Document:

VapAria Corporation 8-K 

 

Exhibit 10.7

 

VAPARIA CORPORATION

2014 EQUITY COMPENSATION PLAN

 

1.            Purpose.

 

                1.1       Purpose.
The purpose of the VapAria Corporation 2014 Equity Compensation Plan is to enable the Company to offer to its employees, officers,
directors and consultants whose past, present and/or potential contributions to the Company and its Subsidiaries have been, are
or will be important to the success of the Company, an opportunity to acquire a proprietary interest in the Company. The types
of long-term incentive Awards that may be provided under the Plan will enable the Company to respond to changes in compensation
practices, tax laws, accounting regulations and the size and diversity of its businesses.

 

2.            Definitions.

 

                2.1       Definitions.
For purposes of the Plan, the following terms shall be defined as set forth below:

 

                              (a)        “Agreement”
means the agreement between the Company and the Holder setting forth the terms and conditions of an Award under the Plan. Agreements
shall be in the form(s) attached hereto.

 

                              (b)        “Award”
means Stock Options, Restricted Stock and/or other Stock Based Awards awarded under the Plan.

 

                              (c)        “Board”
means the Board of Directors of the Company.

 

                              (d)        “Code”
means the Internal Revenue Code of 1986, as amended from time to time.

 

                              (e)        “Committee”
means the Compensation Committee of the Board or any other committee of the Board that the Board may designate to administer the
Plan or any portion thereof. If no Committee is so designated, then all references in this Plan to “Committee” shall
mean the Board.

 

                              (f)        “Common
Stock” means the common stock of the Company, $0.0001 par value per share.

 

                              (g)        “Company”
means VapAria Corporation, a corporation organized under the laws of the State of Delaware and formerly known as OICco Acquisition
IV, Inc.

 

                              (h)        “Disability”
means physical or mental impairment as determined under procedures established by the Committee for purposes of the Plan.

 

                              (i)        “Effective
Date” means the date set forth in Section 12.1, below.

 

                              (j)        “Fair
Market Value”, unless otherwise required by any applicable provision of the Code or any regulations issued thereunder,
means, as of any given date: (i) if the Common Stock is listed on a national securities exchange, the closing price of the Common
Stock in the principal trading market for the Common Stock on such date, as reported by the exchange or on the last preceding trading
date if such security was not traded on such date; (ii) if the Common Stock is not listed on a national securities exchange, but
is traded in the over-the-counter market, the closing bid price for the Common Stock on such date, as reported by the OTC Bulletin
Board or the OTC Markets Inc. or similar publisher of such quotations; and (iii) if the fair market value of the Common Stock cannot
be determined pursuant to clause (i) or (ii) above, such price as the Committee shall determine, in good faith.

 

    	1

    	 

    

                              (k)        “Holder”
means a person who has received an Award under the Plan.

 

                              (l)        “Incentive
Stock Option” means any Stock Option intended to be and designated as an “incentive stock option” within
the meaning of Section 422 of the Code.

 

                              (m)        “Nonqualified
Stock Option” means any Stock Option that is not an Incentive Stock Option.

 

                              (n)        “Normal
Retirement” means retirement from active employment with the Company or any Subsidiary, other than for Cause or due
to death or disability, of a Holder who; (i) has reached the age of 65; (ii) has reached the age of 62 and has completed five years
of service with the Company; or (iii) has reached the age of 60 and has completed 10 years of service with the Company.

 

                              (o)        “Other
Stock-Based Award” means an Award under Section 9, below, that is valued in whole or in part by reference to, or
is otherwise based upon, Common Stock.

 

                              (p)        “Parent”
means any present or future “parent corporation” of the Company, as such term is defined in Section 424(e) of the Code.

 

                              (q)        “Plan”
means the VapAria Corporation 2014 Equity Compensation Plan, as hereinafter amended from time to time.

 

                              (r)        “Repurchase
Value” shall mean the Fair Market Value in the event the Award to be repurchased under Section 10.2 is comprised
of shares of Common Stock and the difference between Fair Market Value and the Exercise Price if lower than Fair Market Value in
the event the Award is a Stock Option or Stock Appreciation Right; in each case, multiplied by the number of shares subject to
the Award.

 

                              (s)        “Restricted
Stock” means Common Stock, received under an Award made pursuant to Section 8, below that is subject to restrictions
under said Section 8.

 

                              (t)        “SAR
Value” means the excess of the Fair Market Value on the exercise date over the exercise price that the participant
would have otherwise had to pay to exercise the related Stock Option, multiplied by the number of shares for which the Stock Appreciation
Right is exercised.

 

                              (u)        “Stock
Appreciation Right” means the right to receive from the Company, on surrender of all or part of the related Stock
Option, without a cash payment to the Company, a number of shares of Common Stock equal to the SAR Value divided by the Fair Market
Value on the exercise date.

 

                              (v)        “Stock
Option” or “Option” means any option to purchase shares of Common Stock that is granted
pursuant to the Plan.

 

                              (w)        “Subsidiary”
means any present or future “subsidiary corporation” of the Company, as such term is defined in Section 424(f) of the
Code.

 

    	2

    	 

    

3.            Administration.

 

                3.1       Committee
Membership. The Plan shall be administered by the Committee, the Board or a committee designated by the Board. Committee members
shall serve for such term as the Board may in each case determine, and shall be subject to removal at any time by the Board. The
Committee members, to the extent deemed to be appropriate by the Board, shall be “non-employee directors” as defined
in Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (“Exchange Act”), and
“outside directors” within the meaning of Section 162(m) of the Code. The Committee shall conduct itself in conformance
with the provisions of the Compensation Committee Charter.

 

                3.2       Powers
of Committee. The Committee shall have the authority and responsibility to recommend to the Board for approval, Awards for
Board members, executive officers, non-executive employees and consultants of the Company, pursuant to the terms of the Plan: (i)
Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock, and/or (iv) Other Stock-Based Awards. For purposes of illustration
and not of limitation, the Committee shall have the authority, subject to the express provisions of this Plan:

 

                              (a)        to
select the officers, employees, directors and consultants of the Company or any Subsidiary to whom Stock Options, Stock Appreciation
Rights, Restricted Stock, and/or Other Stock-Based Awards may from time to time be awarded hereunder.

 

                              (b)        to
determine the terms and conditions, not inconsistent with the terms of the Plan or requisite Board approval, of any Award granted
hereunder including, but not limited to, number of shares, share exercise price or types of consideration paid upon exercise of
Stock Options and the purchase price of Common Stock awarded under the Plan including, without limitation, by a Holder’s
conversion of deferred salary or other indebtedness of the Company to the Holder, such as other securities of the Company or other
property, any restrictions or limitations, and any vesting, exchange, surrender, cancellation, acceleration, termination, exercise
or forfeiture provisions, as the Committee shall determine;

 

                              (c)        to
determine any specified performance goals or such other factors or criteria which need to be attained for the vesting of an Award
granted hereunder;

 

                              (d)        to
determine the terms and conditions under which Awards granted hereunder are to operate on a tandem basis and/or in conjunction
with or apart from other equity awarded under this Plan and cash Awards made by the Company or any Subsidiary outside of this Plan;
and

 

                              (e)        to
determine the extent and circumstances under which Common Stock and other amounts payable with respect to an Award hereunder shall
be deferred that may be either automatic or at the election of the Holder; and

 

3.3       Interpretation
of Plan.

 

             3.1       Committee
Authority. Subject to Section 11, below, the Committee shall have the authority to adopt, alter and repeal such administrative
rules, guidelines and practices governing the Plan as it shall, from time to time, deem advisable, to interpret the terms and provisions
of the Plan and any Award issued under the Plan, and to determine the form and substance of all Agreements relating thereto, and
to otherwise supervise the administration of the Plan. Subject to Section 11, below, all decisions made by the Committee pursuant
to the provisions of the Plan shall be made in the Committee’s sole discretion, subject to Board authorization if indicated,
and shall be final and binding upon all persons, including the Company, its Subsidiaries and Holders.

 

    	3

    	 

    

                3.2       Incentive
Stock Options. Anything in the Plan to the contrary notwithstanding, no term or provision of the Plan relating to Incentive
Stock Options including, but not limited, to Stock Appreciation rights granted in conjunction with an Incentive Stock Option, or
any Agreement providing for Incentive Stock Options shall be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under Section 422 of the Code, or, without the consent of
the Holder(s) affected, to disqualify any Incentive Stock Option under such Section 422.

 

4.            Stock
Subject to Plan.

 

                4.1       Number
of Shares. The total number of shares of Common Stock reserved and available for issuance under the Plan shall be ten million
(10,000,000) shares. Shares of Common Stock under the Plan may consist, in whole or in part, of authorized and unissued shares
or treasury shares. The number of shares of Common Stock available for issuance under the Plan shall automatically increase on
the first trading day of January each calendar year during the term of the Plan, beginning with calendar year 2015, by an amount
equal to one percent (1%) of the total number of shares of Common Stock outstanding on the last trading day in December of the
immediately preceding calendar year, but in no event shall any such annual increase exceed one hundred thousand (100,000) shares
of Common Stock. If any share of Common Stock that have been granted pursuant to a Stock Option ceases to be subject to a Stock
Option, or if any shares of Common Stock that are subject to any Stock Appreciation Right, Restricted Stock, Deferred Stock Award,
or Other Stock-Based Award granted hereunder are forfeited or any such Award otherwise terminates without a payment being made
to the Holder in the form of Common Stock, such shares shall again be available for distribution in connection with future grants
and Awards under the Plan.

 

                4.2       Adjustment
Upon Changes in Capitalization, Etc. In the event of any dividend, other than a cash dividend, payable on shares of Common
Stock, stock split, reverse stock split, combination or exchange of shares, or other similar event not addressed in Section 4.3
below occurring after the grant of an Award, which results in a change in the shares of Common Stock of the Company as a whole,
(i) the number of shares issuable in connection with any such Award and the purchase price thereof, if any, shall be proportionately
adjusted to reflect the occurrence of any such event, and (ii) the Committee shall determine whether such change requires an adjustment
in the aggregate number of shares reserved for issuance under the Plan or to retain the number of shares reserved and available
under the Plan, in their sole discretion. Any adjustment required by this Section 4.2 shall be made by the Committee, in good faith,
subject to Board authorization if indicated, whose determination will be final, binding and conclusive.

 

                4.3       Certain
Mergers and Similar Transactions. In the event of (a) a dissolution or liquidation of the Company, (b) a merger or consolidation
in which the Company is not the surviving corporation, other than a merger or consolidation with a wholly-owned subsidiary, a reincorporation
of the Company in a different jurisdiction, or other transaction in which there is no substantial change in the stockholders of
the Company or their relative stock holdings and the Awards granted under this Plan are assumed, converted or replaced by the successor
corporation, which assumption will be binding on all Awardees, (c) a merger in which the Company is the surviving corporation but
after which the stockholders of the Company immediately prior to such merger, other than any stockholder that merges, or which
owns or controls another corporation that merges with the Company in such merger, cease to own their shares or other equity interest
in the Company, (d) the sale of all or substantially all of the assets of the Company, or (e) the acquisition, sale, or transfer
of more than fifty percent (50%) of the outstanding shares of the Company by tender offer or similar transaction, any or all outstanding
Awards may be assumed, converted or replaced by the successor corporation (if any), which assumption, conversion or replacement
will be binding on all Awardees. In the alternative, the successor corporation may substitute equivalent Awards or provide substantially
similar consideration to Awardees as was provided to stockholders after taking into account the existing provisions of the Awards.
The successor corporation may also issue, in place of outstanding shares Common Stock of the Company held by the Holder, substantially
similar shares or other property subject to repurchase restrictions no less favorable to the Holder. In the event such successor
corporation (if any) refuses or otherwise declines to assume or substitute Awards, as provided above, (i) the vesting of any or
all Awards granted pursuant to this Plan will accelerate immediately prior to the effective date of a transaction described in
this Section 4.3, and (ii) any or all Options granted pursuant to this Plan will become exercisable in full prior to the consummation
of such event at such time and on such conditions as the Committee determines. If such Options are not exercised prior to the consummation
of the corporate transaction, they shall terminate at such time as determined by the Committee. Subject to any greater rights granted to Awardees
under the foregoing provisions of this Section 4.3, in the event of the occurrence of any transaction described in this Section
4.3, any outstanding Awards will be treated as provided in the applicable agreement or plan of merger, consolidation, dissolution,
liquidation, or sale of assets.

 

    	4

    	 

    

 

5.            Eligibility.

 

Awards may be made or granted
to employees, officers, directors and consultants who are deemed to have rendered or to be able to render significant services
to the Company or its Subsidiaries and who are deemed to have contributed or to have the potential to contribute to the success
of the Company. No Incentive Stock Option shall be granted to any person who is not an employee of the Company or a Subsidiary
at the time of grant. Notwithstanding anything to the contrary contained in the Plan, Awards covered or to be covered under a registration
statement on Form S-8 may be made under the Plan only if (a) they are made to natural persons, (b) who provide bona fide services
to the Company or its Subsidiaries, and (c) the services are not in connection with the offer and sale of securities in a capital
raising transaction, and do not directly or indirectly promote or maintain a market for the Company’s securities.

 

6.            Stock
Options.

 

                6.1       Grant
and Exercise. Stock Options granted under the Plan may be of two types: (i) Incentive Stock Options, and (ii) Nonqualified
Stock Options. Any Stock Option granted under the Plan shall contain such terms, not inconsistent with this Plan, or with respect
to Incentive Stock Options, not inconsistent with the Plan and the Code, as the Committee may from time to time approve. The Committee
shall have the authority to grant Incentive Stock Options or Nonqualified Stock Options, or both types of Stock Options, which
may be granted alone or in addition to other Awards granted under the Plan. To the extent that any Stock Option intended to qualify
as an Incentive Stock Option does not so qualify, it shall constitute a separate Nonqualified Stock Option.

 

                6.2       Terms
and Conditions. Stock Options granted under the Plan shall be subject to the following terms and conditions:

 

                              (a)        Option
Term. The term of each Stock Option shall be fixed by the Committee; provided, however, that an Incentive Stock Option
may be granted only within the ten (10) year period commencing from the Effective Date and may only be exercised within ten (10)
years of the date of grant, or five (5) years in the case of an Incentive Stock Option granted to an optionee who, at the time
of grant, owns Common Stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of
the Company (“10% Stockholder”).

 

                              (b)        Exercise
Price. The exercise price per share of Common Stock purchasable under a Stock Option shall be determined by the Committee at
the time of grant and may not be less than one hundred percent (100%) of the Fair Market Value on the day of grant; provided,
however, that the exercise price of an Incentive Stock Option granted to a 10% Stockholder shall not be less than one hundred
ten percent (110%) of the Fair Market Value on the date of grant.

 

    	5

    	 

    

                              (c)        Exercisability.
Stock Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the
Committee and as set forth in Section 10, below. If the Committee provides, in its discretion, that any Stock Option is exercisable
only in installments, i.e., that it vests over time, the Committee may waive such installment exercise provisions at any
time at or after the time of grant in whole or in part, based upon such factors as the Committee shall determine.

 

                              (d)        Method
of Exercise. Subject to whatever installment, exercise and waiting period provisions are applicable in a particular case; Stock
Options may be exercised in whole or in part at any time during the term of the Option, by giving written notice of exercise to
the Company specifying the number of shares of Common Stock to be purchased. Such notice shall be accompanied by payment in full
of the purchase price, which shall be in cash or, if provided in the Agreement, either in shares of Common Stock, including Restricted
Stock and other contingent Awards under this Plan, or partly in cash and partly in such Common Stock, or such other means which
the Committee determines are consistent with the Plan’s purpose and applicable law. Cash payments shall be made by wire transfer,
certified or bank check or personal check, in each case payable to the order of the Company; provided, however, that the
Company shall not be required to deliver certificates for shares of Common Stock with respect to which an Option is exercised until
the Company has confirmed the receipt of good and available funds in payment of the purchase price thereof. Payments in the form
of Common Stock shall be valued at the Fair Market Value on the date prior to the date of exercise. Such payments shall be made
by delivery of stock certificates in negotiable form that are effective to transfer good and valid title thereto to the Company,
free of any liens or encumbrances. A Holder shall have none of the rights of a stockholder with respect to the shares subject to
the Option until such shares shall be transferred to the Holder upon the exercise of the Option.

 

                              (e)        Transferability.
Except as may be set forth in the Agreement, no Stock Option shall be transferable by the Holder other than by will or by the laws
of descent and distribution, and all Stock Options shall be exercisable, during the Holder’s lifetime, only by the Holder
or, to the extent of legal incapacity or incompetency, the Holder’s guardian or legal representative.

 

                              (f)        Termination
by Reason of Death. If a Holder’s employment by the Company or a Subsidiary terminates by reason of death, any Stock
Option held by such Holder, unless otherwise determined by the Committee at the time of grant and set forth in the Agreement, shall
thereupon automatically terminate, except that the portion of such Stock Option that has vested on the date of death may thereafter
be exercised by the legal representative of the estate or by the legatee of the Holder under the will of the Holder, for a period
of one (1) year (or such other greater or lesser period as the Committee may specify at grant) from the date of such death or until
the expiration of the stated term of such Stock Option, whichever period is the shorter.

 

                              (g)        Termination
by Reason of Disability. If a Holder’s employment by the Company or any Subsidiary terminates by reason of Disability,
any Stock Option held by such Holder, unless otherwise determined by the Committee at the time of grant and set forth in the Agreement,
shall there upon automatically terminate, except that the portion of such Stock Option that has vested on the date of termination
may thereafter be exercised by the Holder for a period of one (1) year or such other greater or lesser period as the Committee
may specify at the time of grant from the date of such termination of employment or until the expiration of the stated term of
such Stock Option, whichever period is the shorter.

 

    	6

    	 

    

                              (h)        Other
Termination. Subject to the provisions of Section 13, below, and unless otherwise determined by the Committee at the time of
grant and set forth in the Agreement, if a Holder is an employee of the Company or a Subsidiary at the time of grant and if such
Holder’s employment by the Company or any Subsidiary terminates for any reason other than death or Disability, the Stock
Option shall thereupon automatically terminate, except that if the Holder’s employment is terminated by the Company or a
Subsidiary without cause or due to Normal Retirement, then the portion of such Stock Option that has vested on the date of termination
of employment may be exercised for the lesser of three (3) months after termination of employment or the balance of such Stock
Option’s term.

 

                              (i)        Additional
Incentive Stock Option Limitation. In the case of an Incentive Stock Option, the aggregate Fair Market Value on the date of
grant of the Option with respect to which Incentive Stock Options become exercisable for the first time by a Holder during any
calendar year under all such plans of the Company and its Parent and Subsidiary shall not exceed $100,000.

 

                              (j)        Buyout
and Settlement Provisions. The Committee may at any time, subject to Board authorization, if indicated, offer to repurchase
a Stock Option previously granted, based upon such terms and conditions as the Committee shall establish and communicate to the
Holder at the time that such offer is made.

 

7.             Stock
Appreciation Rights.

 

                7.1       Grant
and Exercise. The Committee, subject to Board authorization, if indicated, may grant Stock Appreciation Rights to participants
who have been, or are being granted, Stock Options under the Plan as a means of allowing such participants to exercise their Stock
Options without the need to pay the exercise price in cash. In the case of a Nonqualified Stock Option, a Stock Appreciation Right
may be granted either at or after the time of the grant of such Nonqualified Stock Option. In the case of an Incentive Stock Option,
a Stock Appreciation Right may be granted only at the time of the grant of such Incentive Stock Option.

 

                7.2       Terms
and Conditions. Stock Appreciation Rights shall be subject to the following terms and conditions:

 

                              (a)        Exercisability.
Stock Appreciation Rights shall be exercisable as shall be determined by the Committee and set forth in the Agreement, subject
to the limitations, if any, imposed by the Code, with respect to related Incentive Stock Options.

 

                              (b)        Termination.
A Stock Appreciation Right shall terminate and shall no longer be exercisable upon the termination or exercise of the related Stock
Option.

 

                              (c)        Method
of Exercise. Stock Appreciation Rights shall be exercisable upon such terms and conditions as shall be determined by the Committee
and set forth in the Agreement and by surrendering the applicable portion of the related Stock Option. Upon such exercise and surrender,
the Holder shall be entitled to receive a number of shares of Common Stock equal to the SAR Value divided by the Fair Market Value
on the date the Stock Appreciation Right is exercised.

 

                              (d)        Shares
Affected Upon Plan. The granting of a Stock Appreciation Right shall not affect the number of shares of Common Stock available
for Awards under the Plan. The number of shares available for Awards under the Plan will, however, be reduced by the number of
shares of Common Stock acquirable upon exercise of the Stock Option to which such Stock Appreciation Right relates.

 

    	7

    	 

    

8.            Restricted
Stock.

 

                8.1       Grant.
Shares of Restricted Stock may be awarded either alone or in addition to other Awards granted under the Plan. The Committee, subject
to Board authorization, if indicated, shall determine the eligible persons to whom, and the time or times at which, grants of Restricted
Stock will be awarded, the number of shares to be awarded, the price (if any) to be paid by the Holder, the time or times within
which such Awards may be subject to forfeiture (“Restriction Period”), the vesting schedule and rights
to acceleration thereof, and all other terms and conditions of the Awards.

 

                8.2       Terms
and Conditions. Each Restricted Stock Award shall be subject to the following terms and conditions:

 

                              (a)        Certificates.
Restricted Stock, when issued, will be represented by a stock certificate or certificates registered in the name of the Holder
to whom such Restricted Stock shall have been awarded. During the Restriction Period, certificates representing the Restricted
Stock and any securities constituting Retained Distributions (as defined below) shall bear a legend to the effect that ownership
of the Restricted Stock and such Retained Distributions, and the enjoyment of all rights appurtenant thereto, are subject to the
restrictions, terms and conditions provided in the Plan and the Agreement. Such certificates shall be deposited by the Holder with
the Company, together with stock powers or other instruments of assignment, each endorsed in blank, which will permit transfer
to the Company of all or any portion of the Restricted Stock and any securities constituting Retained Distributions that shall
be forfeited or that shall not become vested in accordance with the Plan and the Agreement.

 

                              (b)        Rights
of Holder. Restricted Stock shall constitute issued and outstanding shares of Common Stock for all corporate purposes. The
Holder will have the right to vote such Restricted Stock, to receive and retain all regular cash dividends and other cash equivalent
distributions as the Board may in its sole discretion designate, pay or distribute on such Restricted Stock and to exercise all
other rights, powers and privileges of a holder of Common Stock with respect to such Restricted Stock, with the exceptions that
(i) the Holder will not be entitled to delivery of the stock certificate or certificates representing such Restricted Stock until
the Restriction Period shall have expired and unless all other vesting requirements with respect thereto shall have been fulfilled;
(ii) the Company will retain custody of the stock certificate or certificates representing the Restricted Stock during the Restriction
Period; (iii) other than regular cash dividends and other cash equivalent distributions as the Board may in its sole discretion
designate, pay or distribute, the Company will retain custody of all distributions (“Retained Distributions”)
made or declared with respect to the Restricted Stock and such Retained Distributions will be subject to the same restrictions,
terms and conditions as are applicable to the Restricted Stock until such time, if ever, as the Restricted Stock with respect to
which such Retained Distributions shall have been made, paid or declared shall have become vested and with respect to which the
Restriction Period shall have expired; or (iv) a breach of any of the restrictions, terms or conditions contained in this Plan
or the Agreement or otherwise established by the Committee with respect to any Restricted Stock or Retained Distributions will
cause a forfeiture of such Restricted Stock and any Retained Distributions with respect thereto.

 

                              (c)        Vesting;
Forfeiture. Upon the expiration of the Restriction Period with respect to each Award of Restricted Stock and the satisfaction
of any other applicable restrictions, terms and conditions (i) all or part of such Restricted Stock shall become vested in accordance
with the terms of the Agreement, subject to Section 10 below, and (ii) any Retained Distributions with respect to such Restricted
Stock shall become vested to the extent that the Restricted Stock related thereto shall have become vested, subject to Section
10 below. Any such Restricted Stock and Retained Distributions that do not vest shall be forfeited to the Company, and the Holder
shall not thereafter have any rights with respect to such Restricted Stock and Retained Distributions that shall have been so forfeited.

 

    	8

    	 

    

9.           Other
Stock-Based Awards.

 

Other Stock-Based Awards
may be awarded, subject to limitations under applicable law, that are denominated or payable in, valued in whole or in part by
reference to, or otherwise based on, or related to, shares of Common Stock, as deemed by the Committee to be consistent with the
purposes of the Plan, including, without limitation, purchase rights, shares of Common Stock awarded which are not subject to any
restrictions or conditions, or other rights convertible into shares of Common Stock and Awards valued by reference to the value
of securities of or the performance of specified Subsidiaries. Other Stock-Based Awards may be awarded either alone or in addition
to or in tandem with any other Awards under this Plan or any other plan of the Company. Each other Stock-Based Award shall be subject
to such terms and conditions as may be determined by the Committee.

 

10.           Accelerated
Vesting and Exercisability.

 

                10.1       Non-Approved
Transactions. If any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the “beneficial owner” (as referred in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities
in one or more transactions, and the Board does not authorize or otherwise approve such acquisition, then the vesting periods of
any and all Stock Options and other Awards granted and outstanding under the Plan shall be accelerated and all such Stock Options
and Awards will immediately and entirely vest, and the respective holders thereof will have the immediate right to purchase and/or
receive any and all Common Stock subject to such Stock Options and Awards on the terms set forth in this Plan and the respective
agreements respecting such Stock Options and Awards.

 

                10.2       Approved
Transactions. The Committee may, subject to Board authorization, if indicated, in the event of an acquisition of substantially
all of the Company’s assets or at least fifty percent (50%) of the combined voting power of the Company’s then outstanding
securities in one or more transactions, including by way of merger or reorganization which has been approved by the Company’s
Board of Directors, (i) accelerate the vesting of any and all Stock Options and other Awards granted and outstanding under the
Plan, and (ii) require a Holder of any Award granted under this Plan to relinquish such Award to the Company upon the tender by
the Company to Holder of cash in an amount equal to the Repurchase Value of such Award.

 

11.         Amendment
and Termination.

 

The Board may at any time,
and from time to time, amend alter, suspend or discontinue any of the provisions of the Plan, but no amendment, alteration, suspension
or discontinuance shall be made that would impair the rights of a Holder under any Agreement theretofore entered into hereunder,
without the Holder’s consent.

 

12.          Term
of Plan.

 

                12.1       Effective
Date. The Plan shall become effective at such time as the Plan is approved and adopted by the Company’s Board of Directors
(the “Effective Date”), subject to the following provisions:

 

                              (a)        to
the extent that the Plan authorizes the Award of Incentive Stock Options, stockholder approval for the Plan shall be obtained within
12 months of the Effective Date; and

 

    	9

    	 

    

                              (b)        the
failure to obtain stockholder for the Plan as contemplated by subparagraph (a) of this Section 12 shall not invalidate the Plan;
provided, however, that (i) in the absence of such stockholder approval, Incentive Stock Options may not be awarded under
the Plan, and (ii) any Incentive Stock Options theretofore awarded under the Plan shall be converted into Nonqualified Options
upon terms and conditions determined by the Committee to reflect, as nearly as is reasonably practicable in its sole determination,
the terms and conditions of the Incentive Stock Options being so converted.

 

                12.2       Termination
Date. Unless otherwise terminated by the Board, this Plan shall continue to remain effective until the earlier of ten (10)
years from the Effective Date or such time as no further Awards may be granted and all Awards granted under the Plan are no longer
outstanding. Notwithstanding the foregoing, grants of Incentive Stock Options may be made only during the ten (10) year period
following the Effective Date.

 

13.           General
Provisions.

 

                13.1       Written
Agreements. Each Award granted under the Plan shall be confirmed by, and shall be subject to the terms, of the Agreement executed
by the Company and the Holder. The Committee may terminate any Award made under the Plan if the Agreement relating thereto is not
executed and returned to the Company within ten (10) days after the Agreement has been delivered to the Holder for his or her execution.

 

                13.2       Unfunded
Status of Plan. The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation.
With respect to any payments not yet made to a Holder by the Company, nothing contained herein shall give any such Holder any rights
that are greater than those of a general creditor of the Company.

 

                13.3       Employees.

 

                              (a)        Engaging
in Competition with the Company; Disclosure of Confidential Information. If a Holder’s employment with the Company or
a Subsidiary is terminated for any reason whatsoever, and within three (3) months after the date thereof such Holder either (i)
accepts employment with any competitor of, or otherwise engages in competition with, the Company, or (ii) discloses to anyone outside
the Company or uses any confidential information or material of the Company in violation of the Company’s policies or any
agreement between the Holder and the Company, the Committee, in its sole discretion, may require such Holder to return to the Company
the economic value of any Award that was realized or obtained by such Holder at any time during the period beginning on that date
that is six (6) months prior to the date such Holder’s employment with the Company is terminated.

 

                              (b)        Termination
for Cause. The Committee may, if a Holder’s employment with the Company or a Subsidiary is terminated for cause, annul
any Award granted under this Plan to such employee and, in such event, the Committee, in its sole discretion, may require such
Holder to return to the Company the economic value of any Award that was realized or obtained by such Holder at any time during
the period beginning on that date that is six (6) months prior to the date such Holder’s employment with the Company is terminated.

 

                              (c)        No
Right of Employment. Nothing contained in the Plan or in any Award hereunder shall be deemed to confer upon any Holder who
is an employee of the Company or any Subsidiary any right to continued employment with the Company or any Subsidiary, nor shall
it interfere in any way with the right of the Company or any Subsidiary to terminate the employment of any Holder who is an employee
at any time.

 

    	10

    	 

    

                13.4.       Investment
Representations; Company Policy. The Committee may require each person acquiring shares of Common Stock pursuant to a Stock
Option or other Award under the Plan to represent to and agree with the Company in writing that the Holder is acquiring the shares
for investment without a view to distribution thereof. Each person acquiring shares of Common Stock pursuant to a Stock Option
or other Award under the Plan shall be required to abide by all policies of the Company in effect at the time of such acquisition
and thereafter with respect to the ownership and trading of the Company’s securities.

 

                13.5       Additional
Incentive Arrangements. Nothing contained in the Plan shall prevent the Board from adopting such other or additional incentive
arrangements as it may deem desirable, including, but not limited to, the granting of Stock Options and the awarding of Common
Stock and cash otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific
cases.

 

                13.6       Withholding
Taxes. Not later than the date as of which an amount must first be included in the gross income of the Holder for Federal income
tax purposes with respect to any option or other Award under the Plan, the Holder shall pay to the Company, or make arrangements
satisfactory to the Committee regarding the payment of, any Federal, state and local taxes of any kind required by law to be withheld
or paid with respect to such amount. If permitted by the Committee, tax withholding or payment obligations may be settled with
Common Stock, including Common Stock that is part of the Award that gives rise to the withholding requirement. The obligations
of the Company under the Plan shall be conditioned upon such payment or arrangements and the Company or the Holder’s employer
(if not the Company) shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind
otherwise due to the Holder from the Company or any Subsidiary.

 

                13.7       Governing
Law. The Plan and all Awards made and actions taken thereunder shall be governed by and construed in accordance with the laws
of the State of Delaware.

 

                13.8       Other
Benefit Plans. Any Award granted under the Plan shall not be deemed compensation for purposes of computing benefits under any
retirement plan of the Company or any Subsidiary and shall not affect any benefits under any other benefit plan now or subsequently
in effect under which the availability or amount of benefits is related to the level of compensation (unless required by specific
reference in any such other plan to Awards under this Plan).

 

                13.9       Non-Transferability.
Except as otherwise expressly provided in the Plan or the Agreement, no right or benefit under the Plan may be alienated, sold,
assigned, hypothecated, pledged, exchanged, transferred, encumbered or charged, and any attempt to alienate, sell, assign, hypothecate,
pledge, exchange, transfer, encumber or charge the same shall be void.

 

                13.10      Applicable
Laws. The obligations of the Company with respect to all Stock Options and Awards under the Plan shall be subject to (i) all
applicable laws, rules and regulations and such approvals by any governmental agencies as may be required, including, without limitation,
the Securities Act of 1933, as amended, and (ii) the rules and regulations of any securities exchange on which the Common Stock
may be listed.

 

                13.11      Conflicts.
If any of the terms or provisions of the Plan or an Agreement conflict with the requirements of Section 422 of the Code, then such
terms or provisions shall be deemed inoperative to the extent they so conflict with such requirements. Additionally, if this Plan
or any Agreement does not contain any provision required to be included herein under Section 422 of the Code, such provision shall
be deemed to be incorporated herein and therein with the same force and effect as if such provision had been set out at length
herein and therein. If any of the terms or provisions of any Agreement conflict with any terms or provisions of the Plan, then
such terms or provisions shall be deemed inoperative to the extent they so conflict with the requirements of the Plan. Additionally,
if any Agreement does not contain any provision required to be included therein under the Plan, such provision shall be deemed
to be incorporated therein with the same force and effect as if such provision had been set out at length therein.

 

    	11

    	 

    

                13.12      Non-Registered
Stock. The shares of Common Stock to be distributed under this Plan have not been, as of the Effective Date, registered under
the Securities Act of 1933, as amended, or any applicable state or foreign securities laws and the Company has no obligation to
any Holder to register the Common Stock or to assist the Holder in obtaining an exemption from the various registration requirements,
or to list the Common Stock on a national securities exchange or any other trading or quotation system.

 

    	12

    	 

    

Plan Amendments

 

	Date Approved

by Board	Date Approved by

Stockholders, if

necessary	Sections

Amended	Description of Amendment(s)
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

 

    	13

    	 

    

FORM OF OPTION AWARD AGREEMENT

 

VapAria Corporation

5550 Nicollet Avenue

Minneapolis, MN 55419

 

 

[DATE]

_________________

_________________

_________________

 

Re:        Stock
Option

 

Dear __________:

 

              We
are pleased to advise you that on [_______] the Board of Directors of VapAria Corporation, a Delaware corporation (the “Company”)
authorized the Award to you of an option to purchase [_______] shares of our common stock, par value $0.0001 per share (the
“Option”), upon the following terms and conditions:

 

1.           The
Option is granted in accordance with and subject to the terms and conditions of the Company’s 2014 Equity Compensation Plan
(the “Plan”).

 

2.           The
Option is [an incentive] [nonqualified] stock option.

 

3.           The
Option is exercisable commencing on [__________] and terminating at 5:00 pm New York time on [__________].

 

4.           The
price at which the Option may be exercised is $[_____] per share.

 

5.           The
Option is non-transferable and may be exercised, in whole or in part, during the exercise period, only by you, except that upon
your death, the Option may be exercised strictly in accordance with the terms and conditions of the Plan.

 

6.           The
exercise price and number of shares issuable upon exercise of the Option (the “Option Shares”) are subject
to adjustment in accordance with the Plan in the event of stock splits, dividends, reorganizations and similar corporate events.

 

7.           If,
neither the Option nor the Option Shares have been registered under the Securities Act of 1933, as amended (the “Act”),
and the Option Shares may not be sold, assigned, pledged, transferred or otherwise disposed of absent registration under the Act
or the availability of an applicable exemption from registration. All certificates evidencing the Option Shares will contain a
legend describing this restriction on resale of the Option Shares. There is no assurance that there will be a public market into
which you may sell the Option Shares or that you will be able to sell your Option Shares at a profit or at all.

 

8.           In
order to exercise the Option, you must provide us with written notice that you are exercising all or a portion of your Option.
The written notice must specify the number of Option Shares that you are exercising your Option for, and must be accompanied by
the exercise price described in paragraph 4, above. Your Option Shares will be issued to you within approximately one week following
our receipt of your exercise notice and cleared funds evidencing the exercise price.

 

    	

    	 

    

9.           No
rights or privileges of a stockholder of the Company are conferred by reason of the grant of the Option to you. You will have no
rights of a stockholder until you have delivered your exercise notice to us and we have received the exercise price of the Option
in cleared funds.

 

              You
understand that the Plan contains important information about your Option and your rights with respect to the Option. The Plan
includes terms relating to your right to exercise the Option, important restrictions on your ability to transfer the Option or
Option Shares, provisions relating to adjustments in the number of Option Shares and the exercise price and early termination of
the Option following the occurrence of certain events, including the termination of your relationship with us. By signing below,
you acknowledge your receipt of a copy of the Plan. By acceptance of your Option, you agree to abide by the terms and conditions
of the Plan.

 

10.         Our
business is subject to many risks and uncertainties. We may never operate profitably. The exercise of your Option is a speculative
investment and there is no assurance that you will realize a profit on the sale of Option Shares received upon exercise of your
Option.

 

11.         The
Option will become effective upon your acknowledgment of the terms and conditions of this Agreement and your delivery to us of
a signed counterpart of this Agreement.

 

12.         This
Agreement and Plan contain all of the terms and conditions of your Option and supersedes all prior agreements or understandings
relating to your Option. This Agreement shall be governed by the laws of the State of Delaware without regard to the conflicts
of law provisions thereof.

 

13.         This
Agreement may not be amended orally.

 

	 	Very truly yours,
	 	 
	 	 
	 	Chief Executive Officer

 

	AGREED TO AND ACCEPTED THIS
	_____ DAY OF ________ 20__
	 
	(Signature)
	 
	(Print Name)

 

    	2ex10-1.htm

Ex. 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into on this August 19, 2014 among Hampton Roads Bankshares, Inc., a Virginia corporation having its principal place of business at 641 Lynnhaven Parkway, Virginia Beach, VA 23452 (“HRB”), Bank of Hampton Roads, a corporation organized under the laws of, and authorized by statute to accept deposits and hold itself out to the public as engaged in the banking business in, the Commonwealth of Virginia having its principal place of business at 641 Lynnhaven Parkway, Virginia Beach, VA 23452 (“BHR”, and, together with HRB, the “Employer”) and Douglas J. Glenn (the “Executive”).  This Agreement replaces in its entirety that certain amended and restated employment agreement between the parties dated February 13, 2012.

 

WITNESSETH:

 

WHEREAS, the Employer presently employs the Executive as President and Chief Executive Officer of HRB and Chief Executive Officer of BHR;

 

WHEREAS, the Employer desires to provide for the continued employment of the Executive and to make certain changes in the Executive’s employment arrangements which the Employer has determined will reinforce and encourage the continued dedication of the Executive to the Employer; and

 

WHEREAS, the Executive is willing to terminate the Executive’s interests and rights under the existing amended and restated employment agreement with the Employer and to continue to serve the Employer on the terms and conditions herein provided.

 

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

 

	
1.  

	
Employment.

 

(a) The Employer and Executive agree that Executive shall continue to be employed as President and Chief Executive Officer of HRB and Chief Executive Officer of BHR and shall perform such services for the Employer as may be assigned to Executive by the Boards of Directors of HRB or BHR (collectively, the “Board”) from time to time in accordance with the terms and conditions set forth in this Agreement.

 

(b) The term of this Agreement shall commence on the date hereof (the “Effective Date”) and, subject to Section 5(a), shall expire on the third anniversary of the Effective Date, unless sooner terminated in accordance with the provisions of Section 5 (the “Term”).  On the third anniversary of the Effective Date and on each anniversary thereafter, the Term shall be extended for an additional one year unless the Employer shall deliver written notice to the contrary to Executive not less than 90 days prior to the end of the Term.  In the event Executive’s employment with the Employer continues after the expiration of the Term, Executive’s post-expiration employment will be at will.  Executive will not be entitled to any rights or benefits as a result of the expiration of this Agreement.

 

(c) The Executive is currently serving as a director of HRB, Shore Bank, and BHR. HRB shall nominate the Executive for election as a director of HRB as such nominations are necessary so that

 

  

  

  

 

 

(d) the Executive will, if elected by the stockholders of HRB, serve as a director of HRB, Shore Bank, and BHR throughout the term of his employment. HRB agrees to cause the election of the Executive as a director of BHR and Shore Bank throughout the term of his employment. The Executive hereby consents to serve as a director.

 

	
2.  

	
Duties of the Executive.

 

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

 

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

 

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

 

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

 

(a) Signing Bonus. On the Effective Date, the Employer shall pay the Executive a $100,000 signing bonus in the form of a lump sum cash payment.

 

(b) Base Salary.  The Employer shall pay the Executive a base salary (the “Base Salary”), at a rate of $550,000 per year, plus such other compensation as the Employer may, from time to time, determine in its sole discretion.  The Compensation Committee of the Board (the “Compensation Committee”) shall review annually the amount of the Executive’s Base Salary and may increase such Base Salary to such amount as the Employer may determine in its sole and absolute discretion.  Such Base Salary and other compensation shall be payable in accordance with the Employer’s normal payroll practices (and in no event less frequently than monthly) as in effect from time to time.

 

(c) Incentive Bonus Plans.  The Executive will be eligible to participate in any of the Employer’s long-term or short-term incentive plans on the same terms and conditions and in relative magnitude to other senior executive officers of the Employer, subject to annual bonus performance

 

  

2

  

 

 

(d) metrics and other terms and conditions of awards adopted in the sole and absolute discretion of the Compensation Committee on an annual basis.

 

(e) Supplemental Retirement Agreement. Notwithstanding any other provision of this Agreement, the Supplemental Retirement Agreement, dated May 27, 2008 and amended on December 31, 2008 and September 24, 2010, by and between BHR and Executive (the “SERP”), is hereby amended to provide that the maximum aggregate amount the Executive shall be entitled to receive under the SERP is the lesser of (i) $600,000 or (ii) the amount he is otherwise entitled to under the SERP without regard to this amendment.

 

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

 

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

 

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

 

5. Termination of Employment; Change in Control. Notwithstanding the termination of this Agreement or the termination of the Executive’s employment for any reason, the parties shall be required to carry out any provisions of this Agreement which contemplate performance by them subsequent to such termination.  In addition, no termination of this Agreement shall affect any liability or other obligation of either party which shall have accrued prior to such termination, including, but not limited to, any liability, loss or damage on account of breach.  No termination of employment shall terminate the obligation of the Employer to make payments of any vested benefits provided hereunder or the obligations of the Executive under Sections 7 and 8 of this Agreement. Unless otherwise stated in this Section 5, the effect of termination on any outstanding incentive awards, stock options, stock appreciation rights, performance units, or other incentives shall be governed by the terms of the applicable benefit or incentive plan and/or the agreements governing such incentives.

 

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

 

 

(b) This Agreement shall terminate upon death of the Executive; provided, however, that in such event the Employer shall pay to the estate of the Executive the compensation, including Base Salary

 

  

3

  

 

 

(c) and accrued but unused paid-time off in accordance with Employer’s policies with respect thereto, which otherwise would be payable to the Executive through the date on which his death occurs.  Such amounts shall be paid at the end of the payroll period that follows the payroll period in which his employment terminates due to his death.  Additionally, the Employer shall pay to the Executive’s estate (i) any bonus or other short-term incentive compensation earned, but not yet paid, for any year prior to the year in which his death occurs and (ii) any bonus or other short-term incentive compensation for the year in which his death occurs that he would have been eligible to receive if he had lived, multiplied by a fraction, the numerator of which is the number of days in the year that precede the date on which his death occurs and the denominator of which is three hundred sixty-five.

 

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

 

(d) The Employer may terminate Executive’s employment under this Agreement upon its determination of the Disability of the Executive, which Disability has continued for such period required for the Executive to become eligible to receive long term disability benefits under the Employer's long-term disability plan or insurance program.  “Disability” shall mean as defined by Treasury Regulation § 1.409A-3(i)(4).  During the period of any Disability leading up to the termination of the Executive’s employment under this provision, the Employer shall continue to pay the Executive his full Base Salary at the rate then in effect and all perquisites and other benefits (other than any bonus) in accordance with the Employer’s normal payroll practices; provided that, the amount of any such payments to the Executive shall be reduced by the sum of the amounts, if any, payable to the Executive for the same period under any other disability benefit covering the Executive that is provided by the Employer.  Additionally, the Employer shall pay the Executive any bonus or other short-term incentive compensation earned, but not yet paid, through the date of termination, on the same terms as set forth in Section 5(b).

 

 

(e) (1)  The Employer may terminate Executive’s employment under this Agreement other than for “Cause”, as defined in Section 5(e), at any time upon written notice to Executive, which termination shall be effective immediately.  Executive may resign after written notice to the Employer for “Good Reason”, as hereafter defined. In the event the Executive’s employment terminates pursuant to this Section 5(d)(1), Executive shall receive, at the end of the payroll period that follows the payroll period in which his employment terminates, his Base Salary earned through the date of termination, any bonuses or short-term incentive compensation as described in Section 5(b) above, and accrued but unused paid-time off.  In the event the Executive’s employment terminates pursuant to this Section 5(d)(1), provided he complies with the requirements of Section 5(i) below, Executive shall also receive the following items:

 

(i) from the Effective Date until May 31, 2016, an amount equal to 300% of the sum of (i) his current rate of annual Base Salary in effect immediately preceding such termination, and (ii) the average of his last two year’s annual bonus(es) earned (whether paid or unpaid due to restrictions imposed upon the Company under the TARP Capital Purchase Program); provided that such amount shall be paid in a single lump sum cash payment on the date described in Section 5(i) below;

 

(ii) after May 31, 2016, an amount equal to 200% of the sum of (i) his current rate of annual Base Salary in effect immediately preceding such termination and (ii) the average of his last two year’s annual bonus(es) earned (whether paid or unpaid due to restrictions imposed upon the Company under the TARP Capital Purchase

 

  

4

  

 

 

(iii)  Program); provided that such amount shall be paid in a single lump sum cash payment on the date described in Section 5(i) below; and  

 

(iv) The Executive may continue participation for both him and his covered dependents (if applicable), in accordance with the terms of the applicable benefits plans, in the Employer’s group health plan pursuant to plan continuation rules under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”).  In accordance with COBRA, assuming the Executive and his covered dependents (if applicable), are covered under the Employer’s group health plan as of his date of termination, the Executive will be entitled to elect COBRA continuation coverage for the legally required COBRA period (the “Continuation Period”) for such persons.  If the Executive timely elects COBRA coverage for group health coverage, he will be obligated to pay the portion of the full COBRA cost of the coverage equal to an active employee’s share of premiums for coverage for the respective plan year and the Employer’s share of such premiums shall be treated as taxable income to Executive.  In addition, if the terms of the applicable plan documents do not allow Employer to continue to provide COBRA coverage to Executive and his covered dependents (if applicable), beyond the expiration of the statutorily-proscribed COBRA period, the Employer shall make monthly cash payments to Executive in an amount equal to the monthly COBRA premium for coverage for Executive for the duration of the period described in Section 8 hereof. Notwithstanding the above, if during the period described in Section 8 hereof the Executive becomes eligible for qualifying health care coverage through a subsequent employer, the Employer’s obligations hereunder with respect to the foregoing benefits provided in this subsection (iii) may be terminated by the Employer.

 

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

 

(3)  For purposes of this Agreement, Good Reason shall mean as defined by Treasury Regulation § 1.409A-1(n)(2)(ii); provided, however, it shall not constitute Good Reason for the Executive to terminate this Agreement if he is required to change the geographic location at which he is required to perform his services hereunder to a location at which the Employer decides to relocate its headquarters which is less than 50 miles from its present headquarters location.

 

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

 

(f) The Employer shall have the right to terminate Executive’s employment under this Agreement at any time for Cause, which termination shall be effective immediately, upon delivery of written notice to the Executive which shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employee’s employment.  Termination for “Cause” shall mean termination because of the Executive's personal dishonesty, willful misconduct, breach of fiduciary

 

  

5

  

 

 

(g)  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 or material breach of any provision of this Agreement.  Cause shall also include termination because of (A) misappropriation or other intentional material damage to the property or business of the Employer by the Executive, (B) the Executive's repeated absences other than for vacation or physical or mental impairment or illness, (C) the Executive's admission or conviction of, or plea of nolo contendere to, any felony or any other crime referenced in Section 19 of the Federal Deposit Insurance Act that, in the reasonable judgment of the Board, adversely affects the Employer’s reputation or the Executive's ability to carry out the Executive's obligations under this Agreement or (D) the Executive's non-compliance with the provisions of Section 2(b) of this Agreement after notice of such non-compliance from the Employers to the Executive and a reasonable opportunity for the Executive to cure such non-compliance.  Notwithstanding the foregoing, the Employer may not terminate the Executive's employment under this Agreement for Cause unless the Employer provide the Executive with (X) written notice in accordance with the By-laws of HRB and BHR of a special meeting of the Board to consider the termination of the Executive's employment under this Agreement for Cause and (Y) the opportunity for the Executive to address such special meeting.  It shall not constitute a breach of this Agreement for the Employer to suspend the Executive’s duties and place the Executive on an unpaid leave during the period prior to the special meeting of the Board.  In the event Executive’s employment under this Agreement is terminated for Cause, Executive shall thereafter have no right to receive compensation or other benefits under this Agreement.

 

(h) If Executive is suspended and/or temporarily prohibited from participating in the conduct of the Employer’s affairs by a notice served pursuant to the Federal Deposit Insurance Act, the Employer’s obligations under this Agreement shall be suspended as of the date of service unless stayed by appropriate proceedings.  If the charges in the notice are dismissed, the Employer shall (i) pay on the first day of the first month following such dismissal of charges (or as provided elsewhere in this Agreement) the Executive all of the compensation withheld while the obligations under this Agreement were suspended; and (ii) reinstate any such obligations which were suspended.

 

(i) (1)  If Executive’s employment is terminated without Cause within one year after a Change in Control shall have occurred or if he resigns for Good Reason within one year after a Change in Control shall have occurred, then Executive shall receive, at the end of the payroll period that follows the payroll period in which his employment terminates, his Base Salary earned through the date of termination, any bonuses or short term incentive compensation as described in Section 5(b) above, and accrued but unused paid-time off.   In the event the Executive’s employment terminates pursuant to this Section 5(g)(1), provided he complies with the requirements of Section 5(i) below, Executive shall receive the following items: (i) a single lump sum amount equal to 299% of the sum of (i) his current rate of annual Base Salary in effect immediately preceding such termination and (ii) the average of his last two year’s annual bonus(es) earned (whether paid or unpaid due to restrictions imposed upon the Company under the TARP Capital Purchase Program) on the date described in Section 5(i) below and (ii) the benefits and payments described in Section 5(d)(1)(iii).

 

(2)  For purposes of this Agreement, “Change in Control” shall mean as defined by Treasury Regulation § 1.409A-3(i)(5); provided however that in no event shall the merger of any corporate entities that are wholly-owned by HRB be deemed Change in Control for purposes of this Agreement.

 

(3) Notwithstanding anything in this Agreement to the contrary, if the Executive breaches Sections  7 and 8 of this Agreement, the Executive will not thereafter be entitled to receive any further compensation or benefits pursuant to this Section 5(g)(1).

 

  

6

  

 

 

(j) Notwithstanding the provisions relating to the timing of payments described in this Section 5 above, if the Executive is a “specified employee” under Section 409A of the Internal Revenue Code of 1986 and any regulations thereunder (the “Code”) on the date of his termination of employment, payment of amounts due under Section 5(d)(1) shall be made as described in Section 27 of this Agreement.

 

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

 

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

 

All determinations required to be made under this Section 5, and the assumptions to be utilized in arriving at such determination, shall be made by the Tax Counsel, which shall provide its determinations and any supporting calculations both to the Employer and Executive within 10 business days of having made such determination.  The Tax Counsel shall consult with any nationally recognized compensation consultants, accounting firm and/or other legal counsel selected by the Company in determining which payments to, or for the benefit of, the Executive are to be deemed to be parachute payments within the meaning of Section 280G of the Code.  In connection with making determinations under this Section 5, the Tax Counsel shall take into account the value of any reasonable compensation for services to be

 

  

7

  

 

rendered by the Executive before or after the Change in Control, including without limitation, the Executive’s agreeing to refrain from performing services pursuant to a covenant not to compete or similar covenant, and the Employer shall cooperate in good faith in connection with any such valuations and reasonable compensation positions. Without limiting the generality of the foregoing, for purposes of this provision, the Employer agrees to allocate as consideration for the covenants set forth in Section 8 the maximum amount of compensation and benefits payable under Section 5 hereof reasonably allocable thereto so as to avoid, to the extent possible, subjecting any Payment to tax under Section 4999 of the Code.  

 

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

 

7. Confidential Information.  The Executive understands that in the course of the Executive’s employment by the Employer, the Executive will receive confidential information concerning the business of HRB and BHR and that the Employer desires to protect the confidentiality of such information (hereinafter “Confidential Information”).  For purposes of this Section 7, Confidential Information means data and information (i) relating to the business of the Employer, regardless of whether the data or information constitutes a trade secret (as such term is defined in the Uniform Trade Secrets Act), (ii) disclosed to Executive or of which he became aware of as a consequence of his relationship with the Employer, (iii) having value to the Employer, (iv) not generally known to competitors of the Employer; and (v) which includes trade secrets, methods of operation, names and contact information of customers and potential customers, information related to customers and potential customers, profit margins, financial information and projections, personnel data, and similar information; provided, however, that such term shall not mean data or information which has been voluntarily disclosed to the public by the Employer, except where such public disclosure has been made by Executive without authorization from the Employer, which has been independently developed and disclosed by others, or which has otherwise entered the public domain through lawful means.  Confidential Information also includes any information described in this Section 7 which the Employer obtains from a third party and treats as proprietary or confidential, whether or not owned or developed by the Employer.  The Executive agrees that the Executive will not at any time during or after the period of the Executive’s employment by the Employer reveal to anyone outside the Employer, or use for the Executive’s own benefit, any Confidential Information without prior specific written authorization by the Employer.  Upon termination of this Agreement, and upon the request of the Employer, the Executive shall promptly deliver to the Employer any and all written or electronic materials, records and documents, including all copies of this Agreement, made by the Executive or coming into the Executive’s possession during his employment hereunder and that the Executive retained containing or concerning Confidential Information and all other written or electronic materials furnished to and retained by the Executive by the Employer for the Executive’s use during his employment, excluding all copies of this Agreement, whether of a confidential nature or otherwise.  At the Employer’s request following termination of employment for any reason, the Executive shall sign a sworn certification that he has at all times complied with this Section 7, and that he has not taken or removed any Confidential Information, and such certification shall be a prerequisite for any post-termination severance otherwise payable to Executive.

 

  

8

  

8. Restrictive covenants.

 

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

 

(b)           Non-Solicitation of Employees. During the Executive’s employment with the Employer and for a period of two years following the termination of the Executive’s employment hereunder (but not the expiration of this Agreement), the Executive shall not, on the Executive’s own behalf or on behalf of any third party, recruit or hire any individual who was employed by the Employer at any point during the twelve month period immediately preceding his termination of employment with whom the Executive had contact, involvement or communication, during such time.

 

(c)           Non-Competition. During Executive’s employment with the Employer and for a period of two years following the termination of the Executive’s employment hereunder (but not the expiration of this Agreement), the Executive covenants and agrees that he will not either as principal, owner (of greater than 5% of the ownership interests), partner, director, officer, employee, agent, or consultant provide services that are substantially similar to those he provided while employed by the Employer and that compete with the banking services that the Employer provided at any time during the twelve month period immediately preceding Executive's termination of employment. The foregoing restriction shall only apply within a 25-mile radius of the location of HRB’s corporate headquarters and any office or branch of HRB or any of its subsidiaries in operation as of the date of his termination of employment.

 

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

 

10. Regulatory Compliance.  Notwithstanding anything to the contrary herein, any compensation or other benefits paid to the Executive shall be limited to the extent required by any federal or state regulatory agency having authority over HRB or BHR, including any limitations or prohibitions on payments under Section 5 of this Agreement.  The Executive agrees that compliance by HRB or BHR with such regulatory restrictions, even to the extent that compensation or other benefits paid to the Executive are limited, shall not be a breach of this Agreement by the Company or the Employer.

 

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

 

  

9

  

 

 

12.  is subject to recovery or recoupment under any internal policy of the Employer shall be shall be recouped by the Employer as necessary to satisfy such internal policy.  Executive agrees to promptly return or repay any such compensation, and authorizes the Employer to deduct such compensation from any other payments owed to the Executive by the Employer if he fails to do so.

 

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

 

14. Assignability.  The services of the Executive under this Agreement are personal in nature, and the Employer may not assign this Agreement nor the rights or obligations of the Employer under this Agreement, whether by operation of law or otherwise, without the Executive’s prior written consent.  This Agreement shall be binding upon, and inure to the benefit of, the Employer and its permitted successors and assigns under this Agreement.  The Executive may not assign this Agreement, but the Executive’s benefits under this Agreement shall inure to the benefit of the Executive’s heirs, executors, administrators and legal representatives to the extent this Agreement expressly provides.

 

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

 

16. Specific Performance.  The parties agree that irreparable damage would occur in the event that any of the provisions of Sections 7 and 8 of this Agreement were not performed in accordance with their specific terms or were otherwise breached.  The parties accordingly agree that each of the parties to this Agreement shall be entitled to an injunction or injunctions to prevent breaches of Sections 7 and 8 of this Agreement and to enforce specifically the terms and provisions of Sections 7 and 8 of this Agreement, and that such injunctive relief shall be in addition to any other remedy to which any party is entitled at law or in equity. The existence of any claim or cause of action of the Executive against the Employer, whether predicated on this Agreement or not, shall not constitute a defense to the enforcement by the Employer of the restrictions, covenants and agreements contained in this Agreement.  Furthermore, in addition to any other remedies, the Executive agrees that any violation of the provisions in Sections 7 and 8 will result in the immediate forfeiture of any remaining payment that otherwise is or may become due under Section 5, if applicable.  The Executive further agrees that should he breach any of the provisions contained in Sections 7 and 8 of this Agreement, the Executive shall repay to the Employer any amounts previously received by the Executive pursuant to Section 5 that are attributable to that portion of the payments paid for the period during which the Executive was in breach of any of the provisions.  The Employer and the Executive agree that all remedies available to the Employer or the Executive, as applicable, shall be cumulative.

 

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

 

18. Successor Liability.  The Employer shall require any subsequent successor, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all of the business or assets of the Employer to assume expressly and agree to perform this Agreement in the same manner and

 

  

10

  

 

 

19.  to the same extent that the Employer would be required to perform it if no such succession had taken place.

 

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

 

21. Waiver of Breach.  The failure at any time to enforce or exercise any right under any of the provisions of this Agreement or to require at any time performance by the other parties of any of the provisions of this Agreement shall in no way be construed to be a waiver of such provisions or to affect either the validity of this Agreement or any part of this Agreement, or the right of any party hereafter to enforce or exercise its rights under each and every provision in accordance with the terms of this Agreement.

 

22. No Attachment.  Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect; provided, however, that nothing in this Section 20 shall preclude the assumption of such rights by executors, administrators or other legal representatives of the Executive or the Executive’s estate and their assigning any rights under this Agreement to the person or persons entitled hereto.

 

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

 

24. Survival of Benefits.  Any provision of this Agreement that provides a benefit to the Executive and that by the express terms of this Agreement does not terminate upon the expiration of his employment hereunder shall survive the expiration of the term of his employment and shall remain binding upon the Employer until such time as such benefits are paid in full to the Executive or the Executive’s estate.

 

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

 

26. Jury Waiver.  The Employer and the Executive agree that in any litigation action or proceeding arising out of or relating to this Agreement or the Executive’s employment with the Employer, trial shall be in a court of competent jurisdiction without a jury.  The Employer and the Executive irrevocably waive any right each may have to a jury trial and a copy of this Agreement may be introduced as written

 

  

11

  

 

 

27. evidence of the waiver of the right to trial by jury.  The Employer has not made and the Executive has not relied on, any oral representation regarding the enforceability of this provision.  The Employer and the Executive have read and understand the effect of this jury waiver provision.

 

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

 

29. Full Capacity.  The persons signing this Agreement represent that they have full authority and representative capacity to execute this Agreement in the capacities indicated below and to perform all obligations under this Agreement.

30. Compliance with Internal Revenue Code Section 409A.  All payments that may be made and benefits that may be provided pursuant to this Agreement are intended to qualify for an exclusion from Section 409A of the Code and any related regulations or other pronouncements thereunder and, to the extent not excluded, to meet the requirements of Section 409A of the Code.  Any payments made under Section 5 of this Agreement which are paid on or before the last day of the applicable period for the short-term deferral exclusion under Treasury Regulation § 1.409A-1(b)(4) are intended to be excluded under such short-term deferral exclusion.  Any remaining payments under Section 5 are intended to qualify for the exclusion for separation pay plans under Treasury Regulation § 1.409A-1(b)(9). Each payment made under Section 5 shall be treated as a “separate payment”, as defined in Treasury Regulation § 1.409A-2(b)(2), for purposes of Code Section 409A.  Further, notwithstanding anything to the contrary, all severance payments payable under the provisions of Section 5 shall be paid to the Executive no later than the last day of the second calendar year following the calendar year in which occurs the date of Executive’s termination of employment. None of the payments under this Agreement are intended to result in the inclusion in Executive’s federal gross income on account of a failure under Section 409A(a)(1) of the Code.  The parties intend to administer and interpret this Agreement to carry out such intentions.  However, the Employer does not represent, warrant or guarantee that any payments that may be made pursuant to this Agreement will not result in inclusion in the Executive’s gross income, or any penalty, pursuant to Section 409A(a)(1) of the Code or any similar state statute or regulation.  Notwithstanding any other provision of this Agreement, to the extent that the right to any payment (including the provision of benefits) hereunder provides for the “deferral of compensation” within the meaning of Section 409A(d)(1) of the Code, the payment shall be paid (or provided) in accordance with the following:

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

(b)           Payments with respect to reimbursements of expenses or benefits or provision of fringe or other in-kind benefits shall be made on or before the last day of the calendar year following the calendar year in which the relevant expense or benefit is incurred.  The amount of expenses or benefits

  

12

  

eligible for reimbursement, payment or provision during a calendar year shall not affect the expenses or benefits eligible for reimbursement, payment or provision in any other calendar year.

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

  

13

  

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

	  	  	
HAMPTON ROADS BANKSHARES, INC.

	  
	  	  	  	  
	  	  	  	  
	  	
By:

	
/s/ Charles M. Johnston

	  
	  	
Name:

	
Charles M. Johnston

	  
	  	
Its:

	
Chairman of the Board

	  
	  	  	  	  
	  	  	  	  
	  	  	
BANK OF HAMPTON ROADS

	  
	  	  	  	  
	  	  	  	  
	  	
By:

	
/s/ Richard H. Matthews

	  
	  	
Name:

	
Richard H. Matthews

	  
	  	
Its:

	
Chairman of the Board

	  
	  	  	  	  
	  	  	  	  
	  	  	
EXECUTIVE

	  
	  	  	  	  
	  	  	
/s/ Douglas J. Glenn

	  
	  	  	
Douglas J. Glenn

	  

  

14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00234-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00234-of-00352.parquet"}]]