Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On February 22, 2022, Village Bank and Trust Financial Corp. (the “Company”) entered into an employment agreement with Donald M. Kaloski, Jr., Executive Vice President and Chief Financial Officer of the Company and Village Bank (the “Bank”), a wholly-owned subsidiary of the Company. On the same day, the Bank entered into an amended and restated change of control agreement with James C. Winn, President and Chief Executive Officer of Village Bank Mortgage Corporation, a wholly-owned subsidiary of the Bank.
Employment Agreement with Mr. Kaloski
Mr. Kaloski’s employment agreement supersedes and replaces his change of control agreement with the Company, dated March 24, 2020. The initial term of the employment agreement is effective as of February 22, 2022 and will expire on February 22, 2025; provided that on February 22, 2024 and on each February 22nd thereafter (each a “Renewal Date”), the agreement will be automatically extended for an additional 12-month period. The agreement will not, however, be extended if either party gives written notice of non-renewal at least 90 days before the Renewal Date. Pursuant to the agreement, Mr. Kaloski is entitled to receive an annual base salary of no less than $195,000. The Company’s Board of Directors or Compensation Committee will review his base salary at least annually and may increase his salary in its discretion. Mr. Kaloski is entitled to an annual cash performance bonus based on a target of 20% of his annual salary, provided that he meets the performance goals established by the Companys’s Board of Directors or Compensation Committee. He will be entitled to other cash bonuses and stock-based awards in such amounts as may be determined by the Company’s Board of Directors or Compensation Committee in accordance with the terms and conditions of the applicable incentive plans in effect for senior executives of the Company.
If Mr. Kaloski is terminated without “Cause” (as defined in the agreement) or resigns for “Good Reason” (as defined in the agreement), he will be paid one times the sum of (i) his annual base salary plus (ii) an annual bonus amount equal to 20% of his annual base salary, with the amount paid over a 12-month period in accordance with the Company’s normal payroll schedule. Such severance benefit is contingent upon Mr. Kaloski signing a customary release and waiver of claims in favor of the Company. As defined in the agreement, the term “Cause” includes a material failure to perform his duties, unlawful or unethical business conduct, dishonesty, willful violation of any law, rule or regulation (other than traffic violations or similar offense), a material violation of the Company’s work rules, code of ethics or policies, or a material breach of the agreement. As defined in the agreement, the term “Good Reason” includes a material change in Mr. Kaloski’s duties, a significant reduction in his authority, or responsibility, removal from his position as Executive Vice President and Chief Financial Officer, a reduction in his salary, a material reduction in his benefits, the failure by the Company to obtain the assumption of, and agreement to perform, the agreement by any successor, or a failure by the Company to renew the agreement.
If, within 24 months following a “Change of Control” (as defined in the agreement) of the Company, Mr. Kaloski is terminated by the Company without Cause, he terminates his employment for Good Reason, or the Company fails to renew his agreement, he will be paid a lump sum cash payment equal to two times the sum of (i) his annual base salary plus (ii) an annual bonus amount equal to 20% of his annual base salary, with the amount paid within 45 days of his termination. Such change of control benefit is contingent upon Mr. Kaloski signing a customary release and waiver of claims in favor of the Company. As defined in the agreement, the term “Change of Control” includes, among other things, the acquisition by any person or group of securities of the Company representing at least 50% of the Company’s outstanding shares of common stock or voting power, certain merger transactions, and a sale of all or substantially all of the Company’s assets.
Amended and Restated Change of Control Agreement with Mr. Winn
Mr. Winns’s amended and restated change of control agreement supersedes and replaces his prior change of control agreement with the Bank, dated March 24, 2020. The initial term of the new agreement is effective as of March 24, 2022 and will expire at the end of the calendar day on March 31, 2024, provided that the agreement may be extended for an additional 24 months at the discretion of the Bank’s Board of Directors. Pursuant to the agreement, if, within 12 months following a “Change of Control” (as defined in the agreement) of the Company, Mr. Winn is terminated by the Bank without “Cause” (as defined in the agreement) or he terminates his employment with the Bank following a reduction in
