Exhibit 10.7

 

CHANGE IN CONTROL AGREEMENT

 

THIS CHANGE IN CONTROL AGREEMENT (the “Agreement”) is entered by and between
Parkway Acquisition Corp., a Virginia corporation (“Parkway”), and Jonathan L.
Kruckow (“Employee”).

 

WITNESSETH:

 

WHEREAS, Employee is employed in the senior management position of Executive
Vice President and Regional President, Virginia for Parkway and/or its wholly
owned subsidiary, the Skyline National Bank (“Bank”). For purposes of this
Agreement, Parkway, the Bank, along with any future Successor (defined below),
as a result of a future Change in Control Event shall be referred to herein as
the “Employer”.

 

WHEREAS, Parkway desires for the Employee to be eligible for severance benefits
in the event that a Change of Control Event occurs during the term set forth in
Sections 4(A) and 10 of this Agreement, and desires to secure reasonable
protections for its legitimate business interests through certain loyalty
obligations.

 

WHEREAS, the Employee desires to continue employment with Parkway and the Bank
and to obtain the benefits provided by this Agreement, and Employee finds the
loyalty obligations requested to be reasonable, and understands that these
obligations will continue even if the severance benefits are not paid or become
payable under Section 4.

 

WHEREAS, a prior Change in Control Agreement was entered into between the
parties on November 22, 2017, but the Employee’s right to receive severance
benefits under the earlier agreement terminated.

 

WHEREAS, the Board of Directors of Parkway has authorized and approved the need
for and appropriateness of making this new Agreement with the Employee.

 

NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth, and for other good and valuable
considerations, the receipt and sufficiency of which hereby are acknowledged,
Parkway and Employee hereby agree as follows:

 

1.     Effective Date of Agreement. This Agreement is effective as of June 1,
2019 (the “Effective Date”) and shall remain in effect until terminated as
provided herein.

 

2.     Employment. Employee’s employment with Employer has been and will remain
an “at will” relationship. This Agreement does not in any way alter the “at
will” nature of the relationship, nor does it constitute an agreement by
Employer to employ Employee for any particular period of time or in any
particular capacity. Nothing in this Agreement is intended or should be
interpreted to confer upon Employee the right to continued employment by
Employer or to interfere with or restrict in any way the right of Employer to
discharge Employee or terminate Employee’s employment at any time or for any
reason whatsoever, with or without Cause (defined below), and without any
obligation or liability to Employee, except as herein provided, it being the
intent of the parties to provide for payment of the severance benefits specified
herein only in the event of the termination of Employee’s employment under the
circumstances described in Section 3.

 

 

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3.      Definitions. For purposes of this Agreement:

 

(A)     Cause. “Cause” means the termination of Employee’s employment by the
Employer as a result of a finding by a majority vote of the Board (excluding
Employee if he is a Board member) that any of the following have occurred: (i)
Employee has engaged in or has directed others to engage in an act or omission,
or series of actions, deemed to be fraudulent, dishonest or unlawful; (ii) any
knowing and material breach of this Agreement by Employee; (iii) any knowing and
material violation by Employee of corporate policies and procedures that result
in damage to the business or reputation of the Employer, including, without
limitation, the Bank’s Professional Code of Conduct, Code of Ethics and Conflict
of Interest Policy and policies prohibiting discrimination, harassment and/or
retaliation; (iv) Employee has engaged in, or has directed others to engage in,
a criminal act (other than a minor traffic offense) or other willful misconduct
determined to be substantially detrimental to the best interests of the
Employer; (v) knowing breach of fiduciary duty by Employee; (vi) Employee fails
to follow the directions of the CEO or Board, is grossly neglectful of
Employee’s duties or continues to fail to perform assigned duties, which are not
cured within twenty-one (21) days after the CEO or Board provides written notice
of the issue; (vii) Employee engages in conduct which violates any material law,
rule or standard of regulatory agencies governing the Employer, including but
not limited to the Virginia Bureau of Financial Institutions, the Office of the
Comptroller of the Currency, the U.S. Financial Stability Oversight Council,
U.S. Treasury Department, Bureau of Consumer Financial Protection, and the
Securities and Exchange Commission; or (viii) demonstrated incompetence of
Employee.

 

(B)     A “Change of Control Event” shall have occurred at such time as:

 

(i)     any person or entity, including a “group” as defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, a wholly-owned subsidiary thereof, or
any employee benefit plan of the Parkway or any of its subsidiaries becomes the
beneficial owner of Parkway securities having fifty percent (50%) or more of the
combined voting power of the then outstanding securities of Parkway that may be
cast for the election of directors of Parkway (other than as a result of the
issuance of securities initiated by Parkway in the ordinary course of business);
or

 

(ii)     as the result of, or in connection with, any cash tender or exchange
offer, merger or other business combination, sale of assets or contested
election, or any combination of the foregoing transactions, the holders of all
Parkway’s securities entitled to vote generally in the election of directors of
the Parkway immediately prior to such transaction constitute, following such
transaction, less than a majority of the combined voting power of the
then-outstanding securities of the Parkway or any of their respective successor
corporations or entities entitled to vote generally in the election of the
directors of Parkway or such other corporation or entity after such
transactions; or

 

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(iii)     such other change of ownership or control event as defined in Treasury
Regulation §1.409A-3(i)(5) or any subsequent, applicable Treasury Regulation.

 

(C)     Competing Financial Services Organization. “Competing Financial Services
Organization” means an entity unaffiliated with the Employer that is engaged in
the commercial, retail or mortgage banking or lending business, wealth
management business, investment advisory business, or trust service business
that provides services and products that are the same as or competitive with the
services that products offered by the Employer immediately prior to the
Termination Date or were approved by the Employer to be offered within ninety
(90) days of the Termination Date.

 

(D)     Competitive Service or Product. “Competitive Service or Product” means
those services or products offered by a Competing Financial Services
Organization that are the same as or competitive with those services or products
offered by the Employer at the Termination Date or which have been approved by
the Employer to be offered within ninety (90) days of the Termination Date.

 

(E)     Confidential Information. “Confidential Information” means all
non-public information, technical or financial data, materials, computer records
or data, trade secrets and/or know-how regarding Employer or its internal
operations, policies that is treated as confidential, that is not generally
known by persons who are not employed by the Employer or are not a member of the
Boards of Directors of Parkway, the Bank, or the Successor and that is not
otherwise available to the public by lawful and proper means. Confidential
Information also includes all information regarding shareholders of Parkway, or
a Successor, all information received from customers of the Bank, and any
affiliates, or Successors as well as the nature of the products and the terms of
the services provided to those customers. All such non-public information is
considered Confidential Information regardless of the manner which such
information is conveyed or stored (orally, written, electronically or digitally)
as well as information or materials designated or treated as confidential by a
federal or state regulatory or enforcement agency Confidential Information
includes, but is not limited to, strategic plans and forecasts; product or
service plans or research; customer records and lists; marketing research, plans
and/or forecasts; compilations and databases of customers, business or marketing
information that are developed by or for the Employer; budget and/or financial
information; customer contact, account and mailing information; pricing, costs
or profitability analysis; sales and marketing techniques and programs;
incentive compensation plans; account information (including loan terms,
expiration or renewal dates, fee schedules and commissions); software, access
codes, passwords, databases and source codes; inventions; processes, formulas,
designs, drawings or engineering information; hardware configuration, and all
other financial or other business information or systems of the Employer, as
well as the following non-public and sensitive information regarding the
employees of the Employer: Social Security numbers, date of birth, names of
family members, home addresses and email addresses, telephone numbers,
health-related information and compensation information. This definition applies
to information generated by Employee or others who work for the Employer, as
well as information received from a customer or another third party. The above
list is not exhaustive, and Confidential Information also includes other
information that is identified, marked or treated as confidential or
proprietary, or that would appear to a reasonable person to be confidential or
proprietary in the context and circumstances in which the information is known
or used. For purposes of this definition, the term “not available to the public”
shall include all information or material in the public domain by virtue of
improper disclosure by Employee or by another with his permission.
Notwithstanding the foregoing, information shall not be considered Confidential
Information if (i) such information is already known to others not bound by a
duty of confidentiality with respect thereto, (ii) such information is or
becomes publicly available through no fault of Employee, or (iii) the furnishing
or use of such information is compelled by or in connection with legal or
administrative proceedings.

 

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(F)     Customer. “Customer” means a Person or Entity that has an account with,
loan from, an investment or deposit with the Employer, or that has received or
used other financial or investment products or services from the Employer at any
time within the twelve (12) months immediately prior to the Termination Date.

 

(G)     Determination of Long Term Incapacity. “Determination of Long Term
Incapacity” shall mean a good faith determination by Employer that, as a result
of mental or physical illness or injury Employee has failed to perform
Employee’s assigned duties with Employer on a full time basis for a period
exceeding six (6) consecutive months.

 

(H)     Employer. “Employer” means any or all of the following: Parkway
Acquisition Corp., it’s subsidiary Skyline National Bank and all of Parkway or
the Bank’s other existing or future affiliates or subsidiaries, as well as any
Successor (see Section 3(L) below.

 

(I)     Good Reason. “Good Reason,” subject to compliance with the provisions of
Section 4(F), shall mean the existence of one or more of the following
conditions, in the good faith judgment of Employee, which arises in connection
with or within twelve (12) months after the effective time of a Change in
Control Event absent the express consent of Employee:

 

(i)     a reduction in Employee’s base compensation below the sum of 90% of the
Employee’s Base Salary as of the date of this Agreement;

 

(ii)     a material reduction in the Employee’s position such that the Employee
is no longer considered an officer-level employee of either a bank or bank
holding company; or

 

(iii)     a change in the geographic location at which Employee must perform
services over 120 miles from the location at which Employee was serving
immediately prior to the Change in Control Event.

 

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To avoid any confusion under this Section 3(I)(ii), the Employee, who currently
holds a      senior executive position with either or both Parkway and the Bank
has no right to insist      on the same position at the same level with the
Employer after a Change in Control      Event. Employee will have no right to
claim a Good Cause termination under Section      3(I)(ii), if Employee is
retained after the Change in Control Event but is demoted and      given a
lower-level officer position (e.g., CFO to Controller, or CLO to Regional Market
     Manager) so long as the base salary for the new position remains at or
above the      guaranteed amount in Section 3(I)(i). If however, in connection
with the change in      position and status, the Employer also imposes either a
reduction in the Employee’s      guaranteed base salary or requires a material
geographic relocation, then Good Cause      may be declared to exist under
Sections 14(I)(i) and/or (iii).

 

(J)     Other than Good Reason. “Other than Good Reason” shall mean any
voluntary termination by Employee which is not for Good Reason.

 

(K)     Person/Entity. “Person” shall mean any Entity or individual, and the
heirs, executors, administrators, legal representatives, successors, and assigns
of such “Person” where the context so permits. The term “Entity” shall mean any
general partnership, limited partnership, limited liability company,
corporation, joint venture, trust, business trust, cooperative or association or
any foreign trust or foreign business organization.

 

(L)     Successor. “Successor” shall mean any person or entity (corporate or
otherwise) into which, after a Change in Control Event, Parkway, the Bank and/or
their subsidiaries and affiliates (or their successors or assigns) shall be
merged or consolidated or to which all or substantially all of the assets
(including, but not limited to, a sale of substantially all of Parkway, the Bank
or the Bank's loan assets) shall be transferred in any manner as provided in
Section 3(B) or which by agreement assumes the Employer’s obligations under this
Agreement, or which in connection with and after a Change in Control Event
becomes (by agreement, operation of law or otherwise) the employer of Employee.

 

(M)     Retirement. “Retirement” shall mean Employee’s retirement from
employment with the Employer on or after reaching age 65.

 

(N)     Termination Date. “Termination Date” means the effective date as of
which Employee’s employment with Employer is terminated or is deemed terminated.

 

4.     Severance Benefits in Certain Events. If at the effective time of a
“Change in Control Event” (as defined above) or any time within twelve (12)
months immediately following a Change in Control Event, (i) the Employer
terminates Employee’s employment without “Cause” (as defined above) or, (ii) the
Employee terminates employment for “Good Reason” (as defined below), then in the
event of either (i) or (ii), and subject to each of the following: (x) the
limitations set forth herein and in Section 9 below, (y) compliance with the
various loyalty obligations set forth in Sections 11 to 14, and (z) the
Employee’s execution of a comprehensive Waiver and Release prepared by Employer
that waives and releases all claims relating to or arising from Employee’s
employment and the termination of that employment, the Employer shall pay or
cause to be paid the following severance benefits: (a) an amount equal to the
greater of (i) Employee’s annualized base salary for the calendar year preceding
the year in which the Termination Date occurs or (ii) the annualized base salary
for the calendar year in which the Termination Date occurs, and (b) if the
Employee elects COBRA continuation coverage under the Employer’s health plan,
then the Employer will pay on the Employee’s behalf the premiums required for
employee-only COBRA coverage for up to a maximum of twelve (12) months.

 

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(A)     Employee shall not be entitled to any severance benefits under this
Agreement if no Change in Control Event occurs on or before May 31, 2020, as the
Employer’s obligation to pay severance under this Agreement terminates no later
than May 31, 2020 as specified in Section 10 below, unless the Employer extends
the term by an amendment to this Agreement. Moreover, to avoid any confusion,
Employee will not be entitled to any severance benefits under this Agreement,
even if the Employer terminates the Employee without Cause (subject only to the
protection provided by Section 4(C) below) or the Employee terminates employment
for Good Reason during the term of this Agreement if no Change of Control Event
has occurred at the time of termination of employment.

 

(B)     If at any time, even if a covered Change in Control Event occurs during
the term of this Agreement, (i) the Employer terminates Employee’s employment
for “Cause,” (ii) Employee voluntarily terminates Employee’s employment with
Employer for Other than Good Reason, or (iii) Employee’s employment terminates
or is terminated due to Employee’s death, Retirement or pursuant to a
Determination of Long Term Incapacity, then in any of these situations, the
Employee shall have no right to severance benefits under this Agreement.

 

(C)     If however, Employee’s employment is terminated by Employer without
Cause prior to the effective time of a Change in Control Event, but following
the date on which Parkway’s Board of Directors has taken action to approve an
agreement, including any definitive agreement or an agreement in principle,
relating to a Change in Control Event and that event occurs within six (6)
months of the Employee’s termination from employment with Employer, then for
purposes of this Agreement, Employee shall be deemed to be employed by the
Employer as of the effective date of that Change of Control Event (should it
occur), and such termination of employment shall be deemed to occur at the
effective time of the Change in Control Event, and in this event, the Employee
will be entitled to severance benefits under Section 4 of this Agreement.

 

(D)     The base salary amount payable under this Section 4 shall be payable
over twelve (12) months in equal installments that coincide with the Employer’s
regular paydays and the COBRA premium payments shall be paid beginning on the
first regular pay period of Employer after the Waiver and Release becomes
binding. These payments are subject to all applicable tax withholdings, and the
Employee’s compliance with the loyalty obligations set forth in Section 11
below.

 

(E)     Further, in order for the Employee to exercise the right to terminate
for Good Reason, and to be eligible for severance benefits under this Agreement,
Employee must first give the Employer written notice of the condition believe to
constitute Good Reason and must provide the Employer at least thirty (30) days
to remedy such condition, and if the Employer fails to remedy the condition, the
Termination Date shall be on the thirty-first (31st) day after the notice is
given.

 

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5.     Possible Reduction in Payment and Benefits. If the payments and benefits
payable to Employee pursuant to this Agreement, either alone or together with
other payments and benefits which Employee has the right to receive from
Employer, would constitute a “parachute payment” under Section 280G of the
Internal Revenue Code (“Code”), the payments and benefits payable by Employer
pursuant to this Agreement shall be reduced, in the manner determined by
Employee, by the amount, if any, which is the minimum necessary to result in no
portion of the payments and benefits payable by the Employer under this
Agreement being non-deductible to the Employer pursuant to Section 280G of the
Code and subject to the excise tax imposed under Section 4999 of the Code. The
determination of any reduction in the payments and benefits to be made pursuant
to this Section 4 shall be based upon the opinion of the Employer’s independent
public accountants and the fee for such calculation shall be borne by the
Employer. Such accountants shall promptly prepare the foregoing opinion, but in
no event later than thirty (30) days from the Termination Date, and may use such
actuaries such as accountants deemed necessary or advisable for the purpose.

 

6.     Compliance with Code Section 409A. It is intended that this Agreement
comply with the provisions of Section 409A of the Code and the regulations and
guidance of general applicability issued thereunder (referred to herein as
“Section 409A”) so as to not subject the Employee to the payment of additional
interest and taxes under Section 409A. In furtherance of this intent, this
Agreement shall be interpreted, operated and administered in a manner consistent
with these intentions, and to the extent Section 409A would result in the
Employee being subject to the payment of an excise tax or any other additional
income taxes or interest under Section 409A, the parties agree to amend this
Agreement to avoid the application of such taxes and interest. The parties
further intend the installment payments contemplated or required by this
Agreement to be treated as a series of separate payments for 409A purposes.

 

(A)     Notwithstanding any provision in this Agreement to the contrary, as
needed to comply with Section 409A, if the Employee is a “specified employee”
(within the meaning of Section 409A), payments due under this Agreement shall be
subject to a six (6) month delay such that amounts otherwise payable during the
six (6) month period following the Employee’s separation from service (as
defined in Treasury Reg. §1.409A-1(h)) shall be accumulated and paid in a
lump-sum catch-up payment as of the first day of the seventh month following the
Employee’s separation from service (or, if earlier, the date of the Employee’s
death). To the extent that the Employee is required to pay for the cost of any
benefits to keep them in full force and effect during the six (6) month delay
period, the Employee shall also be reimbursed for such out-of-pocket expenses as
of the same date provided above.

 

(B)     This Section 6 shall not apply to the extent such payments can be
considered to be separation pay that is not part of a deferred compensation
arrangement under Section 409A.

 

7.     Legal Fees and Costs and Interest. If the Employee files suit to enforce
rights or receive benefits under this Agreement, and substantially prevails,
then the court shall award the Employee a dollar amount sufficient to cover the
Employee’s reasonable attorney fees and expenses incurred in the litigation. If
however, the Employer prevails in such action, then the Employee shall be liable
to reimburse the Employer for its attorney fees and costs, but not to exceed a
total amount of $50,000. In the event that Employee is entitled to any payment
under Section 4 or Section 7 hereof and such payment is not made within ten (10)
days after it was due or is determined to have been due, it shall bear interest
at the rate of three (3%) percent per annum from the date it was due until paid.

 

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8.     Documents. All documents, record, tapes and other media of any kind or
description relating to the business of Employer or any of its subsidiaries and
affiliates (the “Documents”), whether or not prepared by Employee, are and shall
be the sole and exclusive property of Employer. The Documents (and any copies)
shall be returned to Employer upon Employee’s termination of employment for any
reason or at such earlier time or times as Employer may specify. Employee and
Employee’s legal counsel shall, upon reasonable notice and during normal
business hours, have access to all records of Employer, related to determining
whether and when a Change in Control Event has occurred and the commencement of
consideration thereof.

 

9.     Regulatory Requirements & Limitations. Notwithstanding anything contained
in this Agreement to the contrary, it is understood and agreed that Employer
shall not be required to make any payment or take any action under this
Agreement if:

 

(A)     Employer is declared by any Regulatory Agency or Authority to be
insolvent, in default or operating in an unsafe or unsound manner, or if

 

(B)     in the opinion of counsel to Employer such payment or action (i) would
be prohibited by or would violate any provision of state or federal law
applicable to Employer, (ii) would be prohibited by or would violate any
applicable rules, regulations, orders or formal statements of policy, whether
now existing or hereafter promulgated, of any Regulatory Agency or Authority, or
(iii) otherwise is prohibited by any Regulatory Agency or Authority.

 

10.     Termination of Right to Severance. The Employee’s right to severance
benefits under Section 4 of this Agreement shall terminate automatically and the
Employer’s obligation to pay severance shall become null and void upon the
earlier of (a) May 31, 2020, unless the circumstances described Section 4(C)
occur or this Agreement is amended to extend the time period as permitted under
Section 19, or (b) the termination of the Employee’s employment for any reason
other than a termination that triggers the Employer’s obligation to provide
severance benefits under Section 4. Following any such termination of severance
rights under this Agreement, Employee shall have no further rights or
entitlement to severance benefits under this Agreement, except as provided in
Section 4(C). However, while the right to severance benefits shall terminate,
the remaining provisions of this Agreement shall survive and shall continue to
apply in full force and effect at all times during the remainder of the
Employee’s employment with the Employer and thereafter as set forth below.

 

11.     Loyalty Obligations. Employee acknowledges and agrees that by virtue of
the senior position held and his detailed involvement with the business and
affairs of the Employer, Employee will develop substantial expertise and
knowledge with respect to all aspects of the Employer’s business, affairs and
operations and will have access to all significant aspects of the business,
plans and operations of Employer, including the Confidential Information
(defined in Section 3(E)). As such, Employee acknowledges that he owes a
fiduciary duty of loyalty to the Employer to act in its best interests at all
times, and Employee agrees that the provisions of this Section 11, as well as
Sections 12 to 14 below (collectively the “Loyalty Obligations”) are reasonable
and necessary in order to protect the best interests of the Employer and survive
any termination of the right to receive severance benefits under Section 4
above.

 

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(A)     Confidential Information. At all times, even after termination of
employment (regardless of the circumstances), but subject to the limitations of
Section 11(E), Employee shall hold in strictest confidence, and shall not use or
disclose any of the Confidential Information (defined in Section 13(E)) to any
Person or Entity, except to fulfill his employment obligations and while acting
for the benefit and best interest of Employer, unless expressly authorized to do
so by the President and CEO of Employer. This duty to protect, and not use or
disclose Confidential Information shall remain in full force and effect until
such time as the information becomes available to the public by lawful and
proper means, and without a breach of duty of confidentiality by the Employee or
another.

 

(i)     Third Party Information. Employee also recognizes that Parkway, the Bank
and their affiliates have received, and in the future will receive, information
from third parties that the third party considers to be confidential or
proprietary information and which is, or may be, subject to a duty on the part
of Parkway, the Bank or their affiliates not to disclose to others and to
restrict its use only for certain limited purposes. Employee agrees to hold all
such confidential or proprietary information from third parties in the strictest
confidence and not to disclose it to any Person or Entity to use it except as
necessary in carrying out Employee’s work for the Employer consistent with the
obligations of Employer to such third party.

 

(ii)     Security and Access. At all times, Employee agrees to (a) comply with
and enforce the security policies and procedures which seek to protect and
safeguard the data, equipment, systems and all other facilities, IT resources
and communication technologies of the Employer, Bank or its Affiliates
(“Facilities and IT Resources”), and (b) not access or use any of the Facilities
and IT Resources in any manner after termination of employment (regardless of
the circumstances). Employee further agrees to promptly notify the Employer,
Bank or Affiliates, as applicable, in the event he/she learns of a violation of
any security policies or procedures by others, or of any other misappropriation
or unauthorized access, use, or tampering with any of the Facilities and IT
Resources by others.

 

(B)     Conflicting Employment. During employment by Employer, unless otherwise
specifically approved by the Board after full disclosure in writing, (i)
Employee shall not engage in any other employment, occupation, consulting or
other business activity directly related to the business in which the Employer
is now involved or becomes involved during Employee’s employment; and (ii)
Employee shall not engage in any other activities that conflict with the
business of the Employer or that materially interfere with his ability to devote
the time necessary to fulfill his obligations to the Employer.

 

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(C)     Notification of New Employer. In the event that Employee leaves the
employ of the Employer and begins employment elsewhere, Employee agrees the
Employer may send notice to Employee’s new employer (whether Employee is
employed as an employee, consultant, independent contractor, director, partner,
officer, advisor or manager) informing the new employer about Employee’s loyalty
obligations and restrictions contained in this Agreement.

 

(D)     Post-Employment Duty of Cooperation. By virtue of Employee’s employment,
Employee will know information, including but not limited to Confidential
Information, that is or may be material to and necessary for the Employer to
appropriately and successfully conclude matters that involve third parties. As a
result, following termination of employment (regardless of the circumstances))
Employee agrees to assist, and cooperate fully with, the Employer upon
reasonable request, and to do so voluntarily (without legal compulsion) when
such matters arise. This duty of cooperation is intended to allow the Employer
to meet its legal obligations and satisfactorily conclude matters in a manner
that achieves the best result possible for the Employer.

 

(i)     The matters on which cooperation may be requested include, but is not
limited to, the actual or contemplated defense, prosecution, or investigation of
claims involving the Employer or any of its subsidiaries or affiliate, by a
third party (including employees who may assert claims) as well as responding to
any other civil, criminal, administrative or investigative action, suit,
proceeding, or inquiry, whether formal or informal, by a federal, state, or law
enforcement or regulatory department, agency or authority, where the matter
arises from or is related to events, acts, or omissions involving or pertaining
to the operations, activities, employees or customers of the Employer that
occurred during the period of Employee’s employment by the Employer (“Third
Party Claims”).

 

(ii)     The Employee’s duty to cooperate includes, without limitation, Employee
making himself reasonably available upon reasonable notice, without subpoena, to
meet with the Employer and/or their counsel to provide complete, truthful and
accurate information in interviews, depositions, and trial testimony as well as
other related support activity. If the Employee provides cooperation under this
Section 11(D) during a period in which the Employer is paying severance pay to
the Employee, then the Employer will only reimburse the Employee for all
out-of-pocket travel expenses reasonably incurred at the Employer’s request.

 

(iii)     If the cooperation provided occurs when no severance pay or benefits
is due the Employee, then in addition to reimbursing the Employee for
out-of-pocket travel expenses, the Employer will also reimburse Employee for his
time expended on the Employer’s behalf at a rate of $300/day, or a pro-rata
portion thereof. The Employer will make reasonable efforts to accommodate the
scheduling needs of Employee so as to avoid, to the maximum extent possible,
interference with the Employee’s then current duties and responsibilities.

 

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(E)     Limitations/Permitted Disclosures. Nothing in this Section 11 or any
other provision of this Agreement shall be construed to prevent, interfere with,
limit or restrict the Employee from making disclosures, reports or complaints as
authorized, permitted or required by federal or state law, including without
limitation pursuant to the provisions of the Sarbanes-Oxley Act or Dodd-Frank
Wall Street Reform Act and Consumer Protection Act or by regulations, rules or
orders issued by federal or state regulatory agencies, including without
limitations, Virginia Bureau of Financial Institution, Office of Comptroller of
the Currency, U.S. Treasury, Bureau of Financial Protection or Securities and
Exchange Commission, provided the disclosure does not exceed the extent of
disclosure required by such law, regulation, rules or order.

 

Further, nothing in this Agreement shall prevent, limit, impede or interfere
(nor shall it be construed to prevent, limit, impede or interfere) with (i)
Employee’s obligation to provide full, complete and truthful testimony when so
required in response to a subpoena or order from a court or government agency;
(ii) Employee’s right to report (including pursuant to whistleblower laws)
possible violations of federal, state or local law or other improper
actions/omissions to government agencies, to file a charge or complaint of
discrimination, harassment or retaliation with government agencies, or to
participate or cooperate in any investigation conducted by any government
agency; or (iii) the Employee’s right to make confidential disclosures of
information (including trade secrets) to a government agency, or to an attorney
who is advising the Employee, for the purpose of reporting or as part of an
investigation into a suspected violation of law, nor shall it prohibit the
Employee from filing a lawsuit, complaint or other document that contains a
trade secret, so long as the information containing the trade secret is filed
under seal and is not otherwise disclosed except pursuant to court order.
Employee further understands that his rights when making such protected
disclosures are more fully spelled out in 18 U.S.C. § 1833, as amended, include
immunity from criminal and civil liability from making protected disclosures of
trade secrets under the Defend Trade Secrets Act of 2016. Finally, nothing in
this Agreement authorizes the Employer to terminate Employee’s employment or
otherwise retaliate against Employee for engaging in any of the foregoing
activities.

 

(F)      Notice of Third Party Request/Order. Unless prohibited by law,
regulation or order from doing so, the Employee shall provide written notice of
the receipt of a third party request or order to disclose Confidential
Information to the designated senior officers of the Parkway or its Successor
within two (2) business days of receiving this request or order, but in any
event sufficiently in advance of making any disclosure so as to permit the
Employer to contest the disclosure or seek confidentiality protections.

 

12.     Non-Solicitation Restriction. During employment with the Employer and
for the twelve (12) month period that immediately follows the Termination Date
(regardless of the circumstances), or such time period as the Employer is
obligated to pay severance benefits under this Agreement (whichever is longer)
(“Restricted Period”), Employee shall not unfairly compete with the Employer by
attempting to disrupt business relationships that the Employer has with either:
(i) a Customer (see Section 3(F)) with whom Employee either had communications
within the twelve (12) months prior to the Termination Date, or as to which
Employee received Confidential Information during that same twelve (12) month
period.

 

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In this regard, Employee shall refrain during the Restricted Period from
engaging in any of the following activities, whether Employee alone, or as an
officer, director, stockholder, partner, member, investor, employee, consultant
or agent for or on behalf of any other person or legal entity:

 

(i)     Attempting to disrupt or interfere with the business relationship with a
Customer (as limited above) by directly or indirectly requesting, suggesting,
encouraging or advising that Customer to withdraw, curtail, limit, cancel,
terminate or not renew all or any portion of the Customer’s business with the
Employer.

 

(ii)     Solicit the business of a Customer (as limited above) by communicating
directly with that Customer (regardless of who initiates the communication and
in what form it occurs) when as part of the communication Employee discusses or
offers a Competitive Service or Product.

 

13.     Non-Compete Restriction. At all times during employment with the
Employer and immediately following the Termination Date (regardless of the
circumstances) and throughout the Restricted Period (defined above), Employee
shall not accept employment with or provide services to or on behalf of any
Competing Financial Services Organization if (i) the position or the services to
be performed by Employee involve the same or substantially similar duties and
responsibilities as those performed by Employee on behalf of the Employer during
Employee’s last twelve (12) months of employment with the Employer, or (ii)
Employee is providing consulting, advisory or contract services (whether as a
director, officer, independent contractor, member, owner or shareholder) related
to the design, development, marketing or delivery of Competitive Services or
Products that are intended to be directly competitive with offerings by the
Employer.

 

(A)     Clarification. This restrictive covenant applies only if (a) the
Competing Financial Services Organization operates, or is seeking to open, one
or more branch facilities, within a sixty (60) mile radius of Floyd, Virginia or
within a twenty (20) mile radius of any branch or office operated by the
Employer (“Restricted Territory”) where its Competitive Services and/or Products
are offered to the public, and (b) Employee will be performing services for the
Competing Financial Services Organization in the Restricted Territory, or will
be supervising or providing assistance to others who will be offering or
providing Competitive Services or Products in the Restricted Territory on behalf
of the Competing Financial Services Organization.

 

(B)     Limitation. Nothing in this Section 13 shall prevent Employee from
owning stock in a publicly traded company that offers Competitive Services or
Products in the areas serviced by Employer, provided Employee’s ownership
constitutes less than five percent (5%) of the outstanding shares of the
publicly traded company.

 

14.     Anti-Piracy Restriction. At all times during employment with the
Employer, and immediately after the Termination Date (regardless of the
circumstances) throughout the Restricted Period (defined above), Employee shall
refrain from inducing, soliciting or encouraging a Key Employee (defined herein)
of the Employer to quit employment with the intent, hope or purpose of having
the Key Employee join a Competing Financial Services Organization in a similar
capacity, if that competitive organization has customer service facilities
located within the Restricted Territory (defined above). As used in this Section
14, “Key Employee” means anyone who holds a position of Vice President or higher
with the Employer or any individuals who have reported to, or worked directly
with, the Employee within the last six (6) months of Employee’s employment with
the Employer.

 

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15.     Enforcement. Employee acknowledges that each of the restrictive
covenants set forth above in Section 11 through 14 is a stand-alone restriction
and can be separately enforced as each is reasonable and necessary in order to
protect the legitimate business interests of the Employer. A violation of any
one of the covenants in Sections 11–14 will result in irreparable injury to the
Employer. In the event of a breach or a threatened breach of this Agreement, in
addition to all other remedies (legal or equitable), the Employer shall be
entitled to specific performance of these provisions and the issuance of a
restraining order and/or injunction prohibiting Employee from violating one or
more of these restrictions. Nothing contained herein shall be construed as
limiting or prohibiting the Employer from pursuing any other remedies available
to it for such breach or threatened breach, including the recovery of amounts
paid in severance or other money damages. Should an injunction be issued,
Employee waives the right to require that the court require a bond to be posted
in excess of $500.00.

 

16.     Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision or subsection of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law, then such
invalidity, illegality or unenforceability cannot be reformed by the court to
cause it to be enforceable, then the offending provision shall be stricken from
this Agreement, the remainder of this Agreement shall be construed and enforced
as if the invalid, illegal or unenforceable provision had never been contained
herein.

 

17.     Governing Law/Forum This agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia, with the exception of
its conflict of laws provisions. The parties agree that any lawsuit arising
under this Agreement, relating to the Employee’s employment or its termination
shall be brought and decided exclusively either in the Circuit Court for the
City of Roanoke, Virginia or the U.S. District Court for the Western District of
Virginia, Roanoke Division. Employee waives any objection to venue or
jurisdiction in these courts regardless of where he may live when a suit is
filed.

 

18.     Notices. All written notices required by this Agreement shall be deemed
given when delivered personally or sent by registered or certified mail, return
receipt requested, to the parties at their addresses set forth on the signature
page of this Agreement. Each party may, from time to time, designate a different
address to which notices should be sent by giving notice thereof in writing to
the other party at least three days before the effective date of such change in
address.

 

19.     Amendment. This Agreement may not be varied, altered, modified or in any
way amended except by an instrument in writing executed by the parties hereto or
their legal representatives. In this regard, the Employer may, in its sole
discretion, elect to amend this Agreement to extend (but not reduce) the time
period or term within which severance benefits may be due by changing the date
from May 31, 2018 to a later date. To be effective, any such change to increase
the time period or term in which severance benefits may become payable must be
memorialized in writing, approved by the Board of Parkway or its Successor, and
signed by President & CEO of the Employer and the Employee.

 

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20.     Binding Effect. As of the Effective date, this Agreement shall be
binding upon Employee and the Employer and the Successor.

 

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

 

22.     Entire Agreement. This Agreement constitutes the complete, final and
entire agreement of the parties with respect to the matters addressed herein and
it supersedes and replaces all other prior agreements and understandings,
whether written and oral, express or implied, with respect to the subject matter
of this Agreement. No promises, representations or warranties have been made by
any party to or for the benefit of the other with respect to such matters which
are not expressly set forth herein.

 

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

 

 

Parkway Acquisition Corp. 

 

 

 

 

 

 

By:

/s/ Thomas M. Jackson, Jr

 

 

 

Chairman of Board of Directors 

 

 

 

 

 

  Jonathan L. Kruckow           /s/ Jonathan L. Kruckow     Signature          

 

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