**Exhibit 10.1**

**EXECUTIVE EMPLOYMENT AGREEMENT**

 

ThisEXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is effective as of the 6th dayof  March 2006, by and between CARDINALFINANCIAL CORPORATION (“Cardinal”) and Kendal E. Carson (“you” and all similarreferences) (collectively, the “parties”).

**INTRODUCTION**

 

WHEREAS,Cardinal has retained you to provide services in an executive capacity; and

WHEREAS,the parties desire to memorialize the terms and conditions of your continuingemployment.

NOWTHEREFORE, in consideration of the promises and obligations by and between theparties under this Agreement, and other valuable consideration, the receipt andsufficiency of which are hereby acknowledged, the parties agree as follows:

**TERMS**

 

**1.****             ****Position, Title,Compensation and Benefits.**

 

**a.****             **During your employment, Cardinal agrees to employ youin as a Senior Executive Officer in the position of President, CardinalFinancial Corporation and Senior Executive Vice President, Cardinal Bank,reporting to the Chairman and CEO of Cardinal Financial Corporation and youagree to accept such employment, devoting substantially all of your businesstime, effort and attention to the business of Cardinal, and performing suchduties as are normally associated with your position.

 

**b.****             **Your initial base salary will be at the annualizedrate set forth in your offer letter, less required and authorized withholdingand deductions, payable in installments in accordance with Cardinal’s normalpayroll practices. You will be eligible for an annual merit increase,performance bonus, and stock option grants on the same basis as other similarlysituated Cardinal Executive Officers and subject to the terms of any applicablecompensation, bonus and stock plans.

 

**c.****              **You will be eligible to participate on the same basisas similarly situated Executive Officers in the Company’s benefit plans,including its 401(k) Plan and medical benefit plans in effect from time to timeduring your employment.  All matters ofeligibility for coverage or benefits under any benefit plan will be determinedin accordance with the provisions of such plan. Cardinal may change, alter, or terminate any benefit plan in its solediscretion. Your employment will also be subject to Cardinal’s personnelpolicies and procedures as they may be interpreted, adopted, revised or deletedfrom time to time in the Company’s sole discretion.

 

 

**2.****             ****Contract Term****.** The term of this Agreement shall commence on March 6, 2006, and shallcontinue from that date for three (3) years unless terminated prior thereto byeither Cardinal or you as provided in Section 4.  If the parties do not wish to renew thisAgreement when it expires at the end of the initial or any renewal term hereofas hereinafter provided or if either of the parties wishes to renew this Agreementon different terms than those contained herein, Cardinal or you shall givewritten notice of such intent to the other party at least six (6) months priorto the expiration date. In the absence of such notice, this Agreement shall berenewed on the same terms and conditions contained herein for successive oneyear terms up until March 6, 2011, when, absent express agreement by theparties, this Agreement shall terminate. The parties expressly agree thatdesignation of a term and renewal provisions in this Agreement does not in anyway limit the right of the parties to terminate this Agreement at any time ashereinafter provided. References herein to the term of this Agreement shallrefer both to the initial term and any successive term as the context requires.

 

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**3.****             ****Prohibition on Competition.**

 

**a.****             ****Covenant not to PerformCompeting Services.**  During the term of thisAgreement and during any period during which you remain employed following theexpiration of this Agreement, and for any period during which you receive payfrom Cardinal, you shall not render or perform competing banking and/orfinancial services within twenty-five (25) miles from your office or Cardinal’scorporate headquarters.  This provisionshall not be construed to prevent you from obtaining employment in the bankingand/or financial services industries provided your new endeavor does notviolate the above-stated prohibition.

 

**b.****             ****Covenant Not to SolicitClients or Prospective Clients.**  During theterm of this Agreement and during any period during which you remain employedfollowing the expiration of this Agreement and for a period of six (6) monthsfrom the date you are terminated for Cause or your Voluntary Termination, youagree not to contact directly or indirectly, or to assist another to contact,any Client or Prospective Client of Cardinal with whom you have had any contacton behalf of Cardinal to offer to perform or to perform or render bankingand/or financial services.  Thisprovision shall not be construed to prevent you from contacting clients ofCardinal with whom you have not had any contact during the term of thisAgreement. For the purpose of this Agreement, “Client” means any entity forwhich Cardinal has performed banking and/or financial services within thetwelve months from your termination date. “Prospective Client” means any entity that is not a Client but withrespect to whom, within six (6) months from your termination date, youconducted, prepared, submitted (or assisted or supervised such conduct) anyclient development work product or marketing efforts on behalf of Cardinal.

 

**c.****              ****Restriction on theSolicitation of Cardinal’s Employees.**  During theterm of this Agreement and during any period during which you remain employedfollowing the expiration of this Agreement, and for a period of six (6) monthsfrom the date you are terminated for Cause or your Voluntary Termination, youagree not to attempt to induce any Cardinal employee to terminate his or heremployment, or to seek or accept any employment with any other business entitythat performs banking and/or financial services.

 

**d.****             ****Enforcement of Covenants.**

 

**i.****              **You understand that damages Cardinal willsuffer as a result of your breach of any provision of Section 3 of thisAgreement are impossible to reasonably calculate and may irreparably harmCardinal.  Nothing in this Agreementshall be construed to prevent Cardinal from seeking any form of injunctiverelief to enforce any provision of this Agreement.

 

**ii.****          **In the event that a court finds Section 3of this Agreement, or any of its restrictions, to be ambiguous, unenforceable,or invalid, you and Cardinal agree that the court shall read the Agreement as awhole and interpret the restriction(s) at issue to be enforceable and valid tothe maximum extent allowed by law.

 

**iii. **If the Court declines to enforce thisAgreement in the manner provided in subparagraph 3(d)(ii), you and Cardinalagree that this Agreement will be automatically modified to provide Cardinalwith the maximum protection of its business interests allowed by law and youagree to be bound by this Agreement as modified.

 

**iv.  **If any provision of this Section 3 isdeclared to be ambiguous, unenforceable or invalid, the remainder of thisSection 3 shall remain in full force and effect, and shall be read as if theambiguous, unenforceable or invalid provision was not contained in theAgreement.

 

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**4.****             ****Termination of EmploymentRelationship.**  Your employment relationship with Cardinalmay be terminated by either party subject to the notice provision addressedbelow.

 

**a.****             **Cardinal may terminate your employment for Cause atany time effective immediately upon written notice.  In the event that Cardinal terminates youremployment for Cause, you will be entitled to earned and unpaid base salary andpayment for any earned and unused vacation days through the last date of youremployment.

 

For the purpose of this Agreement, “Cause” means anyof the following: (i) you engage in embezzlement, misappropriation of corporatefunds or other material acts of dishonesty; (ii) your commission or convictionof any felony or entry of a plea of guilty or nolo contendere to any felony;(iii) your material failure to adhere to Cardinal’s corporate codes, policiesor procedures; (iv) your insubordination or any act of gross misconduct; (v)your material breach of your obligations to Cardinal pursuant to thisAgreement; or (v) revocation by any applicable regulatory authority of thenecessary approvals for you to serve as an Executive with Cardinal.

 

**b.****             **Cardinal may terminate this Agreement for any reasonwith thirty (30) days prior notice, pursuant to Section 10 below, to the otherparty.

 

**i.****                    **In the event your employment isterminated by Cardinal pursuant to this Section 4.b, then provided that youexecute a general release in favor of Cardinal, in a form acceptable toCardinal (the “***Release***”),and subject to Section 4.b.(ii) (the date that the Release becomes effectiveand may no longer be revoked by you is referred to as the “***ReleaseDate***”), then: (i) Cardinal shall pay to you an amount equal toyour Base Salary for a period of twelve months (12) months from the ReleaseDate if the termination occurs during the first three years of the contract orsix (6) months from the Release Date if the termination occurs thereafter (suchapplicable period is referred to as the “***Severance Period***”),less applicable withholdings and deductions, on Cardinal’s regular payrolldates; and (ii) if you are participating in Cardinal’s group health insuranceplans on the effective date of termination, and you timely elect and remaineligible for continued coverage under COBRA, or, if applicable, state insurancelaws, Cardinal shall pay that portion of your COBRA premiums that Cardinal waspaying prior to the effective date of termination for the Severance Period orfor the continuation period for which you are eligible, whichever is shorter.Cardinal’s COBRA premium payment obligation will end immediately if you obtainhealth care insurance from any other source during the Severance Period.

 

**ii.****                **You shall not receive any of the benefitspursuant to Section 4.b.(i) unless you execute the Release within theconsideration period specified therein and until the Release becomes effectiveand can no longer be revoked by you under its terms.  Your ability to receive benefits pursuant toSection 4.b(i) is further conditioned upon your: returning all Cardinalproperty; complying with your post termination obligations under this Agreement; and complyingwith the Release including without limitation any non-disparagement andconfidentiality provisions contained therein.

 

**iii.****            **The benefits provided to you pursuant tothis Section 4.b are in lieu of, and not in addition to, any benefits to whichyou may otherwise be entitled under any Cardinal severance plan, policy orprogram.

 

**c.****              **You may Voluntarily Terminate your employment withCardinal upon thirty (30) days prior written notice directed to Cardinal’sChairman and Chief Executive Officer (“CEO”). The Chairman and CEO, in his sole capacity may waive this noticerequirement.

 

**d.****             **In the event of your death, your employment willterminate as of the date of death. If your employment is terminated by reasonof your death, then Cardinal shall pay your accrued salary through the date oftermination and thereafter have no further obligation to pay compensation toyou. The entitlement of any of your beneficiaries to benefits under anyCardinal benefit plan shall be determined in accordance with applicable law andthe provisions of such plan.

 

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**e.****              **Subject to applicable state and federal law, Cardinalshall at all times have the right, upon written notice to you, to terminatethis Agreement based on your Disability (as defined below).  Termination by Cardinal of your employmentbased on “Disability” shall mean termination because you are unable due to aphysical or mental condition to perform the essential functions of yourposition with or without reasonable accommodation for six (6) months in theaggregate during any twelve (12) month period or based on the writtencertification by two licensed physicians of the likely continuation of suchcondition for such period.  Thisdefinition shall be interpreted and applied consistent with the Americans withDisabilities Act, the Family and Medical Leave Act, and other applicable law.In the event your employment is terminated based on your Disability, Cardinalshall pay your accrued salary through the date of termination and thereafterhave no further obligation to pay compensation to you. Your entitlement tobenefits under any Cardinal benefit plan shall be determined in accordance withapplicable law and the provisions of such plan.

 

**f.****               **Regardless of the basis of your termination ofemployment, you agree to provide all assistance requested by Cardinal intransitioning your duties, responsibilities client and other Cardinalrelationships to other Cardinal personnel, both during your employment andafter your termination or resignation.

 

**5.****             ****Change in Control.** Notwithstanding the terms and conditions set forth in Section 4 of thisAgreement, in the event of a Change in Control (as defined below) Cardinalagrees on behalf of itself and any successor to continue your employmentpursuant to this Agreement for a period of eighteen (18) months following theChange in Control and to enter into an agreement with you within the eighteenmonth period to continue your employment thereafter. In the event Cardinal orany successor to Cardinal fails to continue your employment for the fulleighteen month period, then, in lieu of the benefits, if any, to which youwould otherwise be entitled under Section 5, provided you execute a generalrelease in favor of Cardinal, in a form acceptable to Cardinal: (i) withinthirty (30) days of the effective date of the release, Cardinal shall pay youan amount equal to your base salary for the remainder of the eighteen (18)months period plus an amount equal to your base salary for a period of eighteenmonths, less required and authorized withholdings and deductions, on Cardinal’sregular payroll dates, and (ii) if you are participating in Cardinal’s grouphealth insurance plans on the effective date of termination, and you timelyelect and remain eligible for continued coverage under COBRA, or, ifapplicable, state insurance laws, Cardinal shall pay that portion of your COBRApremiums that Cardinal was paying prior to the effective date of terminationfor eighteen months or for the continuation period for which you are eligible,whichever is shorter. Cardinal’s COBRA premium payment obligation will endimmediately if you obtain health care insurance from any other source while youare receiving COBRA payments. In the event Cardinal continues your employmentfor the full eighteen (18) month period but you and Cardinal fail to reach anagreement for your continued employment thereafter, then, in lieu of thebenefits, if any, to which you would otherwise be entitled under Section 5,provided you execute a general release in favor of Cardinal, in a formacceptable to Cardinal, then within thirty (30) days of the effective date of therelease, Cardinal shall make eighteen equal monthly payments to you in anamount equal to your base salary for eighteen (18) months.  

 

**a.****             **For the purpose of this Agreement, “Change in Control”means a merger or consolidation in which (i) Cardinal is a constituent party,or (ii) a Company Subsidiary is a constituent party and Cardinal issues sharesof its capital stock pursuant to such merger or consolidation, except any suchmerger or consolidation involving Cardinal or a Company Subsidiary in which theholders of capital stock of Cardinal immediately prior to such merger orconsolidation continue to hold immediately following such merger orconsolidation more than fifty (50) percent by voting power of the capital stockof or ownership interest in (A) the surviving or resulting entity or (B) if thesurviving or resulting entity is a wholly owned subsidiary of another entityimmediately following such merger or consolidation, the parent entity of suchsurviving or resulting entity.   “Changein Control” may also mean the sale, in a single transaction or series ofrelated transactions, (i) by Cardinal of all or substantially all the assets ofCardinal (except where such sale is to a wholly owned subsidiary of theCompany), or (ii) by the stockholders of Cardinal of more than fifty (50)percent by voting power of the then-outstanding capital stock of Cardinal.  Finally, a “Change of Control” may constitutethe occurrence of any agreement, happening or device, which has substantiallythe same effect on the control of Cardinal as any of the foregoing.

 

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**b.****             **In the event that the aggregate of all payments orbenefits made or provided to, or that may be made or provided to, you underthis Agreement and under all other plans, programs and arrangements of Cardinal(the “***Aggregate Payment***”)would (i) constitute a “parachute payment” within the meaning of Section 280Gof the Code, and (ii) but for this sentence, be subject to the excise taximposed by Section 4999 of the Code (the “***Excise Tax***”), then such payments and benefitsshall be equal to the Reduced Amount. The “***Reduced Amount***” shall be the largest portionof the payments and benefits that would result in no portion of the paymentsand benefits being subject to the Excise Tax. Cardinal shall determine the procedures and manner of making thecalculation required above, and the method to order the reduction of Payments (i.e.,whether equity or cash payments get reduced first). You and Cardinal shallcooperate with each other in connection with any proceeding or claim relatingto the existence or amount of liability for Excise Tax.

 

**c.****              **For the purpose of this Agreement, “Effective Date”means the close of business on the date on which a “Change of Control” occurs.

**6.****             ****Assignment and Survival.**  The rights and obligations of Cardinal under this Agreement shall inureto the benefit of, and shall be binding upon, the successors and assigns ofCardinal.  Your rights and obligationsare personal, and may not be assigned or delegated without the Company’s properwritten consent.

 

**7.****             ****Severability.** If any provision of this Agreement is held invalid or unenforceable forany reason, the invalidity shall not nullify the validity of the remainingprovisions of this Agreement.  If anyprovision of this Agreement is determined by a court or arbitration tribunal tobe overly broad in duration, geographical coverage or scope, or unenforceablefor any other reason, such provision will be narrowed so that it will beenforced as much as permitted by law.

**8.****             ****Choice of Law.** This Agreement shall be governed by the laws of the Commonwealth ofVirginia.  You and Cardinal consent tothe jurisdiction and venue of any state or federal court in the Commonwealth ofVirginia and agree that any permitted lawsuit may be brought to such courts orother court of competent jurisdiction. Each party hereby waives, releases and agrees not to assert, and agreesto cause its affiliates to waive, release and not assert, any rights such partyor its affiliates may have under any foreign law or regulation that would beinconsistent with the terms of this Agreement as governed by Virginia law.

**9.****             ****Waiver.** Any party’s waiver of any other party’s breach of any provision of thisAgreement shall not waive any other right or any future breaches of the same orany other provision.

**10.****      ****Notices.**  Any notices required hereunder to be inwriting shall be deemed effectively given: (a) upon personal delivery to theparty to be notified, (b) when sent by electronic mail, telex or confirmedfacsimile if sent during normal business hours of the recipient, and if not,then on the next business day, (c) five (5) days after having been sent byregistered or certified mail, return receipt requested, postage prepaid, or (d)one (1) day after deposit with a nationally recognized overnight courier,specifying next day delivery, with written verification of receipt.  All communications shall be sent to Cardinalat its primary office location and to you at your address as listed on Cardinalpayroll, or at such other address as Cardinal or you may designate by ten (10)days advance written notice to the other.

 

**11.****      ****Entire Agreement.** This Agreement is the entire agreement between you and Cardinalregarding these matters and supersedes any verbal and written agreements onsuch matters.  This Agreement may bemodified only by written agreement signed by you and the CEO or his or herexpress designee.  All Section headingsare for convenience only and do not modify or restrict any of this Agreement’sterms.

 

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**12.****      ****Counterparts.**  For convenienceof the parties, this Agreement may be executed in one or more counterparts,each of which shall be deemed an original for all purposes.

 

 

**The parties state that they have read, understoodand agree to be bound by this Agreement and that they have had the opportunityto seek the advice of legal counsel before signing it and have either soughtsuch counsel or have voluntarily decided not to do so:**

 

 
| **CARDINAL FINANCIAL CORPORATION** | ** **               | **EMPLOYEE** |
|------------------------------------|--------------------------|--------------|
|                               |                     |         |   |
|                               |                     |         |   |
|                               |                     |         |   |
| By:                                | /s/ Bernard H. Clineburg |         | /s/ Kendal E. Carson |
|                               | Bernard H. Clineburg     |         | (Signature) |
|                               |                     |         |   |
| Its:                               | Chairman and CEO         |         | Kendal E. Carson |
|                               | (Title)                  |         |   |
|                                    |                          |              |  |  |  |

 

11/7/2007

 

 

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