VBFC Village Bank and Trust Financial Corp

On April 5, 2016, Village Bank (the “Bank), the wholly-owned bank subsidiary of Village Bank and Trust Financial Corp. (the “Company”), entered into separate employment agreements with each of James E. Hendricks, Jr., Executive Vice President and Chief Credit Officer of the Company (the “Hendricks Agreement”), and Max C. Morehead, Jr., Executive Vice President − Commercial Banking of the Company (the “Morehead Agreement”).

The Hendricks Agreement supersedes and replaces the employment agreement between the Bank and Mr. Hendricks dated May 16, 2014. The initial term of the Hendricks Agreement will expire on March 31, 2019, provided, however, that the Hendricks Agreement will automatically extend for an additional 12 months on March 31, 2019, and on each March 31st thereafter, unless either party gives notice of nonrenewal at least 90 days prior to the expiration of the then current term. Pursuant to the Hendricks Agreement, Mr. Hendricks is entitled to receive an annual base salary of not less than $180,000. The Bank’s board of directors will review his base salary at least annually and may make adjustments in its discretion. Mr. Hendricks is entitled to cash bonuses and stock-based awards in such amounts as may be determined by the Company’s or the Bank’s board of directors in accordance with the terms and conditions of the applicable incentive plans in effect for senior executives of the Company and the Bank. Mr. Hendricks is also entitled to participate in the Village Bank Supplemental Executive Retirement Plan with a potential annual benefit of $25,000 for 15 years.

If Mr. Hendricks is terminated without “Cause” (as defined in the Hendricks Agreement) or resigns for “Good Reason” (as defined in the Hendricks Agreement), he will be paid for 12 months following his termination the sum of (i) his annual base salary as of the date of termination plus (ii) the highest annual bonus paid or payable for the two most recently completed years. Such severance benefit is contingent upon Mr. Hendricks signing a customary release and waiver of claims in favor of the Bank. As defined in the Hendricks Agreement, the term “Cause” includes, among other things, a material failure to perform his duties, unlawful or unethical business conduct, dishonesty, a willful violation of any law, rule or regulation (other than traffic violations or similar offenses), a material violation of the Bank’s work rules, code of ethics or policies, or a material breach of the Hendricks Agreement. As defined in the Hendricks Agreement, the term “Good Reason” includes, among other things, a material change in Mr. Hendricks’s duties or authority, a change in his title, or a reduction in his salary or benefits.

If, within 24 months following a “Change of Control” (as defined in the Hendricks Agreement) of the Bank, he is terminated by the Bank without Cause, he terminates his employment for Good Reason or the Bank 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 as of the date of termination plus (ii) the highest annual bonus paid or payable for the two most recently completed years. Such change of control benefit is contingent upon Mr. Hendricks signing a customary release and waiver of claims in favor of the Bank. As defined in the Hendricks Agreement, the term “Change of Control” includes, among other things, a sale of securities of the Bank representing at least 50% of the Bank’s outstanding shares or voting power, certain merger transactions, and a sale of all or substantially all of the Bank’s assets.

The Morehead Agreement supersedes and replaces the employment agreement between the Bank and Mr. Morehead dated May 16, 2014. The Morehead Agreement will expire on March 31, 2018 unless renewed or extended in writing by the parties. Pursuant to the Morehead Agreement, Mr. Morehead is entitled to receive an annual base salary of not less than $175,000. The Bank’s board of directors will review his base salary at least annually and may make adjustments in its discretion. Mr. Morehead is entitled to cash bonuses and stock-based awards in such amounts as may be determined by the Company’s or the Bank’s board of directors in accordance with the terms and conditions of the applicable incentive plans in effect for senior executives of the Company and the Bank. Mr. Morehead is also entitled to participate in the Village Bank Supplemental Executive Retirement Plan with a potential annual benefit of $25,000 for 15 years.

If Mr. Morehead is terminated without “Cause” (as defined in the Morehead Agreement) or resigns for “Good Reason” (as defined in the Morehead Agreement), he will be paid for 12 months following his termination the sum of (i) his annual base salary as of the date of termination plus (ii) the highest annual bonus paid or payable for the two most recently completed years. Such severance benefit is contingent upon Mr. Morehead signing a customary release and waiver of claims in favor of the Bank. As defined in the Morehead Agreement, the term “Cause” includes, among other things, a material failure to perform his duties, unlawful or unethical business conduct, dishonesty, a willful violation of any law, rule or regulation (other than traffic violations or similar offenses), a material violation of the Bank’s work rules, code of ethics or policies, or a material breach of the Morehead Agreement. As defined in the Morehead Agreement, the term “Good Reason” includes, among other things, a material change in Mr. Morehead’s duties or authority, a change in his title, or a reduction in his salary or benefits.

If, within 24 months following a “Change of Control” (as defined in the Morehead Agreement) of the Bank, he is terminated by the Bank without Cause, he terminates his employment for Good Reason or the Bank fails to renew his agreement, he will be paid a lump sum cash payment equal to the sum of (i) his annual base salary as of the date of termination plus (ii) the highest annual bonus paid or payable for the two most recently completed years. Such change of control benefit is contingent upon Mr. Morehead signing a customary release and waiver of claims in favor of the Bank. As defined in the Morehead Agreement, the term “Change of Control” includes, among other things, a sale of securities of the Bank representing at least 50% of the Bank’s outstanding shares or voting power, certain merger transactions, and a sale of all or substantially all of the Bank’s assets.

The foregoing summary description is qualified in its entirety by reference to the Hendricks Agreement and the Morehead Agreement, copies of which are attached to this report as Exhibits 10.1 and 10.2, respectively, and are incorporated herein by reference.