Exhibit 10.2

 

RESTRICTIVE COVENANT AGREEMENT

 

This Restrictive Covenant Agreement (“Agreement”) effective as of this 1st day
of June, 2008, is entered into by and between Scott C. Harvard (“Officer”) and
Hampton Roads Bankshares, a Virginia corporation (“HRB”).

 

RECITALS

 

WHEREAS, this Agreement is entered into by HRB as a condition of the closing of
that certain Agreement and Plan of Merger (the “Merger Agreement”) dated January
8, 2008, by and between HRB and Shore Financial Corporation, a Virginia
corporation, (“SFC”), pursuant to which Merger Agreement SFC will become a
wholly owned subsidiary of HRB;

 

WHEREAS, Officer is being directly and materially benefited as an equity holder
or executive of SFC and through this Agreement with HRB;

 

WHEREAS, the Officer currently is rendering or desires to render valuable
services to HRB and it is the desire of HRB to have the benefit of the Officer's
continued and future loyalty, service and counsel;

 

WHEREAS, HRB is engaged in the business of banking and Officer has particular
and peculiar knowledge and background in the operation of a business of this
nature;

 

WHEREAS, Officer is currently employed as the President and Chief Executive
Officer of Shore Bank, a wholly owned subsidiary of SFC, and shall continue to
be employed in such capacity after the closing of the Merger Agreement;

 

WHEREAS, upon closing of the Merger Agreement between HRB and SFC, Shore Bank,
shall become a wholly owned subsidiary of HRB;

 

WHEREAS, upon closing of the Merger Agreement between HRB and SFC, Officer shall
become an executive officer of HRB as HRB is currently structured and a member
of the Board of Directors of HRB and Bank of Hampton Roads with integral
knowledge of the confidential and trade secret information of both entities; and

 

WHEREAS, HRB desires to protect its investment in SFC, Shore Bank and Bank of
Hampton Road and any of its subsidiaries from unfair competition and its
confidential information from unauthorized disclosure or misappropriation.

 

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

 

 

1.

Effective Date; Payment to Officer upon Closing of Merger.

 

The effective date of this Agreement shall be the closing date of the Merger
Agreement. In consideration for his covenants and obligations as set forth
herein, HRB will pay to Officer

 

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One Hundred Seventy-Five Thousand Dollars and no cents ($175,000.00) upon the
closing of the Merger Agreement.

 

 

2.

Restrictive Covenants.

 

(a)            During the Officer's employment with Shore Bank and for a period
of one (1) year following the date Officer's employment with Shore Bank ends,
the Officer will not, directly or indirectly, either as a principal, agent,
employee, employer, stockholder, partner or in any other individual or
representative capacity whatsoever, serve in a position where Officer is engaged
in the process of providing services or products that compete with the services
or products provided by HRB or any direct or indirect wholly owned subsidiary of
HRB, including, but not limited to, Bank of Hampton Roads and Shore Bank, at any
time during the last year of Officer’s employment with Shore Bank. This
restriction shall only apply within a twenty-five (25) mile radius of any office
or branch operated by Shore Bank, Bank of Hampton Roads, HRB or any direct or
indirect wholly owned subsidiary of HRB on the date Officer’s employment with
Shore Bank ends.

 

(b)            During the Officer's employment with Shore Bank and for a period
of one (1) year following the later of (i) the date Officer's employment with
Shore Bank ends or (ii) the date Officer ceases to receive any payment from
Shore Bank pursuant to any agreement (except as provided below), Officer will
not solicit, or assist any person or entity to solicit, any person or entity
who, during the six (6) month period prior to the date Officer’s employment with
Shore Bank ends, paid or engaged Shore Bank, Bank of Hampton Roads, HRB or any
direct or indirect wholly owned subsidiary of HRB, for products or services, for
the purpose of providing services or selling products where those services or
products compete with the services or products offered by Shore Bank, Bank of
Hampton Roads, HRB or any direct or indirect wholly owned subsidiary of HRB, as
of the date Officer’s employment with Shore Bank ends. If Officer’s employment
with Shore Bank is terminated by either Shore Bank or the Officer as a result of
a “Change in Control” of HRB, then the duration of the restriction set forth in
this section 2(b) shall be one (1) year from the date Officer’s employment with
Shore Bank ends. For purposes of this Agreement, a “Change in Control” shall be
defined as (a) the date that any one person, or more than one person, acting as
a group, acquires ownership of stock of HRB that, together with stock held by
such person or group constitutes more than 50% of the total fair market value or
total voting power of the stock of HRB , (b) the date any one person, or more
than one person, acting as a group, acquires (or has acquired ownership during
the twelve (12) month period ending on the date of the most recent acquisition
by such person) ownership of stock of HRB possessing 30% or more of the total
voting power of the stock, or (c) the date a majority of the members of HRB’s
Board of Directors are replaced during any twelve (12) month period by directors
whose appointment or election is not endorsed by a majority of the members of
HRB’s Board of Directors before the date of the appointment or election.

 

(c)              During the Officer's employment with Shore Bank and for a
period of one (1) year following the later of (i) the date Officer’s employment
with Shore Bank ends or (ii) the date Officer ceases to receive any payment from
Shore Bank pursuant to any agreement, Officer agrees that he will not on his own
behalf or on behalf of any person or entity, in any capacity, solicit, recruit
or hire or assist others in soliciting, recruiting or hiring any person who,
during the twelve (12) months preceding the termination of the Officer's
employment with Shore Bank, was an employee or officer with Shore Bank, Bank of
Hampton Roads, HRB or any direct or indirect wholly owned subsidiary of HRB. If
Officer’s employment with Shore Bank is terminated by either Shore Bank or the
Officer as a result of a “Change in Control” (as defined

 

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above) of HRB, then the duration of the restriction set forth in this section
2(c) shall be one (1) year from the date Officer’s employment with Shore Bank
ends.

 

(d)              During the Officer's employment with Shore Bank, and at all
times thereafter, Officer agrees not to disclose, communicate or divulge to any
third party, or use, or permit others to use, any confidential information of
Shore Bank, Bank of Hampton Roads, HRB or any direct or indirect wholly owned
subsidiary of HRB. For purposes of this Agreement, “confidential information”
shall mean all information disclosed to Officer, or known to Officer as a
consequence of or through Officer’s employment with Shore Bank, where such
information is not generally known by the public or was regarded or treated as
proprietary by Shore Bank, Bank of Hampton Roads, HRB or any direct or indirect
wholly owned subsidiary of HRB.

 

Subsections (a), (b), (c), and (d) of this Section 2 are intended by the parties
hereto as separate and divisible provisions, and if for any reason either one is
held to be invalid or unenforceable, neither the validity nor the enforceability
of the other shall thereby be affected. If any court holds that the whole or any
part of Subsections (a), (b), (c), and (d) is unenforceable by reason of the
extent, duration or geographic scope thereof, or otherwise, then the court
making such determination shall have the right to reduce such extent, duration,
geographic scope, or other provisions hereof, and in its reduced form such
Section shall be enforceable in the manner contemplated hereby.

 

3.            Notice of Subsequent Employment. For a period which is the later
of one (1) year (i) after the Officer's employment with Shore Bank ends or (ii)
the date Officer ceases to receive any payment from Shore Bank pursuant to any
agreement, the Officer agrees to notify HRB of the name and address of the
Officer's employer and the Officer hereby authorizes HRB to contact any such
employer during that period for the limited purpose of making the employer aware
of this Agreement and protection against any disclosure of confidential and
proprietary information, or unfair competition. If Officer’s employment with
Shore Bank is terminated by either Shore Bank or the Officer as a result of a
“Change in Control” (as defined above) of HRB, then the obligations required of
the Officer set forth in this section 3 shall be one (1) year from the date
Officer’s employment with Shore Bank ends.

 

4.            Remedies. The Officer acknowledges that if Officer breaches or
threatens to breach this Agreement, in addition to any and all other rights and
remedies it may have, HRB shall be entitled to injunctive relief, both temporary
and permanent, against the Officer, as the Officer recognizes that a remedy at
law would be inadequate and insufficient. HRB shall be entitled to recover from
the Officer all costs and expenses, including but not limited to reasonable
attorney's fees and court costs, incurred by HRB as a result of or arising out
of any breach of threatened breach under or pursuant to this Agreement in
addition to such other rights and remedies as HRB may have under this Agreement
or any other agreement, at law or in equity.

 

 

5.

Miscellaneous.

 

(a)              Waiver.   A waiver by any party of any of the terms and
conditions of this Agreement in any instance shall not be deemed or construed to
be a waiver of such terms and conditions for the future, or of any subsequent
breach thereof.

 

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(b)              Severabilitv.   If any provision of this Agreement, as applied
to any circumstances, shall be adjudged by a court to be void and unenforceable,
the same shall in no way affect any other provision of this Agreement or the
applicability of such provision to any other circumstances.

 

(c)              Amendment.   This Agreement may not be varied, altered,
modified, changed, or in any way amended except by an instrument in writing,
executed by the parties hereto or their legal representatives.

 

(d)              Nonassignabilitv of Payments.    Neither the Officer nor his
estate shall have any right to commute, sell, assign, transfer or otherwise
convey the right to receive any payments hereunder, which payments and the right
thereto are expressly declared to be nonassignable and nontransferable.

 

(e)              Binding Effect.   This Agreement shall be binding upon and
inure to the benefit of the Officer (and his personal representative), HRB and
any successor organization or organizations which shall succeed to substantially
all of the business and property of HRB, whether by means of merger,
consolidation, acquisition of all or substantially all of the assets of HRB or
otherwise, including by operation of law.

 

(f)               Governing Law.   This Agreement shall be governed by and
construed in accordance with the Laws of the Commonwealth of Virginia, whether
statutory or decisional, applicable to agreements made and entirely to be
performed within such state and such provisions of federal law as may be
applicable. Venue for any dispute arising hereunder shall lie exclusively in the
state or federal courts located in or having jurisdiction over the City of
Norfolk, Virginia, or where HRB is headquartered.

 

(g)              Assignment. Officer shall not have the right to transfer or
assign any or all of his or her rights or interest hereunder. This Agreement may
be assigned by HRB.

 

(h)             Background, Enumerations and Headings. The Background,
enumerations and headings contained in this Agreement are for convenience of
reference only and are not intended to have any substantive significance in
interpreting this Agreement.

 

 

[Signatures Follow Next Page]

 

 

Initials:

HRB _____

Scott C. Harvard: _____

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 

Officer:

 

Hampton Roads Bankshares,

 

 

a Virginia banking corporation

 

 

 

/s/ Scott C. Harvard

 

By: /s/ Jack W. Gibson

Scott C. Harvard

 

 

 

 

Print Name: Jack W. Gibson

 

 

 

 

 

Title: Vice Chairman, President and

 

 

Chief Executive Officer

 

 

 

Date: June 1, 2008

 

Date: June 1, 2008

 

 

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