Exhibits 10.4

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into on this 
10th  day of February, 2016 among Hampton Roads Bankshares, Inc., a Virginia
corporation having its principal place of business at 641 Lynnhaven Parkway,
Virginia Beach, VA 23452 (“HRB”), Bank of Hampton Roads, a corporation organized
under the laws of, and authorized by statute to accept deposits and hold itself
out to the public as engaged in the banking business in, the Commonwealth of
Virginia having its principal place of business at 641 Lynnhaven Parkway,
Virginia Beach, VA 23452 (“BHR”) and Donna W. Richards (the “Executive”).

 

WITNESSETH:

 

WHEREAS, HRB intends to acquire Xenith Bankshares, Inc. according to that
certain Agreement and Plan of Reorganization dated February 10, 2016 whereby
Xenith Bankshares, Inc. will be acquired and merged into HRB and Xenith Bank, a
wholly owned subsidiary of Xenith Bankshares, Inc., will be merged into HRB’s
wholly owned subsidiary, BHR, with HRB and BHR as the surviving entities, whose
names will change to Xenith Bankshares (“HoldCo”) and Xenith Bank (“Xenith”)
respectively, if the change in name is approved by the shareholders of Holdco
(the “Acquisition”)(1).

 

WHEREAS, the Executive  is currently employed as President of BHR and President
and Chief Operating Officer of HRB.

 

WHEREAS, effective upon the closing of the Acquisition (the “Effective Date”),
Xenith and HoldCo (collectively “Employer”) desire to provide for the continued
employment of the Executive and to make certain changes in the Executive’s
pre-Acquisition employment arrangements which the Employer has determined will
reinforce and encourage the continued dedication of the Executive to the
Employer.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement, the Employer and the Executive, intending to be
legally bound hereby, mutually agree, conditioned upon the closing of the
Acquisition, as follows:

 

1.                                      Employment.

 

(a)                                 The Employer and Executive agree that, upon
the Effective Date,  Executive shall be employed as President and Chief
Operating Officer (“COO”) of Xenith and President and COO of HoldCo, and shall
perform such services for each as may be assigned to Executive by the Chief
Executive Officer of Xenith or HoldCo, or the Board of Directors of Xenith or
HoldCo (collectively, the “Board”) from time to time in accordance with the
terms and conditions set forth in this Agreement.

 

(b)                                 The term of this Agreement shall commence on
the Effective Date and, subject to Section 5(a) of this Agreement, shall expire
on the second anniversary of the Effective Date, unless sooner terminated in
accordance with the provisions of Section 5 (the “Term”).  On the second
anniversary of the Effective Date and on each anniversary thereafter, the Term
shall be extended for an additional one year unless the Employer shall deliver
written notice to the contrary to Executive not less than 90 days prior to the
end of the Term.  In the event the Employer provides the written notice
described in the preceding sentence, yet Executive’s employment with the
Employer continues after the expiration of the Term, Executive’s post-expiration
employment will be at will.  If the Executive is offered post-expiration

 

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(1)  If the name change is not approved and the current name(s) are retained, or
other name(s) adopted, the appropriate name(s) shall be substituted herein as
warranted.

 

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employment on substantially similar financial terms,  and refuses such
employment, she will not be entitled to any severance  as a result of the
expiration of this Agreement and termination of employment. If the Executive
continues employment post-expiration on an at will basis, the Employer shall
have no severance obligation under Section 5 of this Agreement in the event of
termination of employment unless otherwise agreed by the Employer and the
Executive.

 

2.                                      Duties of the Executive.

 

(a)                                 The Executive shall serve in the position of
President and COO of Xenith and President and COO of HoldCo and perform all
duties and services commensurate with that position. Unless otherwise specified
hereafter, any services performed by the Executive shall be for the benefit of
Xenith and, therefore, any payments or benefits paid to the Executive pursuant
to this Agreement shall be the sole responsibility of Xenith; provided, however,
Xenith’s obligation to make any payments owed to the Executive under this
Agreement shall be discharged to the extent compensation payments are made by
HoldCo.

 

(b)                                 The Executive shall devote her full time and
attention to the discharge of the duties undertaken by her hereunder.  Executive
shall comply with all policies, standards and regulations of the Employer, and
shall perform her duties under this Agreement to the best of her abilities and
in accordance with general business standards of conduct. The foregoing
provision shall not prevent the Executive’s purchase, ownership or sale of any
interest, or the Executive’s engaging in, any business that does not compete
with the business of the Employer or the Executive’s involvement in charitable
or community activities, provided, that the time and attention that the
Executive devotes to such business and charitable or community activities does
not materially interfere with the performance of the Executive’s duties under
this Agreement and further provided that such conduct complies in all material
respects with applicable policies of the Employer.

 

(c)                                  The Executive shall be entitled to paid
time off during each calendar year in accordance with the paid time off policy
of the Employer for senior executive officers, to be taken at such time or times
as the Executive and the Employer shall mutually determine.  Earned but unused
paid time off shall be accrued in accordance with the Employer’s paid time off
policy. Any payments made by the Employer to the Executive as compensation in
lieu of paid time off shall be paid in accordance with the Employer’s normal
payroll practices.

 

3.                                      Compensation.  For all services to be
rendered by the Executive under this Agreement, the Employer and the Executive
agree as follows:

 

(a)                                 Base Salary.  The Employer shall pay the
Executive a base salary (the “Base Salary”), at a rate of $400,000 per year,
plus such other compensation as the Employer may, from time to time, determine
in its sole discretion.  The Compensation Committee of the Xenith Board (the
“Compensation Committee”), shall review annually the amount of the Executive’s
Base Salary, and may increase, but not decrease, such Base Salary to such amount
as the Employer may determine in its sole and absolute discretion.  Such Base
Salary and other compensation shall be payable in accordance with the Employer’s
normal payroll practices (and in no event less frequently than monthly) as in
effect from time to time.

 

(b)                                 Restricted Stock.  An award of 200,000
Restricted Stock Units (“RSUs”) under the HRB 2011 Omnibus Incentive Plan (as
revised), fifty (50) percent of such amount vesting upon the integration of
Xenith’s core operating system to a single core processor and the remaining
fifty (50) percent vesting on the second anniversary of the Effective Date;
provided, however, any unvested RSUs (or, if unvested, stock options)
immediately vest in the event of a Change of Control.  Additionally, any
unvested RSUs immediately vest in the event of a termination by Executive for
Good Reason. No restrictions on the sale

 

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of such Holdco common stock shall apply after payment to the Executive except to
the extent required by law.

 

(c)                                  Intentionally Omitted.

 

(d)                                 Retention Bonus.  The Executive shall
receive a retention bonus as follows within thirty (30) days of the closing of
the Acquisition, calculated as follows:

 

i.                  (Current Base Salary plus average of last two (2) years’
bonuses) x 2.99; and

 

ii.               Immediate vesting of any unvested RSUs under her June 26,
2013, August 22, 2014, and September 16, 2015, RSU Awards,  to be settled in
cash.

 

(e)                                  Incentive Bonus Plans.  The Executive will
be eligible to participate in any of the Employer’s long-term or short-term
incentive plans on the same terms and conditions and in relative magnitude to
other Tier II senior executive officers of the Employer, subject to annual bonus
performance metrics and other terms and conditions of awards adopted in the sole
and absolute discretion of the Compensation Committee of the Xenith Board on an
annual basis.

 

(f)                                   Other Benefits.  Subject to any applicable
terms, conditions, and eligibility requirements, from and after the Effective
Date and throughout Executive’s employment hereunder, except as otherwise
expressly provided in the Agreement, the Executive shall be entitled to
participate in all cash and non-cash employee benefit plans maintained by the
Employer for senior executive officers or employees generally, including but not
limited to (i) a 401(k) retirement program, (ii) long-term disability,
(iii) extended medical leave, (iv) 25 days per year of paid-time off and
(v) health insurance, dental insurance and life insurance coverage as are
provided to the class of employees that includes the Executive.

 

(g)                                  Withholding for Taxes.  The Employer may
withhold from any amounts payable to Executive under this Agreement all federal,
state, city or other taxes and withholdings as shall be required pursuant to any
applicable law, rule or regulation.

 

(h)                                 Excess Parachute Payment.  In the event any
of the items described above would constitute an “excess parachute payment” as
described in Section 5(j), Executive’s right to payment of such items shall be
subject to the provisions of Section 5(j).

 

4.                                      Expenses.  The Employer shall promptly
reimburse the Executive for (a) all reasonable expenses the Executive pays or
incurs in connection with the performance of the Executive’s duties and
responsibilities in connection with her employment under this Agreement, upon
presentation of expense vouchers or other appropriate documentation for such
expenses and (b) all reasonable professional expenses, such as licenses and dues
and professional educational expenses, the Executive pays or incurs during her
employment hereunder, all of the above in accordance with Employer’s policies
with respect thereto.

 

5.                                      Termination of Employment.
Notwithstanding the termination of this Agreement or the termination of the
Executive’s employment for any reason, the parties shall be required to carry
out any provisions of this Agreement which contemplate performance by them
subsequent to such termination.  In addition, no termination of this Agreement
shall affect any liability or other obligation of either party which shall have
accrued prior to such termination, including, but not limited to, any liability,
loss or damage on account of breach.  No termination of employment shall
terminate the obligation of the Employer to make payments or provide any vested
benefits provided hereunder or any other plan or program of Employer or the
obligations of the Executive under Sections 7 and 8 of this Agreement.

 

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Unless otherwise stated in this Agreement, including Sections 3(b) and 5 of this
Agreement, the effect of termination on any outstanding incentive awards, stock
options, stock appreciation rights, performance units,  restricted stock,
restricted stock units or other incentives shall be governed by the terms of the
applicable benefit or incentive plan and/or the agreements governing such
incentives.

 

(a)                                 Executive With Notice.  The Executive’s
employment hereunder may be terminated by the Executive upon 30 days written
notice to the Employer or at any time by mutual agreement in writing.  It shall
not constitute a breach of this Agreement for the Employer to suspend the
Executive’s duties and to place the Executive on a paid leave during the 30-day
notice period. If the Executive’s employment is terminated under this
Section 5(a) of this Agreement, the Employer shall pay the Executive only any
vested benefits under this Agreement or any plan or program of the Employer (
paid at the times provided thereunder) and any sums due to him as Base Salary
and/or reimbursement of expenses through the date of termination.  Such  Base
Salary and reimbursements shall be paid at the end of the payroll period that
follows the payroll period in which her employment terminates.

 

(b)                                 Death.  This Agreement shall terminate upon
death of the Executive; provided, however, that in such event the Employer shall
pay to the estate of the Executive the compensation, including Base Salary and
accrued but unused paid-time off in accordance with Employer’s policies with
respect thereto, which otherwise would be payable to the Executive through the
date on which her death occurs.  Such amounts shall be paid at the end of the
payroll period that follows the payroll period in which her employment
terminates due to her death.  Additionally, the Employer shall pay to the
Executive’s estate any vested benefits under this Agreement or under any plan or
program of the Employer (paid at the times provided thereunder) and any bonus or
other short-term incentive compensation earned, but not yet paid, for any year
prior to the year in which her death occurs.

 

Any bonus or other short-term incentive compensation payable under this
Section 5(b) shall be paid (i) on the date of payment to other employees
eligible for bonuses or other short-term incentive compensation under the same
plan or plans, or, (ii) if no date or time frame for payment is specified in
those plans, by March 15 of the calendar year following the calendar year in
which the compensation is earned.

 

(c)                                  Disability.  The Executive understands and
agrees that she is a key person in Employer’s operation and that an extended
absence will cause undue hardship to Employer’s continued operations. The
Employer may terminate Executive’s employment under this Agreement upon its
determination of the Disability of the Executive, which Disability constitutes a
“disability” under the Employer’s applicable long term disability plan or
insurance program and that has continued for such period required for the
Executive to become eligible to receive long term disability benefits under the
Employer’s long-term disability plan or insurance program.  During the period of
any Disability leading up to the termination of the Executive’s employment under
this provision, the Employer shall continue to pay the Executive her full Base
Salary at the rate then in effect and all perquisites and other benefits (other
than any bonus) in accordance with the Employer’s normal payroll practices;
provided that, the amount of any such payments to the Executive shall be reduced
by the sum of the amounts, if any, payable to the Executive for the same period
under any other disability benefit covering the Executive that is provided by
the Employer.  Additionally, the Employer shall pay the Executive any bonus or
other short-term incentive compensation earned, but not yet paid, for any year
prior to the year in which her disability leads up to the termination of the
Executive’s employment, on the same terms as set forth in Section 5(b) and any
vested benefits under this Agreement or under any plan or program of the
Employer (paid at the times provided thereunder).

 

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(d)                                 Employer Without “Cause” or Employee with
“Good Reason.”

 

(1)                                 The Employer may terminate Executive’s
employment under this Agreement other than for “Cause” (as defined in
Section 5(e), below), at any time upon written notice to Executive, which
termination shall be effective immediately.  This would include a termination
in  connection with the expiration of this Agreement caused by non-renewal by
Employer under Section 2(b), above.  Executive may resign after written notice
to the Employer for “Good Reason”, as hereafter defined. In the event the
Executive’s employment terminates pursuant to this Section 5(d)(1), Executive
shall receive, at the end of the payroll period that follows the payroll period
in which her employment terminates, her Base Salary earned through the date of
termination and any accrued but unused paid time off, any bonuses or short-term
incentive compensation shall be paid as described in Section 5(b) above. Any
vested benefits under this Agreement or any plan or program of the Employer
shall be paid at the times provided under this Agreement or any such plan or
program, as applicable.  In the event the Executive’s employment terminates
pursuant to this Section 5(d)(1), provided she complies with the requirements of
Section 5(i) below, Executive shall also receive the following items:

 

(i)                                     An amount equal to 200% of the sum of
(i) her current rate of annual Base Salary in effect immediately preceding such
termination, and (ii) the average of her last two year’s annual bonus(es)
earned, if any; provided that such amount shall be paid in a single lump sum
cash payment on the date described in Section 5(i) below;

 

(ii)                                  The Executive may continue participation
for both her and her covered dependents (if applicable), in accordance with the
terms of the applicable benefits plans, in the Employer’s group health plan
pursuant to plan continuation rules under the Consolidated Omnibus Budget
Reconciliation Act (“COBRA”).  In accordance with COBRA, assuming the Executive
and her covered dependents (if applicable), are covered under the Employer’s
group health plan as of her date of termination, the Executive will be entitled
to elect COBRA continuation coverage for the legally required COBRA period (the
“Continuation Period”) for such persons.  If the Executive timely elects COBRA
coverage for group health coverage, she will be reimbursed for the full COBRA
cost of the coverage for herself (which shall be treated as taxable income to
Executive).  In addition, if the terms of the applicable plan documents do not
allow Employer to continue to provide COBRA coverage to Executive and her
covered dependents (if applicable), beyond the expiration of the
statutorily-proscribed COBRA period, the Employer shall make monthly cash
payments to Executive in an amount equal to the monthly COBRA premium for
coverage for Executive for the duration of the period between the expiration of
COBRA and twenty-four (24) months following her last day of employment. 
Notwithstanding the above, if the Executive becomes eligible for qualifying
health care coverage through a subsequent employer within twenty-four (24)
months after her last day of employment, the Employer’s obligations hereunder
with respect to the foregoing benefits provided in this subsection (ii) may be
terminated by the Employer.

 

(2)                                 Notwithstanding anything in this Agreement
to the contrary, if Executive breaches Sections 7 and 8 of this Agreement,
Executive will not thereafter be entitled to receive any further compensation or
benefits pursuant to Section 5(d)(1) of this Agreement other than the right to
participate in COBRA.

 

(3)                                 For purposes of this Agreement, “Good
Reason” shall mean any of the following:  (i) a material diminution in the
Executive’s Base Salary; (ii) a material diminution in the

 

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Executive’s authority, duties or responsibilities; (iii) a material diminution
in the authority, duties, or responsibilities of the officer to which the
Executive is required to report; (iv) a material diminution in the budget over
which the Executive retains authority; (v) a material change in the geographic
location at which the Executive must perform her services, provided, however,
that a change in location of the headquarters to Richmond, Virginia shall not
constitute Good Reason; or (vi) a material breach of this Agreement.

 

(4)                                 To terminate this Agreement and her
employment under this Agreement for Good Reason, the Executive must provide
written notice to the Employer of the existence of the circumstances providing
grounds for termination for Good Reason within 90 days of the initial existence
of such grounds and must give the Employer at least 30 days from receipt of such
notice to cure the condition constituting Good Reason (“Notice of Good
Reason”).  Such termination must be effective within one year after the initial
existence of the condition constituting Good Reason.  In the event of
termination for Good Reason, the date of termination shall be the effective date
specified in the Executive’s Notice of Good Reason.

 

(e)                                  Employer with “Cause”.  The Employer shall
have the right to terminate Executive’s employment under this Agreement at any
time for Cause, which termination shall be effective immediately, upon delivery
of written notice to the Executive which shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
Employee’s employment and subject to the applicable cure provisions as set forth
below.  Termination for “Cause” shall mean termination because of the
Executive’s personal and material dishonesty regarding matters related to the
performance of her duties for the Employer, willful misconduct in connection
with the performance of her duties for the Employer, breach of fiduciary duty
involving personal profit, willful violation of any final cease-and-desist order
or material breach of any provision of this Agreement.  Cause shall also include
termination because of

 

(1)                                 material misappropriation of, or other
intentional material damage to the property or business of the Employer by the
Executive,

 

(2)                                 the Executive’s excessive absences other
than for physical or mental impairment or illness, subject to the cure
provisions set forth in Section 5(e)(4) of this Agreement.

 

(3)                                 the Executive’s admission or conviction of,
or plea of nolo contendere to, any felony or any other crime referenced in
Section 19 of the Federal Deposit Insurance Act that, in the reasonable judgment
of the Board, adversely affects the Employer’s reputation or the Executive’s
ability to carry out the Executive’s obligations under this Agreement or

 

(4)                                 the Executive’s non-compliance with the
provisions of Section 2(b) of this Agreement after notice of such non-compliance
from the Employer to the Executive and a reasonable opportunity for the
Executive to cure such non-compliance.  To terminate the Executive’s employment
under this Agreement for Cause pursuant to Section 5(e)(2) of this Agreement and
Section 5 (e)(4), the Employer must provide written notice to the Executive
within ninety (90) days of the initial existence of such grounds and must give
the Executive at least thirty (30) days from the receipt of such notice to cure
such condition. Notwithstanding the foregoing, the Employer may not terminate
the Executive’s employment under this Agreement for Cause unless the Employer
provides the Executive with both written notice in accordance with the By-laws
of Xenith and HoldCo of a special meeting of the Board to consider the
termination of the Executive’s employment under this Agreement for Cause and the
opportunity for the Executive to address such special meeting.  It shall not
constitute a breach of this Agreement for the Employer to suspend the
Executive’s duties and place the Executive on an unpaid leave

 

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during the period prior to the special meeting of the Board.  In the event
Executive’s employment under this Agreement is terminated for Cause, Executive
shall thereafter have no right to receive compensation or other unvested
benefits under this Agreement.

 

(f)                                   In Connection with a Change in Control. 
If, during the term of Executive’s employment under this Agreement and within
twelve (12) months immediately following a Change of Control or within six
(6) months immediately prior to such Change of Control, Executive’s employment
with the Employer under this Agreement is terminated without Cause or for Good
Reason, then the Employer shall pay to Executive, or in the event of her
subsequent death, to her designated beneficiary or beneficiaries, or to her
estate, as the case may be, in lieu of all other claims under Section 5(d) of
this Agreement, a severance payment in an amount equal to 200% of the sum of: 
i) her current rate of annual Base Salary in effect immediately preceding such
termination and ii) the average of her last two years’ annual bonus(es) earned,
if any, provided that such amount shall be paid in a single lump sum cash
payment on the date described in Section 5(i) below.  The Executive also shall
be entitled to the continued participation in benefits plan(s) as set out in
Subsection 5(d)(1)(ii) above.  In addition, all unvested outstanding equity
based award held by the Executive on the date of the Executive’s termination of
employment under this Section 5(f) shall vest.  Any accrued but unused paid time
off, bonuses or short term incentive compensation and vested benefits shall be
paid as described in Section 5 (b) of this Agreement.

 

For purposes of this Agreement, a Change in Control shall be deemed to have
occurred on the earliest of the following dates:

 

(i)                                     The date any entity or person shall have
become the beneficial owner of, or shall have obtained voting control over, 50%
or more of the outstanding common stock of HoldCo;

 

(ii)                                  The date HoldCo completes (x) a merger or
consolidation of HoldCo with or into another corporation or other business
entity (each, a “corporation”), regardless of whether HoldCo is the continuing
or surviving corporation or pursuant to which any shares of common stock of
HoldCo would be converted into cash, securities or other property of another
corporation, other than a merger or consolidation of HoldCo in which the holders
of the common stock of HoldCo immediately prior to the merger or consolidation
continue to own immediately after the merger or consolidation at least 50% of
the common stock of HoldCo, or if HoldCo is not the surviving corporation, the
common stock (or other voting securities) of the surviving corporation; or (y) a
sale or other disposition of all or substantially all of the assets of HoldCo;
or

 

(iii)                               The date that Continuing Directors cease for
any reason to constitute a majority of the board of directors of HoldCo.  (The
term “Continuing Director” means any member of the board of directors of HoldCo,
while a member of such board and (a) who was a member of such board on the
Effective Date or (b) whose nomination for, or election to, such HoldCo Board
was recommended or approved by at least two-thirds of the members of such HoldCo
Board who are then Continuing Directors; provided, however, that no member of
such HoldCo Board whose initial assumption of office is in connection with an
actual or threatened contest relating to the election of directors shall be
deemed a Continuing Director.).

 

For the purposes of this Subsection, the term “person” shall mean any
individual, corporation, partnership, group, association or other person, as
such term is defined in Section 13(d)(3) or Section 14(d)(2) of the Exchange
Act, other than HoldCo, Xenith or any other subsidiary of HoldCo or any employee
benefit plan(s) sponsored or maintained by HoldCo or any subsidiary thereof, and
the term “beneficial owner” shall have the meaning given the term in Rule 13d-3
under the Exchange Act.

 

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(g)                                  Suspension per FDIA.  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 shall (i) pay on the first day of the
first month following such dismissal of charges (or as provided elsewhere in
this Agreement) the Executive all of the compensation withheld while the
obligations under this Agreement were suspended; and (ii) reinstate any such
obligations which were suspended.

 

(h)                                 409A Compliance.  Notwithstanding the
provisions relating to the timing of payments described in this Section 5 above,
if the Executive is a “specified employee” under Section 409A of the Internal
Revenue Code of 1986 and any regulations thereunder (the “Code”) on the date of
her termination of employment, payment of amounts due under Section of this
Agreement and that constitute deferred compensation shall be made as described
in Section 27 of this Agreement.

 

(i)                                     Severance Contingent on Release.  In
addition, within 60 days of termination of the Executive’s employment, and as a
condition to the Employer’s obligation to pay any severance under Sections
5(d) or 5(f) of this Agreement, the Executive shall execute, and not timely
revoke during any revocation period provided pursuant to such release, a release
and waiver of claims reasonably satisfactory to the Employer.  Payment, in most
instances,  will be made as soon as practicable after such release is effective
but in all events within such 60 day period. If the 60-day period spans two
calendar years, such severance payment will be made as soon as possible in the
subsequent taxable year, provided however that any portion of an insurance
premium due to be paid by the Employer during such 60-day period under Section 5
of this Agreement shall be paid by the Employer on the due date whether or not
the release and waiver has been signed.

 

(j)                                    Tax Counsel.  If tax counsel appointed by
the Employer (the “Tax Counsel”) determines that any or the aggregate value (as
determined pursuant to Section 280G of the Code) of all payments, distributions,
accelerations of vesting, awards and provisions of benefits by the Employer to
or for the benefit of Executive (whether paid or payable, distributed or
distributable, accelerated, awarded or provided pursuant to the terms of this
Agreement or otherwise) (a “Payment”) would constitute an “excess parachute
payment” within the meaning of Section 280G of the Code and be subject to the
excise tax imposed by Section 4999 of the Code (the “Excise Tax”), such Payment
shall be reduced to the least extent necessary so that no portion of the Payment
shall be subject to the Excise Tax, but only if, by reason of such reduction,
the net after-tax benefit received by the Executive as a result of such
reduction will exceed the net after-tax benefit that would have been received by
the Executive if no such reduction were made.  The Payment shall be reduced,  if
applicable, by the Employer in the following order of priority: (A) reduction of
any cash severance payments otherwise payable to the Executive that are exempt
from Section 409A of the Code; (B) reduction of any other cash payments or
benefits otherwise payable to the Executive that are exempt from Section 409A of
the Code, but excluding any payments attributable to any acceleration of vesting
or payments with respect to any equity award that are exempt from Section 409A
of the Code; (C) reduction of any payments attributable to any acceleration of
vesting or payments with respect to any equity award that are exempt from
Section 409A of the Code, in each case beginning with payments that would
otherwise be made last in time; and (D) reduction of any other payments or
benefits otherwise payable to the Executive on a pro-rata basis or such other
manner that complies with Section 409A of the Code, but excluding any payments
attributable to any acceleration of vesting and payments with respect to any
equity award that are exempt from Section 409A of the Code.  If, however, such
Payment is not reduced as described above, then such Payment shall be paid in
full to the Executive and the Executive shall be responsible for payment of any
Excise Taxes relating to the Payment.

 

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All determinations required to be made under this Section 5, and the assumptions
to be utilized in arriving at such determination, shall be made by the Tax
Counsel, which shall provide its determinations and any supporting calculations
both to the Employer and Executive within 10 business days of having made such
determination.  The Tax Counsel shall consult with any nationally recognized
compensation consultants, accounting firm and/or other legal counsel selected by
the Company in determining which payments to, or for the benefit of, the
Executive are to be deemed to be parachute payments within the meaning of
Section 280G of the Code.  In connection with making determinations under this
Section 5, the Tax Counsel shall take into account the value of any reasonable
compensation for services to be rendered by the Executive before or after the
Change in Control, including without limitation, the Executive’s agreeing to
refrain from performing services pursuant to a covenant not to compete or
similar covenant, and the Employer shall cooperate in good faith in connection
with any such valuations and reasonable compensation positions. Without limiting
the generality of the foregoing, for purposes of this provision, the Employer
agrees to allocate as consideration for the covenants set forth in Section 8 the
maximum amount of compensation and benefits payable under Section 5 hereof
reasonably allocable thereto so as to avoid, to the extent possible, subjecting
any Payment to tax under Section 4999 of the Code.

 

(k)  Offset/Recovery Upon Breach by Executive.  Notwithstanding anything in this
Agreement to the contrary, if the Executive breaches Section 8 of this
Agreement, the Executive will not thereafter be entitled to receive any further
compensation or benefits pursuant to Section 5 and/or will be required to repay
any such benefits for the period in breach of Sections 7 and/or 8 of this
Agreement.

 

6.                                      Indemnification.  Notwithstanding
anything in the articles of incorporation or By-laws of Xenith or HoldCo to the
contrary, the Executive shall at all times during the Executive’s employment by
Xenith or HoldCo, and after such employment, be indemnified by such entities to
the fullest extent applicable law permits for any matter in any way relating to
the Executive’s affiliation with Xenith or HoldCo, provided, however, that if
Xenith or HoldCo shall have terminated the Executive’s employment for Cause,
then neither Xenith or HoldCo shall have any obligation whatsoever to indemnify
the Executive for any claim arising out of the matter for which the Executive’s
employment shall have been terminated for Cause or for any conduct of the
Executive not within the scope of the Executive’s duties under this Agreement.

 

7.                                      Confidential Information.  The Executive
understands that in the course of the Executive’s employment by the Employer,
the Executive will receive confidential information concerning the business of
Xenith or HoldCo and that the Employer desires to protect the confidentiality of
such information (hereinafter “Confidential Information”).  For purposes of this
Section 7, Confidential Information means data and information (i) relating to
the business of the Employer, regardless of whether the data or information
constitutes a trade secret (as such term is defined in the Uniform Trade Secrets
Act), (ii) disclosed to Executive or of which she became aware of as a
consequence of her relationship with the Employer, (iii) having value to the
Employer, (iv) not generally known to competitors of the Employer; and (v) which
includes trade secrets, methods of operation, names and contact information of
customers and potential customers, information related to customers and
potential customers, profit margins, financial information and projections,
personnel data, and similar information; provided, however, that such term shall
not mean data or information which has been voluntarily disclosed to the public
by the Employer, except where such public disclosure has been made by Executive
without authorization from the Employer, which has been independently developed
and disclosed by others, or which has otherwise entered the public domain
through lawful means.  Confidential Information also includes any information
described in this Section 7 which the Employer obtains from a third party and
treats as proprietary or confidential, whether or not owned or developed by the
Employer.  The Executive agrees that the Executive will not at any time during
or after the period of the Executive’s employment by the Employer reveal to
anyone outside the Employer, or use for the Executive’s own

 

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benefit, any Confidential Information without prior specific written
authorization by the Employer.  Upon termination of this Agreement, and upon the
request of the Employer, the Executive shall promptly deliver to the Employer
any and all written or electronic materials, records and documents, including
all copies of this Agreement, made by the Executive or coming into the
Executive’s possession during her employment hereunder and that the Executive
retained containing or concerning Confidential Information and all other written
or electronic materials furnished to and retained by the Executive by the
Employer for the Executive’s use during her employment, excluding all copies of
this Agreement, whether of a confidential nature or otherwise.

 

8.                                      Restrictive covenants.

 

(a)                                 Non-Solicitation of Clients. During the
Executive’s employment and for a period of one year following the Executive’s
last day of employment with the Employer, the Executive covenants and agrees
that she will not, for herself or for the benefit of another, solicit a Client
for the purpose of providing banking services of any type that the Employer
rendered to its clients in the twelve months immediately preceding her
termination of employment. The term “Client” as used in this Section 8 of the
Agreement shall be defined as any individual or entity that paid or engaged
Xenith for banking services in the twelve month period immediately preceding the
date of Executive’s termination of employment and with whom Executive had
contact, involvement or communication, directly or indirectly, during such time.

 

(b)                                 Non-Solicitation of Employees. During the
Executive’s employment and for a period of one year following the Executive’s
last day of employment with the Employer, the Executive will not, on the
Executive’s own behalf or on behalf of any third party, recruit or hire any
individual who was employed by the Employer or Holdco at any point during the
twelve month period immediately preceding her last day of employment and with
whom the Executive had contact, involvement or communication, during such time
period.

 

(c)                                  Non-Competition.  During Executive’s
employment and for a period of one year following the Executive’s last day of
employment with the Employer, the Executive covenants and agrees that she will
not, either as principal, owner (of greater than 5% of the ownership interests),
partner, director, officer, employee, agent, or consultant, compete with i)
HoldCo by providing services to any competing bank holding company that are
substantially similar to those she provided to HoldCo during her employment; or
ii) Xenith, by providing services that are substantially similar to those she
provided to Xenith to any financial institution that offers banking products and
services competitive to those offered by Xenith at any time during the twelve
month period immediately preceding Executive’s last day of employment. The
foregoing restrictions shall only apply within a 50 mile radius of the location
of  HoldCo’s corporate headquarters (with respect to Section 8(c)(i), above) or
ii) 50 miles of any office, branch or division of Xenith in operation as of the
date of her last day of employment (with respect to Section 8(c)(ii), above).

 

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

 

10.                               Regulatory Compliance.  Notwithstanding
anything to the contrary herein, any compensation or other benefits paid to the
Executive shall be limited to the extent required by any federal or state
regulatory agency having authority over Xenith or HoldCo, including any
limitations or prohibitions on payments under Section 5 of this Agreement.  The
Executive agrees that compliance by Xenith or HoldCo

 

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with such regulatory restrictions, even to the extent that compensation or other
benefits paid to the Executive are limited, shall not be a breach of this
Agreement by the Company or the Employer.

 

11.                               Clawback.  Notwithstanding any other
provisions in this Agreement to the contrary, the Executive agrees that any
compensation and benefits provided to her under this Agreement that are subject
to recovery or recoupment under any applicable law, regulation or securities
exchange rule, shall be recouped by the Employer as necessary to satisfy such
law, regulation, or rules.  These laws, regulations, and rules include, but are
not limited to, where such compensation constitutes “excessive compensation”
within the meaning of 12 C.F.R. Part 30, Appendix A, where the Executive has
committed, is substantially responsible for, or has violated, the respective
acts, omissions, conditions, or offenses outlined under 12 C.F.R. § 359.4(a)(4),
and if Xenith becomes, and for so long as  Xenith  remains, subject to the
provisions of 12 U.S.C. § 1831o(f), where such compensation exceeds the
restrictions imposed on the senior executive officers of such an institution. In
addition, the Executive agrees that any incentive compensation provided to her
under this Agreement that is subject to recovery or recoupment under any
internal policy of the Employer shall be shall be recouped by the Employer as
necessary to satisfy such internal policy.  Executive agrees to promptly return
or repay any such compensation, and authorizes the Employer to deduct such
compensation from any other payments owed to the Executive by the Employer if
she fails to do so.

 

12.                               Entire Agreement; Amendment.  This Agreement
contains the entire agreement between the Employer and the Executive with
respect to the subject matter of this Agreement, and this Agreement may not be
amended, waived, changed, modified or discharged except by an instrument in
writing executed by the Employer and the Executive.

 

13.                               Assignability.   This Agreement shall be
binding upon, and inure to the benefit of, the Employer and its or their legal
successors and assigns.  The Executive may not assign this Agreement, but the
Executive’s benefits under this Agreement shall inure to the benefit of the
Executive’s heirs, executors, administrators and legal representatives to the
extent this Agreement expressly provides.

 

14.                               Notice.  Any notice that may be given under
this Agreement shall be in writing and be deemed given when hand delivered and
acknowledged or, if mailed, one day after mailing by registered or certified
mail, return receipt requested, or if delivered by an overnight delivery
service, one day after the notice is delivered to such service, to any party to
this Agreement at its respective address stated above, or at such other address
as any party may by similar notice designate.

 

15.                               Specific Performance.  The parties agree that
irreparable damage would occur in the event that any of the provisions of
Sections 7 and 8 of this Agreement were not performed in accordance with their
specific terms or were otherwise breached.  The parties accordingly agree that
each of the parties to this Agreement shall be entitled to an injunction or
injunctions to prevent breaches of Sections 7 and 8 of this Agreement and to
enforce specifically the terms and provisions of Sections 7 and 8 of this
Agreement, and that such injunctive relief shall be in addition to any other
remedy to which any party is entitled at law or in equity. The existence of any
claim or cause of action of the Executive against the Employer, whether
predicated on this Agreement or not, will not constitute a defense to the
enforcement by the Employer of the restrictions, covenants and agreements
contained in this Agreement; provided, however, that the failure by the Employer
to pay the Executive her compensation due pursuant to Section 3 of this
Agreement shall constitute such a defense, as shall the Employer’s failure to
pay the severance and benefits due under Section 5(d)(1) of this Agreement if
such failure is not in response to a breach by the Executive of Section 8 of
this Agreement.  Furthermore, in addition to any other remedies, the Executive
agrees that any violation of the provisions in Section 8 will result in the
immediate forfeiture of any remaining payment that otherwise is or may become
due under Section 5, if applicable.  The Executive further agrees that should
she breach any of the provisions contained in Section 8 of this Agreement, the

 

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Executive shall repay to the Employer any amounts previously received by the
Executive pursuant to Section 5 that are attributable to that portion of the
payments paid for the period during which the Executive was in breach of any of
the provisions.  The Employer and the Executive agree that all remedies
available to the Employer or the Executive, as applicable, shall be cumulative.

 

16.                               No Third Party Beneficiaries.  Nothing in this
Agreement, express or implied, is intended to confer upon any person or entity
other than the Employer and the Executive and the heirs, executors,
administrators and personal representatives of the Executive any rights or
remedies of any nature under or by reason of this Agreement.

 

17.                               Successor Liability.  The Employer shall
require any subsequent successor, whether direct or indirect, by purchase,
merger, consolidation or otherwise, to all or substantially all of the business
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, and the Executive
agrees to continue to be bound in such case.

 

18.                               Mitigation.  The Executive shall not be
required to mitigate the amount of any payment provided for in this Agreement by
seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Agreement be reduced by any compensation earned by
the Executive as the result of employment by another employer or by retirement
benefits payable after the termination of this Agreement, except that the
Employer shall not be required to provide the Executive and the Executive’s
eligible dependents with medical insurance coverage as long as the Executive and
the Executive’s eligible dependents are receiving comparable medical insurance
coverage from another employer.

 

19.                               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, 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.

 

20.                               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 20 shall preclude the assumption of such rights by
executors, administrators or other legal representatives of the Executive or the
Executive’s estate and their assigning any rights under this Agreement to the
person or persons entitled hereto.

 

21.                               Severability.  The invalidity or
unenforceability of any term, phrase, clause, paragraph, section, restriction,
covenant, agreement or other provision of this Agreement shall in no way affect
the validity or enforceability of any other provision, or any part of this
Agreement, but this Agreement shall be construed as if such invalid or
unenforceable term, phrase, clause, paragraph, section, restriction, covenant,
agreement or other provision had never been contained in this Agreement unless
the deletion of such term, phrase, clause, paragraph, section, restriction,
covenant, agreement or other provision would result in such a material change as
to cause the covenants and agreements contained in this Agreement to be
unreasonable or would materially and adversely frustrate the objectives of the
parties as expressed in this Agreement.

 

22.                               Survival of Benefits.  Any provision of this
Agreement that provides a benefit to the Executive and that by the express terms
of this Agreement does not terminate upon the expiration of her

 

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employment hereunder shall survive the expiration of the term of her employment
and shall remain binding upon the Employer until such time as such benefits are
paid in full to the Executive or the Executive’s estate.

 

23.                               Construction.  This Agreement shall be
governed by and construed in accordance with the internal laws of the
Commonwealth of Virginia, to the extent not inconsistent with and governed by
federal law, without giving effect to principles of conflict of laws.  All
headings in this Agreement have been inserted solely for convenience of
reference only, are not to be considered a part of this Agreement and shall not
affect the interpretation of any of the provisions of this Agreement.

 

24.                               Jury Waiver.  The Employer and the Executive
agree that in any litigation action or proceeding arising out of or relating to
this Agreement or the Executive’s employment with the Employer, trial shall be
in a court of competent jurisdiction without a jury.  The Employer and the
Executive irrevocably waive any right each may have to a jury trial and a copy
of this Agreement may be introduced as written evidence of the waiver of the
right to trial by jury.  The Employer has not made and the Executive has not
relied on, any oral representation regarding the enforceability of this
provision.  The Employer and the Executive have read and understand the effect
of this jury waiver provision.

 

25.                               Venue.  The Employer and the Executive hereby
expressly consent to be subject to the jurisdiction of the Commonwealth of
Virginia to determine any disputes regarding this Agreement and further agree
that the exclusive venue for any such dispute shall be in Virginia Beach,
Virginia.  Employer and Executive agree to accept the jurisdiction of any such
court and each waives any claim and warrants that she or it will not argue or
contend that any such court does not have jurisdiction, is not an appropriate
forum or venue or that such a forum is inconvenient.

 

26.                               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.

 

27.                               Compliance with Internal Revenue Code
Section 409A.  All payments that may be made and benefits that may be provided
pursuant to this Agreement are intended to qualify for an exclusion from
Section 409A of the Code and any related regulations or other pronouncements
thereunder and, to the extent not excluded, to meet the requirements of
Section 409A of the Code.  Any payments made under Section 5 of this Agreement
which are paid on or before the last day of the applicable period for the
short-term deferral exclusion under Treasury Regulation § 1.409A-1(b)(4) are
intended to be excluded under such short-term deferral exclusion.  Any remaining
payments under Section 5 except certain payments related to extended group
health plan coverage are intended to qualify for the exclusion for separation
pay plans under Treasury Regulation § 1.409A-1(b)(9). Each payment made under
Section 5 shall be treated as a “separate payment”, as defined in Treasury
Regulation § 1.409A-2(b)(2), for purposes of Code Section 409A. None of the
payments under this Agreement are intended to result in the inclusion in
Executive’s federal gross income on account of a failure under
Section 409A(a)(1) of the Code.  The parties will administer and interpret this
Agreement to carry out such intentions.  However, the Employer does not
represent, warrant or guarantee that any payments that may be made pursuant to
this Agreement will not result in inclusion in the Executive’s gross income, or
any penalty, pursuant to Section 409A(a)(1) of the Code or any similar state
statute or regulation.  Notwithstanding any other provision of this Agreement,
to the extent that the right to any payment (including the provision of
benefits) hereunder provides for the “deferral of compensation” within the
meaning of Section 409A(d)(1) of the Code, the payment shall be paid (or
provided) in accordance with the following:

 

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(a)                                 If the Executive is a “Specified Employee”
within the meaning of Section 409A(a)(2)(B)(i) of the Code on the date of the
Executive’s termination (the “Separation Date”), and if an exemption from the
six month delay requirement of Code Section 409A(a)(2)(B)(i) is not available,
then no such payment that is not otherwise exempt under 409A shall be made or
commence during the period beginning on the Separation Date and ending on the
date that is six months following the Separation Date or, if earlier, on the
date of the Executive’s death.  The amount of any payment that would otherwise
be paid to the Executive during this period shall instead be paid to the
Executive on the first day of the first calendar month following the end of the
period.

 

(b)                                 Payments with respect to reimbursements of
expenses or benefits or provision of fringe or other in-kind benefits shall be
made on or before the last day of the calendar year following the calendar year
in which the relevant expense or benefit is incurred.  The amount of expenses or
benefits eligible for reimbursement, payment or provision during a calendar year
shall not affect the expenses or benefits eligible for reimbursement, payment or
provision in any other calendar year.

 

28.                               Complete Agreement/Waiver.  This Agreement and
the agreements, policies and plans referenced herein, are the full and complete
expression of the terms and conditions of the Executive’s employment with
Employer.  This Agreement, upon closing of the Acquisition, supersedes any prior
agreements between HRB and/or BHR and the Executive.  Accordingly, upon closing,
the Executive understands and agrees that, upon the closing of the Acquisition,
she is not entitled to any compensation under any prior Agreement between her
and HRB and/or BHR, including but not limited to her May 22, 2013, Employment
Agreement, as amended, and specifically waives any such compensation.  Provided,
however, nothing herein is intended to, or does, waive any  stock option or
Restricted Stock Unit grant of Executive prior to the closing of the
Acquisition, vested or unvested, in effect prior to the execution of this
Agreement.

 

29.                               Pronouns.  Use of the male should be construed
as the female herein, where applicable.

 

[Remainder of page intentionally left blank; signature page follows.]

 

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IN WITNESS WHEREOF, each of HRB, BHR and the Executive have executed this
Agreement as of the date first written above.

 

 

HAMPTON ROADS BANKSHARES, INC.

 

 

 

 

 

By:

/s/ Charles M. Johnston

 

Name: Charles M. Johnston

 

Its: Chairman and Chief Executive Officer

 

 

 

BANK OF HAMPTON ROADS

 

 

 

 

 

By:

/s/ Charles M. Johnston

 

Name: Charles M. Johnston

 

Its: Chief Executive Officer

 

 

 

EXECUTIVE

 

 

 

 

 

/s/ Donna W. Richards

 

Donna W. Richards

 

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