Form of Change in Control Severance Agreement



 Exhibit 10.4 
 FORM OF CHANGE IN CONTROL SEVERANCE AGREEMENT 
 This Change in Control Severance Agreement
(“Agreement”) is made and entered into as of November 1, 2008 between Valley Financial Corporation (“Company”), a Virginia corporation, and
                     (“Employee”). 
 WHEREAS, Employee is employed as                      of Valley Bank (“Employer”) which is either
the Company or a Subsidiary of the Company; and 
 WHEREAS, Company desires to provide Employee with certain benefits in the event that
Employee’s employment with Employer is terminated under the circumstances specified in this Agreement; 
 WHEREAS, Employee desires to
continue employment with Employer and to accept Company’s offer of the benefits specified in this Agreement; 
 NOW, THEREFORE, in
consideration of the premises and mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows: 
 SECTION 1.
DEFINITIONS. As used in this Agreement, the following capitalized terms have the indicated meanings unless the context clearly requires otherwise: 
 1.01. “Applicable Federal Rate” has the meaning ascribed to that term in Section 1274(b)(2)(B) of the Code. 
 1.02. “Board” means the Board of Directors of the Company, unless otherwise specified. 
 1.03.
“Cause” means (a) the continued failure (after notice from Employee’s supervisor or officer having superior authority over Employee) by Employee to perform his duties as an employee of Employer (other than any such failure
resulting from his incapacity due to physical or mental illness); or (b) the violation of a lawful directive from Employee’s supervisor or officer having superior authority over Employee; or (c) a breach of Employee’s fiduciary
duty; or (d) the engaging by the Employee in any conduct which has a material adverse financial effect on or is materially injurious to the Company or any Subsidiary and which was not done or omitted to be done in good faith and in the best
interests of the Company or any Subsidiary; or (e) the engaging by Employee in any conduct which is illegal or dishonest either in connection with Employee’s duties as an employee of Employer or, if not so connected, which reflects in a
materially adverse way on Employee’s fitness to serve in the capacity employed by Employer; or (f) the issuance of a removal order or similar order by a governmental regulatory agency with appropriate jurisdiction prohibiting Employee from
participating in the affairs of the Company or any Subsidiary. For purposes of determining the existence of “Cause” under either clause 1.03(a) or 1.03(b) above any act or failure to act based upon authority given pursuant to a resolution
duly adopted in the case of clause 1.03(a) above by the Board of Directors of the Employer or, in the case of clause 1.03(c) above, by the Board of Directors of either the Employer or the Company, if different, or, in the case of either clause
1.03(a) or 1.03(c) above, based upon the advice of counsel for the Company shall be conclusively presumed not to constitute “Cause”. In addition, Employee’s attention to matters not directly related to the business of the Employer
shall not provide a basis for termination for Cause under either clause 1.03(a) or (c) above so long as either the Board of the Employer or Company, if different, has approved Employee’s engagement in such activities. 







 1.04. “Change in Control” means a change in control of a nature that would be required to be
reported (assuming such event has not been “previously reported”) in response to Item l(a) of the Current Report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (“Exchange Act”); provided that, notwithstanding the foregoing and without limitation, such a change in control shall be deemed to have occurred at such time as (i) any person, within the meaning of Sections 3(a)(9) and
13(d)(3) of the Exchange Act (“Person”) is or becomes the “beneficial owner” (as defined in Rule 13d-3 or Rule 13d-5 under the Exchange Act as in effect on January 1, 1994), directly or indirectly, of 20% or more of the
combined voting power of the Company’s voting securities; (ii) the Board as comprised on the date hereof (the “Incumbent Board”) ceases for any reason to constitute at least the majority of the Board, provided that any person
becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least 75% of the directors comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination) shall be, for purposes of this clause (ii) considered as though such person were a member of the
Incumbent Board; (iii) all or substantially all of the assets of the Company or the assets of the Bank are sold, transferred or conveyed by any means, including but not limited to direct purchase or merger, if the transferee is not controlled
by the Company, control meaning the ownership of more than 50% of the combined voting power of such entity’s voting securities; or (iv) the Company is merged or consolidated with another corporation or entity and as a result of such merger
or consolidation less than 75% of the outstanding voting securities of the surviving or resulting corporation or entity shall be owned in the aggregate by the former shareholders of the Company. Notwithstanding anything in the foregoing to the
contrary, no change in control shall be deemed to have occurred for purposes of this Agreement by virtue of any transaction (i) which results in the Employee or a group of Persons which includes the Employee, acquiring, directly or indirectly,
20% or more of the combined voting power of the Employer’s voting securities; (ii) arranged or caused by a federal bank regulatory agency possessing appropriate jurisdiction on the grounds of failing financial condition of the Company or
Valley Bank which results in the acquisition, directly or indirectly, of 20% or more of the combined voting power of the Company’s voting securities by any Person or (iii) which results in the Company, any Subsidiary of the Company or any
profit-sharing plan, employee stock ownership plan or employee benefit plan of the Company or any of its subsidiaries (or any trustee of or fiduciary with respect to any such plan acting in such capacity) acquiring, directly or indirectly, 20% or
more of the combined voting power of the Company’s voting securities. 
 1.05 “Code” means the Internal Revenue Code of 1986,
as amended from time to time. 
 1.06 “Date of Termination” means the date of Employee’s “separation from service”
within the meaning of Code section 409A and Treasury Regulations thereunder. 
 1.07 “Disability” means the earlier of the
following events: either (a) as a result of Employee’s inability due to physical or mental illness, Employee shall have been absent from the full-time performance of his duties with the Employer for six (6) consecutive months, and
(ii) within thirty (30) days after Notice of Termination is given Employee shall not have returned to the full-time performance of his duties; or (b) the Employee qualifies for full time disability benefits under any disability
insurance policy provided by or through the Company as a Plan. 
 1.08 “Effective Date” means the date in the first paragraph of
this Agreement. 
 1.09 “Employer” or “Company” includes any corporation or other entity which is the surviving or
continuing entity in respect of any merger, consolidation or form of business combination in which the Employer or Company ceases to exist. 
 1.10 “Good Reason” means, on or after a Change in Control, (a) the failure by the Company to pay 








 
Employee any compensation due Employee (which failure is not cured within 5 days after notice describing such failure and setting forth the amount owed);
(b) a material diminution in the Employee’s base compensation; (c) a material diminution in the Employee’s authority, duties, title, or responsibilities, (d) a material change in the geographic location at which the
Participant must perform the services, or (e) any other action or inaction that constitutes a material breach by the Company of this Agreement. Employee must provide notice to the Company of the existence of the condition on which a Good Reason
termination would be based within sixty (60) days after the initial existence of the condition, upon the notice of which the Company shall have thirty (30) days during which it may remedy the condition without having to pay the amounts
described in this Agreement. 
 1.11 “Notice of Termination” means a written notice that sets out the specific termination
provision of this Agreement set forth in Section II relied upon for termination. No Notice of Termination is required hereunder in the event of the Employee’s death. 
 1.12 “Plan” means any compensation plan such as an incentive, bonus, stock option or restricted stock plan, any pension or profit sharing plan or any welfare benefit plan (including, but not limited to
health, life or disability insurance). 
 1.13 “Subsidiary” means any entity that the Company, directly or indirectly, has the
practical ability to control. 
 SECTION 2. TERMINATION OF EMPLOYMENT AND SEVERANCE. 
 2.01 Termination Not Providing for Severance. Upon termination of employment after the Effective Date: (a) by the Employee for other than Good
Reason; or (b) by the Employer for Cause; or (c) by the Employer for any reason prior to a Change in Control; or (d) by the Employer on account of Employee’s Disability; or (e) by virtue of Employee’s death, the Company
shall pay or cause to be paid to the Employee an amount equal to Employee’s accrued salary through the Date of Termination at the rate in effect at the time Notice of Termination is given (if required). Employee shall not be entitled to any
bonus or other discretionary compensation which has not been received by Employee prior to the Notice of Termination unless provided for under the specific terms of any Plan. In the event of Employee’s death and the foregoing amounts shall be
determined on the date of death without any requirement for Notice of Termination. Notwithstanding any other provision of this Agreement, the severance pay described in Section 2.02 below shall not be payable upon termination of Employee’s
employment for any reason before a Change in Control. 
 2.02 Termination Providing for Severance. Upon termination of Employee’s
employment on or after a Change in Control, if such termination is not one of the types described in Section 2.01, the Company shall pay or cause to be paid to Employee (in addition to the amount determined under Section 2.01) an amount
equal to two (2) times the Employee’s annual salary at the rate in effect (i) at the time Notice of Termination is given, if Notice of Termination is required, or (ii) on the Date of Termination, if no Notice of Termination is
required. Such payment shall be made within thirty (30) days of the Date of Termination, if Employee is not a “specified employee” for purposes of Code Section 409A on the Date of Termination. If Employee is a “specified
employee” for purposes of Code Section 409A on the Date of Termination, the payment shall be made (i) within thirty (30) days of the Date of Termination to the extent the payment is permitted to be treated as exempt
“separation pay” for purposes of Code Section 409A and Treasury Regulations thereunder; and (ii) on the first day of the month following the six-month anniversary of the Date of Termination to the extent the payment is not
permitted to be treated as exempt “separation pay” for purposes of Code Section 409A and Treasury Regulations thereunder. If such payment is required to be made on the first day of the month following the six-month anniversary of the
Employee’s Date of Termination, interest shall accrue on the payment from Employee’s Date of Termination through the date of payment at the Prime Rate of Interest in effect on the Date of Termination and 








 
as reported in the Wall Street Journal. 
 2.03 Offset and Recovery. The amount of any payment provided for in this Section II shall not be reduced, offset or subject to recovery by the Company by reason of any compensation earned by Employee as the result of employment by another
employer after the Date of Termination, or otherwise but any sums paid to Employee hereunder which were not properly payable to such Employee may be recovered by or in right of the Company, together with interest at the Applicable Federal Rate.

 SECTION 3. TERM; BINDING AGREEMENT. 
 3.01 This Agreement shall continue in effect until the first anniversary of the Effective Date; provided, however, that beginning with the first anniversary of the Effective Date and each anniversary thereafter, the
term of this Agreement shall automatically be extended for one additional year unless at least one hundred twenty (120) days prior to such anniversary date, the Company or the Employee shall have given written notice that this Agreement shall
not be extended, and provided further, anything in this Agreement to the contrary notwithstanding, this Agreement shall continue in effect for at least a period of twelve (12) months beyond the date of a Change in Control, if one shall have
occurred (i) during the term of this Agreement, and (ii) prior to a Notice of Termination, except a Notice of Termination given by the Company other than for Cause or Disability after any regulatory filing has been made in contemplation of
a Change in Control. 
 3.02 This Agreement shall be binding upon and inure to the benefit of and be enforceable by Employee’s personal
or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees; provided that the Employee may not assign this Agreement or any right hereunder without the express prior written consent of the Company.
This Agreement shall be binding upon and (in addition to the intended third party beneficiaries pursuant to Section 11) inure to the benefit of the Company and its successors and assigns, whether by merger, consolidation or transfer of all or
substantially all of the Company’s assets, in which case the “Company” as used herein shall mean such successor or assignee. 
 SECTION 4. FEES AND EXPENSES. 
 4.01 Except as provided in Section 7, each party shall pay its own legal fees and
related or other expenses incurred in connection with this Agreement including, without limitation all such fees and expenses, if any, incurred in contesting or disputing any termination or seeking to obtain or enforce any right or benefit provided
by this Agreement, whether or not such party prevails. 
 SECTION 5. TAXES. 
 5.01 All payments to be made to Employee under this Agreement will be subject to required withholding of federal, state and local and employment and other
taxes. 
 SECTION 6. MISCELLANEOUS. 
 6.01 Survival. The respective obligations of, and benefits afforded to, the parties in Sections 2, 4, 5, 6, 7, 10, and 11 of this Agreement shall survive termination of this Agreement. 
 6.02 Notice. For the purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given by Company when delivered to Employee or by Employee when delivered to the President/Chief Executive Officer of Company or when mailed by United States registered mail, return receipt requested, postage prepaid and
addressed, in the case of Company, to the attention of the President/Chief Executive Officer at the following address: 







 Valley Financial Corporation 
 36 Church Avenue, SW 
 Roanoke, Virginia 24011

 or, in the case of Employee, to the address set forth below the Employee’s signature, provided that all notices may be sent to such other address as
either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt. 
 6.03 Modification; Waiver; Governing Law. No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in writing signed by Employee and the
President/Chief Executive Officer of Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be
deemed a waiver of a similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the Commonwealth of Virginia (excluding its principles of conflict of
laws). 
 6.04 Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in full force and effect. 
 6.05 Jurisdiction and Venue and JURY
WAIVER. All disputes and legal or other litigation proceedings by any party hereto in connection with or relating to this Agreement, in whole or part, its enforcement or any matters described or contemplated herein shall be instituted only in the
courts of Virginia or of the United States sitting in Virginia. Each party promises to commence any legal proceeding only in such courts and each party irrevocably submits to the exclusive jurisdiction of such courts in any such disputes or
litigation. Each party irrevocably waives the rights to trial by jury in connection with any matter arising hereunder to the fullest extent permitted by law, any defense or objection it may now or hereafter have to the laying of venue of any such
proceeding brought in such courts and any claim that any proceeding brought in any such courts has been brought in an inconvenient forum. 
 6.06 At Will Employment. Employee acknowledges and agrees that Employee is an “at-will” employee and nothing herein or in any general or specific written or oral policies of Company or Employer or statements made to Employee at
any time, whether written or oral or any assignment of “Due Cause” to any action or inaction of Employee shall or shall be deemed to change or restrict this at-will relationship. 
 SECTION 7. CONFIDENTIALITY; COVENANT NOT TO COMPETE. 
 7.01 Confidentiality. Employee agrees that during and subsequent to his period of employment with Employer, Employee will not at any time communicate or disclose to any person or entity, without the consent of the
Company or Employer (which shall be in writing if after termination of employment) or use or take benefit from or assist any other person or entity to use or benefit from, any proprietary or other confidential information concerning the Company or
any Subsidiary of the Company, their joint and several operations, assets, personnel, finances, business methodologies, policies, procedures and plans and strategies, it being understood, however, that the obligations of this Section shall not apply
to the extent that the aforesaid matters (a) are disclosed in circumstances where Employee is legally required to do so or (b) become generally known to and available for use by the public otherwise than by the Employee’s act or
omission. 
 7.02 Covenant Not to Compete. If the Employee’s employment with the Employer is terminated under circumstances entitling
Employee to severance compensation under Section 2.2 of this Agreement, the Employee 








 
agrees that for a period of 2 (two) years from the date employment is terminated, Employee will not, without the prior, written consent of the
President/Chief Executive Officer of the Company, become an officer, employee, agent, partner, director, or substantial stockholder of any entity engaged in the commercial or retail banking business within a 100 mile radius of the City of Roanoke,
Virginia, or become associated in any substantial manner with any entity in the process of formation to engage in the retail or commercial banking business, or any group that intends to form any such entity in the geographical area described above.

 7.03 Relief. In the event of Employee’s actual or threatened breach of this Section, the Company and/or Employer shall be entitled to
a preliminary restraining order and an injunction restraining the Employee from violating its provisions. Notwithstanding Section 4, in the event the Employee is in breach of this Section, Employee shall be liable for all costs and expenses
incurred by the Company and/or Employer, including but not limited to reasonable legal fees and expert witness fees, in obtaining any equitable or legal relief in connection with such a breach. 
 7.04 Other Remedies. Nothing in this Agreement shall be construed to prohibit the Company or Employer from pursuing any other available remedies for such
breach or threatened breach, including the recovery of damages from the Employee. If at the time of enforcement of this Section a court holds that the duration, scope or area restrictions stated herein are unreasonable under the circumstances then
existing and, thus, unenforceable, the Company and Employee agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area. 
 SECTION 8. RELATED AGREEMENTS. 
 8.01
To the extent that any provision of any other agreement between Company or any of its Subsidiaries and Employee shall limit, qualify or be inconsistent with any provision of this Agreement, then for purposes of this Agreement, while such other
agreement shall remain in force, the provision of this Agreement shall control and such provision of such other agreement shall be deemed to have been superseded, and to be of no force or effect, as if such other agreement had been formally amended
to the extent necessary to accomplish such purpose. 
 SECTION 9. COUNTERPARTS. 
 9.01 This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one
and the same instrument. 
 SECTION 10. RELEASE. 
 10.01 Notwithstanding anything in this Agreement to the contrary, in order to be eligible to receive any payments or benefits (including but not limited to any severance payment) under this Agreement in addition to
fulfilling all other conditions precedent to the same, Employee (if he has the legal capacity or if not, Employee’s legal representative) must within 10 days after the Date of Termination: (a) resign as a member of the Board of the Company
and its Subsidiaries, if applicable, and as an officer, manager and employee of the Company and its Subsidiaries and (b) execute, on behalf of Employee and Employee’s estate, heirs and representatives, a release in form and substance
satisfactory to the Company and its legal counsel releasing the Company and its Subsidiaries and their respective officers, directors, employees, members, managers, agents, independent contractors, representatives, shareholders, successors and
assigns from any and all claims related to the termination of Employee’s employment. 
 SECTION 11. THIRD PARTY BENEFICIARIES.








 11.01 Employer is an intended third party beneficiary of the rights and benefits of Section 7, with
full power to enforce in its own name alone or in conjunction with Company. 
 11.02 The Company and its Subsidiaries and their respective
officers, directors, employees, members, managers, agents, independent contractors, representatives, shareholders, successors and assigns are each intended third party beneficiaries of the rights and benefits of Section 10, with full power to
enforce in their own name alone or in conjunction with the Company or any other third party beneficiary. 
 IN WITNESS WHEREOF, the parties
have executed this Agreement as of November 12, 2008. 
  

			
	VALLEY FINANCIAL CORPORATION
		
	By:	 	 /s/ Ellis L. Gutshall

		 	Ellis L. Gutshall, President and CEO


  

			
	Employee:
	  

	
	Address:
	  

	  










 Schedule to Form of Change in Control Agreement 
  

			
	 Employee
	  	 Title

	John T. McCaleb	  	Executive Vice President and Chief Lending Officer
	Andrew M. Agee	  	Senior Vice President and Senior Real Estate Officer