandings,
and/or agreements between the parties, written or oral, at any time.

 

(j)       Construction. The parties understand and agree that because they both
have been given the opportunity to have counsel review and revise this
Agreement, the normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement. Instead, the language of all parts of this
Agreement shall be construed as a whole, and according to its fair meaning, and
not strictly for or against either of the parties.

 

(k)       Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.

 

(Signatures on following page)

 

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IN WITNESS WHEREOF, Employee has hereunto set Employee’s hand and the Employer
has caused these presents to be executed in its name on its behalf, all as of
the day and year first above written.

 

  /s/ Jeffrey L. Karafa     JEFFREY L. KARAFA                     /s/ Joe A.
Shearin     SOUTHERN NATIONAL     BANCORP OF VIRGINIA, INC.     By:   Joe A.
Shearin     Its: President and Chief Executive Officer                     /s/
Joe A. Shearin     SONABANK     By: Joe A. Shearin     Its: President and Chief
Executive Officer  

  

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