Document:

exv10w30

 

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT is made and entered into as of the 1st day of
March, 2003 by and between ALLIANCE BANKSHARES CORPORATION, a Virginia
corporation, hereinafter called the “Corporation”, ALLIANCE BANK CORPORATION, a
Virginia corporation, hereinafter called the “Bank”, and THOMAS A. YOUNG, JR.
hereinafter called “Employee”, and provides as follows:

RECITALS

     WHEREAS, the Corporation is a bank holding company engaged in the
operation of a bank; and

     WHEREAS, the Bank is a financial institution which is a wholly owned
subsidiary of the Corporation; and

     WHEREAS, Employee has been involved in the management of the Corporation
and the Bank, and previously was involved in the management of the business and
affairs of an entity similar to the Corporation and, therefore, possesses
managerial experience, knowledge, skills and expertise in such type of
business; and

     WHEREAS, the employment of Employee by the Corporation and the Bank is in
the best interests of the Corporation, the Bank and Employee; and

     WHEREAS, the parties have mutually agreed upon the terms and conditions of
Employee’s continued employment by the Corporation and the Bank as hereinafter
set forth;

TERMS OF AGREEMENT

     NOW, THEREFORE, for and in consideration of the premises and of the mutual
promises and undertakings of the parties as hereinafter set forth, the parties
covenant and agree as follows:

     Section 1. Employment. (a) Employee shall be employed as the President
and Chief Executive Officer of the Corporation and the Bank. He shall perform
such services for the Corporation and/or one or more Affiliates as may be
assigned to Employee by the Corporation from time to time upon the terms and
conditions hereinafter set forth.

          (b) References in this Agreement to services rendered for the Corporation
and compensation and benefits payable or provided by the Corporation shall
include services rendered for and compensation and benefits payable or provided
by any Affiliate. References in this Agreement to the “Corporation” also shall
mean and refer to each Affiliate for which Employee performs services.
References in this Agreement to “Affiliate” shall mean any business entity
that, directly or indirectly, through one or more intermediaries, is controlled
by the Corporation.

 

 

          (c) The parties recognize that the Board of Directors of the Corporation
shall manage the business affairs of the Corporation and that the relationship
between the Corporation and Employee shall be that of an employer and an
employee. The Board of Directors shall have the sole authority to set and
establish the hours of operation of the business and to set and establish
reasonable work schedules and standards applicable to Employee.

     Section 2. Term. The term of this Agreement shall continue until March
1, 2006 unless sooner terminated under the terms of this Agreement (the
“Initial Term”). This Agreement shall be renewed automatically for successive
additional terms of one (1) year each unless either party gives the other
notice of nonrenewal at least sixty (60) days prior to the expiration of the
Initial Term or any additional term, as the case may be.

     Section 3. Exclusive Service. Employee shall devote his best efforts and
full time to rendering services on behalf of the Corporation in furtherance of
its best interests. Employee shall comply with all policies, standards and
regulations of the Corporation now or hereafter promulgated, and shall perform
his duties under this Agreement to the best of his abilities and in accordance
with standards of conduct applicable to chief executive officers of banks.

     Section 4. Salary. (a) As compensation while employed hereunder,
Employee, during his faithful performance of this Agreement, in whatever
capacity rendered, shall receive an annual base salary of $175,000 payable on
such terms and in such installments as the parties may from time to time
mutually agree upon. The Board of Directors, in its discretion, may increase
Employee’s base salary during the term of this Agreement, but in no event shall
the annual base salary be reduced.

          (b) The Corporation shall withhold state and federal income taxes, social
security taxes and such other payroll deductions as may from time to time be
required by law or agreed upon in writing by Employee and the Corporation. The
Corporation shall also withhold and remit to the proper party any amounts
agreed to in writing by the Corporation and Employee for participation in any
corporate sponsored benefit plans for which a contribution is required.

          (c) Except as otherwise expressly set forth hereunder, no compensation
shall be paid pursuant to this Agreement in respect of any month or portion
thereof subsequent to any termination of Employee’s employment by the
Corporation.

     Section 5. Corporate Benefit Plans. (a) Employee shall be entitled to
participate in or become a participant in any employee benefit plan maintained
by the Corporation for which he is or will become eligible on such terms as the
Board of Directors may, in its discretion, establish, modify or otherwise
change.

          (b) The Corporation shall provide Employee with a disability insurance
policy providing benefits commensurate with other employees as so amended by
the Board from time to time.

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          (c) The Corporation shall pay the premiums on group term insurance on the
life of Employee in an amount equal to two times his base salary under the CNA
group term life insurance program.

          Section 6. Bonuses. Employee shall receive only such bonuses as the
Board of Directors, in its discretion, decides to pay to Employee.

          Section 7. Expense Account. (a) The Corporation shall reimburse
Employee for reasonable and customary business expenses incurred in the conduct
of the Corporation’s business. Such expenses will include business meals,
out-of-town lodging and travel expenses, and membership dues and costs to
attend meetings and conventions of business-appropriate organizations and
associations. Employee agrees to timely submit records and receipts of
reimbursable items and agrees that the Corporation can adopt reasonable rules
and policies regarding such reimbursement. The Corporation agrees to make
prompt payment to Employee following receipt and verification of such reports.

          (b) The Corporation will provide Employee an allowance of up to $750 per
month to lease an automobile for personal and business use and will pay or
reimburse Employee for all maintenance, insurance, fuel and taxes on such
automobile. The Corporation shall be the lessee of the automobile.

          Section 8. Sick Leave. Employee shall be entitled to the same sick leave
as the Board of Directors may from time to time designate for all full-time
employees of the Corporation.

          Section 9. Vacations. Employee shall be entitled to twenty (20) week
days of vacation leave each year which shall be taken at such time or times as
may be approved by the Corporation and during which Employee’s compensation
hereunder shall continue to be paid.

          Section 10. Termination. (a) Notwithstanding the termination of
Employee’s employment pursuant to any provision of this Agreement, the parties
shall be required to carry out any provisions of this Agreement which
contemplate performance by them subsequent to such termination. In addition,
no termination shall affect any liability or other obligation of either party
which shall have accrued prior to such termination, including, but not limited
to, any liability, loss or damage on account of breach. No termination of
employment shall terminate the obligation of the Corporation to make payments
of any vested benefits provided hereunder or the obligations of Employee under
Sections 11, 12 and 13.

                    (b) Employee’s employment hereunder may be terminated by Employee upon
thirty (30) days written notice to the Corporation or at any time by mutual
agreement in writing.

                    (c) This Agreement shall terminate upon the death of Employee; provided,
however, that in such event the Corporation shall pay to the estate of Employee
the compensation including salary and accrued bonus, if any, which otherwise
would be payable to Employee through the end of the month in which his death
occurs.

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          (d) The Corporation may terminate Employee’s employment other than for
“Cause”, as defined in Section 10(e), at any time upon written notice to
Employee, which termination shall be effective immediately. Employee may
resign thirty (30) days after notice to the Corporation for “Good Reason”, as
hereafter defined. In the event the Employee’s employment terminates pursuant
to this Section 10(d), Employee shall receive a monthly amount equal to
one-twelfth (1/12) his rate of annual base salary in effect immediately
preceding such termination (“Termination Compensation”) in each month for
twelve (12) months or the remainder of the term of this Agreement, whichever is
greater. Payments of the Termination Compensation shall be made at the times
such payments would have been made in accordance with Section 4(a).
Notwithstanding anything in this Agreement to the contrary, if Employee
breaches Section 11 or 12, Employee will not thereafter be entitled to receive
any further compensation or benefits pursuant to this Section 10(d). In
addition, notwithstanding anything in this Agreement to the contrary, the
Corporation shall not be required to make payment of the Termination
Compensation or any portion thereof to the extent such payment is prohibited by
the terms of the regulations presently found at 12 C.F.R. part 359 or to the
extent that any other governmental approval of the payment required by law is
not received.

     For purposes of this Agreement, “Good Reason” shall mean:

          (i) The assignment of duties to the Employee by the Corporation which
result in the Employee having significantly less authority or responsibility
than he has on the date hereof, without his express written consent;

          (ii) The removal of the Employee from or any failure to re-elect him to
the position of President and Chief Executive Officer of the Corporation and
Alliance Bank;

          (iii) Requiring the Employee to maintain his principal office outside of
Fairfax County, Virginia;

          (iv) A reduction by the Corporation of the Employee’s annual base salary
(which shall also constitute a breach of Section 4(a) hereof);

          (v) The failure of the Corporation to provide the Employee with
substantially the same fringe benefits that are provided to him at the
inception of his employment; except as a result of severe financial distress
that leads to a general decrease in the level of compensation or benefits of
all or substantially all of the Corporation’s employees;

          (vi) The Corporation’s failure to comply with any material term of this
Agreement; or

          (vii) The failure of the Corporation to obtain the assumption of and
agreement to perform this Agreement by any successor as contemplated in Section
14 hereof.

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          (e) The Corporation shall have the right to terminate Employee’s
employment under this Agreement at any time for Cause, which termination shall
be effective immediately. Termination for “Cause” shall include termination
for Employee’s personal dishonesty, incompetence, willful misconduct, breach of
a fiduciary duty involving personal profit, intentional failure to perform
stated duties, willful violation of any law, rule or regulation (other than
traffic violations or similar offenses) or final cease-and-desist order,
conviction of a felony or of a misdemeanor involving moral turpitude,
misappropriation of the Corporation’s assets (determined on a reasonable basis)
or those of its Affiliates, or material breach of any other provision of this
Agreement. In the event Employee’s employment under this Agreement is
terminated for Cause, Employee shall thereafter have no right to receive
compensation or other benefits under this Agreement.

          (f) The Corporation may terminate Employee’s employment under this
Agreement, after having established the Employee’s disability by giving to
Employee written notice of its intention to terminate his employment for
disability and his employment with the Corporation shall terminate effective on
the 90th day after receipt of such notice if within 90 days after such receipt
Employee shall fail to return to the full-time performance of the essential
functions of his position (and if Employee’s disability has been established
pursuant to the definition of “disability” set forth below). For purposes of
this Agreement, “disability” means either (i) disability which after the
expiration of more than 13 consecutive weeks after its commencement is
determined to be total and permanent by a physician selected and paid for by
the Corporation or its insurers, and acceptable to Employee or his legal
representative, which consent shall not be unreasonably withheld or (ii)
disability as defined in the policy of disability insurance maintained by the
Corporation or its Affiliates for the benefit of Employee, whichever shall be
more favorable to Employee. Notwithstanding any other provision of this
Agreement, the Corporation shall comply with all requirements of the Americans
with Disabilities Act, 42 U.S.C. § 12101 et. seq.

          (g) If Employee is suspended and/or temporarily prohibited from
participating in the conduct of the Corporation’s affairs by a notice served
pursuant to the Federal Deposit Insurance Act, the Corporation’s obligations
under this Employment Agreement shall be suspended as of the date of service
unless stayed by appropriate proceedings. If the charges in the notice are
dismissed, the Corporation may in its discretion (i) pay Employee all or part
of the compensation withheld while its contract obligations were suspended, and
(ii) reinstate (in whole or in part) any of its obligations which were
suspended.

          (h) If Employee is removed and/or permanently prohibited from
participating in the conduct of the Corporation’s affairs by an order issued
under the Federal Deposit Insurance Act or the Code of Virginia, all
obligations of the Corporation under this Employment Agreement shall terminate
as of the effective date of the order, but vested rights of the parties shall
not be affected.

          (i)(1) If Employee’s employment is terminated without Cause or if he
resigns for Good Reason within one year after a Change of Control shall have
occurred, then on or before Employee’s last day of employment with the
Corporation, the Corporation shall pay to Employee as compensation for services
rendered to the Corporation and its Affiliates a cash amount (subject to any
applicable payroll or other taxes required to be withheld) equal to the excess,
if

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any, of 299% of Employee’s “annualized includable compensation for the base
period”, as defined in Section 280G of the Internal Revenue Code of 1986 (the
“Code”), over the total amount payable to Employee under Section 10(d) provided
that, at the option of Employee, the cash amount required to be paid hereby
shall be paid by the Corporation in equal monthly installments over the
thirty-six (36) months succeeding the date of termination, payable on the first
day of each such month.

          (2) For purposes of this Agreement, a Change of Control occurs if, after
the date of this Agreement, (i) any person, including a “group” as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the owner or
beneficial owner of Corporation securities having 50% or more of the combined
voting power of the then outstanding Corporation securities that may be cast
for the election of the Corporation’s directors other than a result of an
issuance of securities initiated by the Corporation, or open market purchases
approved by the Board of Directors, as long as the majority of the Board of
Directors approving the purchases is a majority at the time the purchases are
made; or (ii) as the direct or indirect result of, or in connection with, a
tender or exchange offer, a merger or other business combination, a sale of
assets, a contested election of directors, or any combination of these events,
the persons who were directors of the Corporation before such events cease to
constitute a majority of the Corporation’s Board, or any successor’s board,
within two years of the last of such transactions. For purposes of this
Agreement, a Change of Control occurs on the date on which an event described
in (i) or (ii) occurs. If a Change of Control occurs on account of a series of
transactions or events, the Change of Control occurs on the date of the last of
such transactions or events.

          (3) It is the intention of the parties that no payment be made or benefit
provided to Employee pursuant to this Agreement that would constitute an
“excess parachute payment” within the meaning of Section 280G of the Code and
any regulations thereunder, thereby resulting in a loss of an income tax
deduction by the Corporation or the imposition of an excise tax on Employee
under Section 4999 of the Code. If the independent accountants serving as
auditors for the Corporation on the date of a Change of Control (or any other
accounting firm designated by the Corporation) determine that some or all of
the payments or benefits scheduled under this Agreement, as well as any other
payments or benefits on a Change of Control, would be nondeductible by the
Company under Section 280G of the Code, then the payments scheduled under this
Agreement will be reduced to one dollar less than the maximum amount which may
be paid without causing any such payment or benefit to be nondeductible. The
determination made as to the reduction of benefits or payments required
hereunder by the independent accountants shall be binding on the parties.
Employee shall have the right to designate within a reasonable period, which
payments or benefits will be reduced; provided, however, that if no direction
is received from Employee, the Corporation shall implement the reductions in
its discretion.

     Section 11. Confidentiality/Nondisclosure. Employee covenants and agrees
that any and all information concerning the customers, businesses and services
of the Corporation of which he has knowledge or access as a result of his
association with the Corporation in any capacity, shall be deemed confidential
in nature and shall not, without the proper written consent of the Corporation,
be directly or indirectly used, disseminated, disclosed or published by
Employee to third parties

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other than in connection with the usual conduct of the business of the
Corporation. Such information shall expressly include, but shall not be
limited to, information concerning the Corporation’s trade secrets, business
operations, business records, customer lists or other customer information.
Upon termination of employment Employee shall deliver to the Corporation all
originals and copies of documents, forms, records or other information, in
whatever form it may exist, concerning the Corporation or its business,
customers, products or services. In construing this provision it is agreed
that it shall be interpreted broadly so as to provide the Corporation with the
maximum protection. This Section 11 shall not be applicable to any information
which, through no misconduct or negligence of Employee, has previously been
disclosed to the public by anyone other than Employee.

     Section 12. Covenant Not to Compete. During the term of this Agreement
and throughout any further period that he is an officer or employee of the
Corporation, and for a period of twelve (12) months from and after the date
that Employee is (for any reason) no longer employed by the Corporation or for
a period of twelve (12) months from the date of entry by a court of competent
jurisdiction of a final judgment enforcing this covenant in the event of a
breach by Employee, whichever is later, Employee covenants and agrees that he
will not, directly or indirectly, either as a principal, agent, employee,
employer, stockholder, co-partner or in any other individual or representative
capacity whatsoever: (i) engage in a Competitive Business anywhere within a
five (5) mile radius of any office operated by the Corporation on the date
Employee’s employment terminates; or (ii) solicit, or assist any other person
or business entity in soliciting, any depositors or other customers of the
Corporation to make deposits in or to become customers of any other financial
institution conducting a Competitive Business; or (iii) induce any individuals
to terminate their employment with the Corporation or its Affiliates. As used
in this Agreement, the term “Competitive Business” means all banking and
financial products and services that are substantially similar to those offered
by the Corporation on the date that Employee’s employment terminates.

     Section 13. Injunctive Relief, Damages, Etc. Employee agrees that given
the nature of the positions held by Employee with the Corporation, that each
and every one of the covenants and restrictions set forth in Sections 11 and 12
above are reasonable in scope, length of time and geographic area and are
necessary for the protection of the significant investment of the Corporation
in developing, maintaining and expanding its business. Accordingly, the parties
hereto agree that in the event of any breach by Employee of any of the
provisions of Sections 11 or 12 that monetary damages alone will not adequately
compensate the Corporation for its losses and, therefore, that it may seek any
and all legal or equitable relief available to it, specifically including, but
not limited to, injunctive relief and Employee shall be liable for all damages,
including actual and consequential damages, costs and expenses, including legal
costs and actual attorneys’ fees, incurred by the Corporation as a result of
taking action to enforce, or recover for any breach of, Section 11 or Section
12. The covenants contained in Sections 11 and 12 shall be construed and
interpreted in any judicial proceeding to permit their enforcement to the
maximum extent permitted by law. Should a court of competent jurisdiction
determine that any provision of the covenants and restrictions set forth in
Section 12 above is unenforceable as being overbroad as to time, area or scope,
the court may strike the offending provision or reform such provision to
substitute such other terms as are reasonable to protect the Corporation’s
legitimate business interests.

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     Section 14. Binding Effect/Assignability. This Employment Agreement
shall be binding upon and inure to the benefit of the Corporation and Employee
and their respective heirs, legal representatives, executors, administrators,
successors and assigns, but neither this Agreement, nor any of the rights
hereunder, shall be assignable by Employee or any beneficiary or beneficiaries
designated by Employee. The Corporation will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business, stock or assets of the Corporation, by
agreement in form and substance reasonably satisfactory to the Employee, to
expressly assume and agree to perform this Agreement in its entirety. Failure
of the Corporation to obtain such agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall entitle the
Employee to the compensation described in Section 10(d). As used in this
Agreement, “Corporation” shall mean Alliance Bankshares Corporation, a Virginia
corporation, and any successor to its respective business, stock or assets as
aforesaid which executes and delivers the agreement provided for in this
Section 14 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.

     Section 15. Governing Law. This Employment Agreement shall be subject to
and construed in accordance with the laws of the Commonwealth of Virginia,
without giving effect to its principles of conflict of laws.

     Section 16. Litigation. In the event of any dispute between the parties
concerning this Agreement, each party shall be responsible for obtaining
counsel at its own expense; however, in the event that the Corporation does not
substantially prevail in any litigation arising under this Agreement, the
Corporation shall promptly reimburse the Employee for all reasonable attorneys’
fees and expenses incurred in connection with such litigation.

     Section 17. Invalid Provisions. The invalidity or unenforceability of
any particular provision of this Employment Agreement shall not affect the
validity or enforceability of any other provisions hereof, and this Employment
Agreement shall be construed in all respects as if such invalid or
unenforceable provisions were omitted.

     Section 18. Notices. Any and all notices, designations, consents,
offers, acceptance or any other communications provided for herein shall be
given in writing and shall be deemed properly delivered if delivered in person
or by registered or certified mail, return receipt requested, addressed in the
case of the Corporation to its registered office or in the case of Employee to
his last known address.

     Section 19. Entire Agreement.

          (a) This Employment Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersedes any and all
other agreements, either oral or in writing, among the parties hereto with
respect to the subject matter hereof.

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          (b) This Employment Agreement may be executed in one or more counterparts,
each of which shall be considered an original copy of this Agreement, but all
of which together shall evidence only one agreement.

     Section 20. Amendment and Waiver. This Employment Agreement may not be
amended except by an instrument in writing signed by or on behalf of each of
the parties hereto. No waiver of any provision of this Employment Agreement
shall be valid unless in writing and signed by the person or party to be
charged.

     Section 21. Case and Gender. Wherever required by the context of this
Employment Agreement, the singular or plural case and the masculine, feminine
and neuter genders shall be interchangeable.

     Section 22. Captions. The captions used in this Employment Agreement are
intended for descriptive and reference purposes only and are not intended to
affect the meaning of any Section hereunder.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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     IN WITNESS WHEREOF, the Corporation has caused this Employment Agreement
to be signed by its duly authorized officer and Employee has hereunto set his
hand and seal on the day and year first above written.

	 
	ALLIANCE BANKSHARES CORPORATION
	 
	 
	By: Thomas P. Danaher

	Title: Chairman of the Board of Directors

ATTEST:

Joyce E. Vanneman

	 
	ALLIANCE BANK CORPORATION
	 
	 
	By: Thomas P. Danaher

	Title: Chairman of the Board of Directors

ATTEST:

Joyce E. Vanneman

	 	 	 
	EMPLOYEE	 	 
	 	 	 
	 	 	 
	Thomas A. Young, Jr.
	
(SEAL)	 
	Thomas A. Young, Jr.	 	 

ATTEST:

Joyce E. Vanneman

10exv10w31

 

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT is made and entered into as of the 1st day of
March, 2003 by and between ALLIANCE BANK, a Virginia banking corporation,
hereinafter called the “Bank”, and Paul M. Harbolick, Jr. hereinafter called
“Employee”, and provides as follows:

RECITALS

     WHEREAS, the Bank is a bank chartered under the laws of the Commonwealth
of Virginia and engaged in the business of banking; and

     WHEREAS, Employee has been involved in the management of the Bank and
possesses managerial experience, knowledge, skills and expertise in such type
of business; and

     WHEREAS, the employment of Employee by the Bank is in the best interests
of the Bank and Employee; and

     WHEREAS, the parties have mutually agreed upon the terms and conditions of
Employee’s continued employment by the Bank as hereinafter set forth;

TERMS OF AGREEMENT

     NOW, THEREFORE, for and in consideration of the premises and of the mutual
promises and undertakings of the parties as hereinafter set forth, the parties
covenant and agree as follows:

     Section 1. Employment. (a) Employee shall be employed as the Executive
Vice President & CFO of the Bank. He shall perform such services for the Bank
and/or one or more Affiliates as may be assigned to Employee from time to time
upon the terms and conditions hereinafter set forth.

             (b) References in this Agreement to services rendered for the Bank and
compensation and benefits payable or provided by the Bank shall include
services rendered for and compensation and benefits payable or provided by any
Affiliate. References in this Agreement to the “Bank” also shall mean and
refer to each Affiliate for which Employee performs services. References in
this Agreement to “Affiliate” shall mean any business entity that, directly or
indirectly, through one or more intermediaries, is controlled by or controls
the Bank.

             (c) The parties recognize that the Board of Directors of the Bank shall
manage the business affairs of the Bank and that the relationship between the
Bank and Employee shall be that of an employer and an employee. The Board of
Directors shall have the sole authority to set and establish the hours of
operation of the business and to set and establish reasonable work schedules
and standards applicable to Employee.

 

 

     Section 2. Term. The term of this Agreement shall continue until March 1,
2004 unless sooner terminated under the terms of this Agreement (the “Initial
Term”). This Agreement shall be renewed automatically for successive
additional terms of one (1) year each unless either party gives the other
notice of nonrenewal at least sixty (60) days prior to the expiration of the
Initial Term or any additional term, as the case may be.

     Section 3. Exclusive Service. Employee shall devote his best efforts and
full time to rendering services on behalf of the Bank in furtherance of its
best interests. Employee shall comply with all policies, standards and
regulations of the Bank now or hereafter promulgated, and shall perform his
duties under this Agreement to the best of his abilities and in accordance with
standards of conduct applicable to chief executive officers of banks.

     Section 4. Salary. (a) As compensation while employed hereunder,
Employee, during his faithful performance of this Agreement, in whatever
capacity rendered, shall receive an annual base salary of $112,000.00 payable
on such terms and in such installments as the parties may from time to time
mutually agree upon. The Board of Directors, in its discretion, may increase
Employee’s base salary during the term of this Agreement, but in no event shall
the annual base salary be reduced.

             (b) The Bank shall withhold state and federal income taxes, social
security taxes and such other payroll deductions as may from time to time be
required by law or agreed upon in writing by Employee and the Bank. The Bank
shall also withhold and remit to the proper party any amounts agreed to in
writing by the Bank and Employee for participation in any corporate sponsored
benefit plans for which a contribution is required.

             (c) Except as otherwise expressly set forth hereunder, no compensation
shall be paid pursuant to this Agreement in respect of any month or portion
thereof subsequent to any termination of Employee’s employment by the Bank.

     Section 5.
Corporate Benefit Plans. (a) Employee shall be entitled to
participate in or become a participant in any employee benefit plan maintained
by the Bank for which he is or will become eligible on such terms as the Board
of Directors may, in its discretion, establish, modify or otherwise change.

             (b) The Bank shall provide Employee with a disability insurance policy
providing benefits commensurate with other employees as so amended by the Board
from time to time.

             (c) The Bank shall pay the premiums on group term insurance on the life of
Employee in an amount equal to two times his base salary under a qualified
group benefits plan as secured by the Bank.

     Section 6. Bonuses. Employee shall receive only such bonuses as the Board
of Directors, in its discretion, decides to pay to Employee.

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     Section 7. Expense Account. (a) The Bank shall reimburse Employee for
reasonable and customary business expenses incurred in the conduct of the
Bank’s business. Such expenses will include business meals, out-of-town
lodging and travel expenses, and membership dues and costs to attend meetings
and conventions of business-appropriate organizations and associations.
Employee agrees to timely submit records and receipts of reimbursable items and
agrees that the Bank can adopt reasonable rules and policies regarding such
reimbursement. The Bank agrees to make prompt payment to Employee following
receipt and verification of such reports.

             (b) The Bank will provide Employee an allowance of up to $375.00 per month
to be used toward expenses incurred with a country club of his choice.

     Section 8. Vacation and Sick Leave. Employee shall be entitled to 20 days
of vacation and such sick leave as the Board of Directors may from time to time
designate for all full-time employees of the Bank.

    &nbspSection 9. Termination. (a) Notwithstanding the termination of Employee’s
employment pursuant to any provision of this Agreement, the parties shall be
required to carry out any provisions of this Agreement which contemplate
performance by them subsequent to such termination. In addition, no
termination shall affect any liability or other obligation of either party
which shall have accrued prior to such termination, including, but not limited
to, any liability, loss or damage on account of breach. No termination of
employment shall terminate the obligation of the Bank to make payments of any
vested benefits provided hereunder or the obligations of Employee under
Sections 10, 11 and 12.

             (b) Employee’s employment hereunder may be terminated by Employee upon
thirty (30) days written notice to the Bank or at any time by mutual agreement
in writing.

             (c) This Agreement shall terminate upon the death of Employee; provided,
however, that in such event the Bank shall pay to the estate of Employee the
compensation including salary and accrued bonus, if any, which otherwise would
be payable to Employee through the end of the month in which his death occurs.

             (d) The Bank may terminate Employee’s employment other than for “Cause”,
as defined in Section 9(e), at any time upon written notice to Employee, which
termination shall be effective immediately. Employee may resign thirty (30)
days after notice to the Bank for “Good Reason”, as hereafter defined. In the
event the Employee’s employment terminates pursuant to this Section 9(d),
Employee shall receive a monthly amount equal to one-twelfth (1/12) his rate of
annual base salary in effect immediately preceding such termination
(“Termination Compensation”) in each month for twelve (12) months or the
remainder of the term of this Agreement, whichever is greater. Payments of the
Termination Compensation shall be made at the times such payments would have
been made in accordance with Section 4(a). Notwithstanding anything in this
Agreement to the contrary, if Employee breaches Section 10 or 11, Employee will
not thereafter be entitled to receive any further compensation or benefits
pursuant to this Section 9(d). In addition, notwithstanding anything in this
Agreement to the contrary, the Bank shall not be required to make payment of
the Termination Compensation or any

3

 

portion thereof to the extent such payment is prohibited by the terms of the
regulations presently found at 12 C.F.R. part 359 or to the extent that any
other governmental approval of the payment required by law is not received.

     For purposes of this Agreement, “Good Reason” shall mean:

     (i)  The assignment of duties to the Employee by the Bank which result in
the Employee having significantly less authority or responsibility than he has
on the date hereof, without his express written consent;

     (ii)  The removal of the Employee from his position as Executive Vice
President & CFO;

     (iii)  A reduction by the Bank of the Employee’s annual base salary (which
shall also constitute a breach of Section 4(a) hereof);

     (iv)  The failure of the Bank to obtain the assumption of and agreement to
perform this Agreement by any successor as contemplated in Section 13 hereof;

     (v)  Requiring the Employee to maintain his principal office outside of the
Northern Virginia Area.

             (e) The Bank shall have the right to terminate Employee’s employment under
this Agreement at any time for Cause, which termination shall be effective
immediately. Termination for “Cause” shall include termination for Employee’s
personal dishonesty, incompetence, willful misconduct, breach of a fiduciary
duty involving personal profit, failure to perform stated duties, willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order, conviction of a felony or of
a misdemeanor involving moral turpitude, misappropriation of the Bank’s assets
(determined on a reasonable basis) or those of its Affiliates, or material
breach of any other provision of this Agreement. In the event Employee’s
employment under this Agreement is terminated for Cause, Employee shall
thereafter have no right to receive compensation or other benefits under this
Agreement.

             (f) The Bank may terminate Employee’s employment under this Agreement,
after having established the Employee’s disability by giving to Employee
written notice of its intention to terminate his employment for disability and
his employment with the Bank shall terminate effective on the 90th day after
receipt of such notice if within 90 days after such receipt Employee shall fail
to return to the full-time performance of the essential functions of his
position (and if Employee’s disability has been established pursuant to the
definition of “disability” set forth below). For purposes of this Agreement,
“disability” means either (i) disability which after the expiration of more
than 13 consecutive weeks after its commencement is determined to be total and
permanent by a physician selected and paid for by the Bank or its insurers, and
acceptable to Employee or his legal representative, which consent shall not be
unreasonably withheld or (ii) disability as defined in the policy of disability
insurance maintained by the Bank or its Affiliates for the benefit of Employee,
whichever shall be more favorable to Employee. Notwithstanding any

4

 

other provision of this Agreement, the Bank shall comply with all requirements
of the Americans with Disabilities Act, 42 U.S.C. § 12101
et. seq.

             (g) If Employee is suspended and/or temporarily prohibited from
participating in the conduct of the Bank’s affairs by a notice served pursuant
to the Federal Deposit Insurance Act, the Bank’s obligations under this
Employment Agreement shall be suspended as of the date of service unless stayed
by appropriate proceedings. If the charges in the notice are dismissed, the
Bank may in its discretion (i) pay Employee all or part of the compensation
withheld while its contract obligations were suspended, and (ii) reinstate (in
whole or in part) any of its obligations which were suspended.

             (h) If Employee is removed and/or permanently prohibited from
participating in the conduct of the Bank’s affairs by an order issued under the
Federal Deposit Insurance Act or the Code of Virginia, all obligations of the
Bank under this Employment Agreement shall terminate as of the effective date
of the order, but vested rights of the parties shall not be affected.

             (i) (1) If Employee’s employment is terminated without Cause within one
year after a Change of Control shall have occurred or if he resigns for Good
Reason within one year after a Change of Control shall have occurred, then on
or before Employee’s last day of employment with the Bank, the Bank shall pay
to Employee as compensation for services rendered to the Bank and its
Affiliates a cash amount (subject to any applicable payroll or other taxes
required to be withheld) equal to two year’s compensation (annual base salary
plus the average of the last three years bonuses) ; provided, however, that the
Bank may pay said amounts in equal monthly installments over the twenty four
(24) months succeeding the date of termination, payable on the first day of
each such month.

                 (2) For purposes of this Agreement, a Change of Control occurs if, after
the date of this Agreement, (i) any person, including a “group” as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the owner or
beneficial owner of Bank securities having 50% or more of the combined voting
power of the then outstanding Bank securities that may be cast for the election
of the Bank’s directors other than a result of an issuance of securities
initiated by the Bank, or open market purchases approved by the Board of
Directors, as long as the majority of the Board of Directors approving the
purchases is a majority at the time the purchases are made; or (ii) as the
direct or indirect result of, or in connection with, a tender or exchange
offer, a merger or other business combination, a sale of assets, a contested
election of directors, or any combination of these events, the persons who were
directors of the Bank before such events cease to constitute a majority of the
Bank’s Board, or any successor’s board, within two years of the last of such
transactions. For purposes of this Agreement, a Change of Control occurs on
the date on which an event described in (i) or (ii) occurs. If a Change of
Control occurs on account of a series of transactions or events, the Change of
Control occurs on the date of the last of such transactions or events.

     Section 10. Confidentiality/Nondisclosure. Employee covenants and agrees
that any and all information concerning the customers, businesses and services
of the Bank of which he has knowledge or access as a result of his association
with the Bank in any capacity, shall be deemed

5

 

confidential in nature and shall not, without the proper written consent of the
Bank, be directly or indirectly used, disseminated, disclosed or published by
Employee to third parties other than in connection with the usual conduct of
the business of the Bank. Such information shall expressly include, but shall
not be limited to, information concerning the Bank’s trade secrets, business
operations, business records, customer lists or other customer information.
Upon termination of employment Employee shall deliver to the Bank all originals
and copies of documents, forms, records or other information, in whatever form
it may exist, concerning the Bank or its business, customers, products or
services. In construing this provision it is agreed that it shall be
interpreted broadly so as to provide the Bank with the maximum protection.
This Section 10 shall not be applicable to any information which, through no
misconduct or negligence of Employee, has previously been disclosed to the
public by anyone other than Employee.

     Section 11. Covenant Not to Compete. During the term of this Agreement
and throughout any further period that he is an officer or employee of the
Bank, and for a period of twelve (12) months from and after the date that
Employee is (for any reason) no longer employed by the Bank or for a period of
twelve (12) months from the date of entry by a court of competent jurisdiction
of a final judgment enforcing this covenant in the event of a breach by
Employee, whichever is later, Employee covenants and agrees that he will not,
directly or indirectly, either as a principal, agent, employee, employer,
stockholder, co-partner or in any other individual or representative capacity
whatsoever: (i) engage in a Competitive Business anywhere within a fifteen (15)
mile radius of the Bank’s headquarters on the date Employee’s employment
terminates; or (ii) solicit, or assist any other person or business entity in
soliciting, any depositors or other customers of the Bank to make deposits in
or to become customers of any other financial institution conducting a
Competitive Business; or (iii) induce any individuals to terminate their
employment with the Bank or its Affiliates. As used in this Agreement, the
term “Competitive Business” means all banking and financial products and
services that are substantially similar to those offered by the Bank on the
date that Employee’s employment terminates.

     Section 12. Injunctive Relief, Damages, Etc. Employee agrees that given
the nature of the positions held by Employee with the Bank, that each and every
one of the covenants and restrictions set forth in Sections 10 and 11 above are
reasonable in scope, length of time and geographic area and are necessary for
the protection of the significant investment of the Bank in developing,
maintaining and expanding its business. Accordingly, the parties hereto agree
that in the event of any breach by Employee of any of the provisions of
Sections 10 or 11 that monetary damages alone will not adequately compensate
the Bank for its losses and, therefore, that it may seek any and all legal or
equitable relief available to it, specifically including, but not limited to,
injunctive relief and Employee shall be liable for all damages, including
actual and consequential damages, costs and expenses, including legal costs and
actual attorneys’ fees, incurred by the Bank as a result of taking action to
enforce, or recover for any breach of, Section 10 or Section 11. The covenants
contained in Sections 10 and 11 shall be construed and interpreted in any
judicial proceeding to permit their enforcement to the maximum extent permitted
by law. Should a court of competent jurisdiction determine that any provision
of the covenants and restrictions set forth in Section 11 above is
unenforceable as being overbroad as to time, area or scope, the court may
strike the offending provision or reform such provision to substitute such
other terms as are reasonable to protect the Bank’s legitimate business
interests.

6

 

     Section 13. Binding Effect/Assignability. This Employment Agreement shall
be binding upon and inure to the benefit of the Bank and Employee and their
respective heirs, legal representatives, executors, administrators, successors
and assigns, but neither this Agreement, nor any of the rights hereunder, shall
be assignable by Employee or any beneficiary or beneficiaries designated by
Employee. The Bank will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of
the business, stock or assets of the Bank, by agreement in form and substance
reasonably satisfactory to the Employee, to expressly assume and agree to
perform this Agreement in its entirety. Failure of the Bank to obtain such
agreement prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle the Employee to the compensation described
in Section 9(d). As used in this Agreement, “Bank” shall mean Alliance
Bankshares Bank, a Virginia Bank, and any successor to its respective business,
stock or assets as aforesaid which executes and delivers the agreement provided
for in this Section 13 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.

     Section 14. Governing Law. This Employment Agreement shall be subject to
and construed in accordance with the laws of the Commonwealth of Virginia,
without giving effect to its principles of conflict of laws.

     Section 15. Litigation. In the event of any dispute between the parties
concerning this Agreement, each party shall be responsible for obtaining
counsel at its own expense; however, in the event that the Bank does not
substantially prevail in any litigation arising under this Agreement, the Bank
shall promptly reimburse the Employee for all reasonable attorneys’ fees and
expenses incurred in connection with such litigation.

     Section 16. Invalid Provisions. The invalidity or unenforceability of any
particular provision of this Employment Agreement shall not affect the validity
or enforceability of any other provisions hereof, and this Employment Agreement
shall be construed in all respects as if such invalid or unenforceable
provisions were omitted.

     Section 17. Notices. Any and all notices, designations, consents, offers,
acceptance or any other communications provided for herein shall be given in
writing and shall be deemed properly delivered if delivered in person or by
registered or certified mail, return receipt requested, addressed in the case
of the Bank to its registered office or in the case of Employee to his last
known address.

     Section 18. Entire Agreement.

             (a) This Employment Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersedes any and all
other agreements, either oral or in writing, among the parties hereto with
respect to the subject matter hereof.

7

 

             (b) This Employment Agreement may be executed in one or more counterparts,
each of which shall be considered an original copy of this Agreement, but all
of which together shall evidence only one agreement.

     Section 19. Amendment and Waiver. This Employment Agreement may not be
amended except by an instrument in writing signed by or on behalf of each of
the parties hereto. No waiver of any provision of this Employment Agreement
shall be valid unless in writing and signed by the person or party to be
charged.

     Section 20. Case and Gender. Wherever required by the context of this
Employment Agreement, the singular or plural case and the masculine, feminine
and neuter genders shall be interchangeable.

     Section 21. Captions. The captions used in this Employment Agreement are
intended for descriptive and reference purposes only and are not intended to
affect the meaning of any Section hereunder.

     IN WITNESS WHEREOF, the Bank has caused this Employment Agreement to be
signed by its duly authorized officer and Employee has hereunto set his hand
and seal on the day and year first above written.

	 	 	 
	 	ALLIANCE BANK
	 
	 	By:	Thomas A. Young, Jr.

	 	 	

	 	Title:	  President & CEO

	 	 
	ATTEST:	 
	 
	Joyce E. Vanneman

	 

	 	 
	 	EMPLOYEE
	 
	 	Paul M. Harbolick, Jr.  (SEAL)

Paul M. Harbolick, Jr.

	 	 
	ATTEST:	 
	 
	Joyce E. Vanneman

	 

8

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