8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 27, 2008

Hampton Roads Bankshares, Inc.

(Exact name of registrant as specified in its charter)

Virginia (State or other jurisdiction of incorporation)	001-32968 (Commission File Number)		54-2053718 (I.R.S. Employer Identification No.)
999 Waterside Drive, Suite 200 Norfolk, Virginia (Address of principal executive offices)		23510 (Zip Code)

Registrant’s telephone number, including area code: (757) 217-1000

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

See disclosure contained in Item 2.03 below, which is incorporated herein by reference.

Item 2.01. Completion of Acquisition or Disposition of Assets.

On June 1, 2008, Hampton Roads Bankshares, Inc. (“HRB”) completed the acquisition (the “Merger”) of Shore Financial Corporation (“SFC”).  The Merger was made pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) dated January 8, 2008 by and between HRB and SFC.

Under the terms of the Merger, each outstanding share of common stock of SFC, was converted into the right to receive 1.8 shares of HRB common stock or $22.00 in cash, or a combination thereof based on election and allocation procedures. Based on the election by SFC shareholders, HRB will issue approximately 68% of the merger consideration in stock or approximately 2,713,000 shares. The cash portion of the merger consideration was funded by cash on hand and proceeds of borrowing from the Loan from Compass Bank described in Item 2.03 below.

In connection with the Merger, Shore Bank, a previously wholly-owned subsidiary of SFC, has become a wholly-owned subsidiary of HRB.

A copy of the press release announcing the completion of the Merger is being filed as Exhibit 99.1 to this report.

Item 2.03.       Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

Credit Agreement

On May 29, 2008, HRB entered into a Credit Agreement (the “Credit Agreement”) with Compass Bank (the “Lender”).

The Credit Agreement provides for a loan of an amount up to US$23,000,000 (the “Loan”). HRB’s obligations under the Credit Agreement are secured by substantially all of its assets. The maturity date for the Loan is July 1, 2018. Amounts outstanding under the Credit Agreement bear interest at a rate of the Compass Bank Prime rate minus one hundred (100) basis points.

The terms of the Credit Agreement include various covenants, including covenants that require HRB to maintain a minimum return on average assets and sufficient loan loss reserves and that limit charge-offs and non-performing loans. The Credit Agreement also provides for limitations on indebtedness, liens, dividends and mergers. The Credit Agreement includes customary events of default, including, without limitation, payment defaults, cross defaults to other indebtedness and bankruptcy related defaults.

The proceeds from the Loan will be used primarily to fund the cash portion of the merger consideration for the Merger described in Item 2.01 above.

Pledge Agreement

In connection with the Credit Agreement, HRB entered into a Pledge Agreement dated as of May 29, 2008 (the “Security Agreement”), in favor of the Lender. Pursuant to the Security Agreement, HRB granted a security interest in substantially all of their respective assets to secure the prompt and complete payment and performance by HRB of its obligations under the Credit Agreement and the other loan documents executed in connection therewith.

The foregoing descriptions of the Credit Agreement and Security Agreement are qualified in their entirety by reference to the actual terms of the Credit Agreement and Security Agreement, which are attached hereto as Exhibits 10.1 and 10.2, respectively, and incorporated by reference herein.

Item 5.02.       Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Employment Agreements

On May 27, 2008, HRB entered into an amendment to the HRB’s employment agreements with each of Jack W. Gibson, Donald W. Fulton, Jr. and Douglas J. Glenn, to reflect provisions required by Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). The amendments to Mr. Gibson’s and Mr. Fulton’s employment agreement also reflect such executive’s employment relationship not only with the Bank but also with HRB.

The above summaries of the amendments to the employment agreements are qualified in their entirety by the full text of such amendments, which are attached hereto as Exhibits 10.3, 10.4 and 10.5 and incorporated by reference herein.

Supplemental Retirement Agreements

On May 27, 2008, the Bank and Mr. Gibson entered into an amendment to Mr. Gibson’s Supplemental Retirement Agreement with the Bank. The amendments reflect provisions required by Section 409A of the Code and Mr. Gibson’s employment relationship not only with the Bank, but also with HRB. Additionally, on May 27, 2008, the Bank entered into a Supplemental Retirement Agreement with Mr. Glenn.

The above summaries of the amendment to Mr. Gibson’s Supplemental Retirement Agreement with the Bank and Mr. Glenn’s Supplemental Retirement Agreement are qualified in their entirety by the full text of such documents, which are attached hereto as Exhibits 10.6 and 10.7 respectively and incorporated by reference herein.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No. Description

10.1 Fourth Amendment to Employment Agreement by and between HRB and Jack W. Gibson.

10.2 Fourth Amendment to Employment Agreement by and between HRB and Donald W. Fulton, Jr..

10.3 First Amendment to Employment Agreement by and between HRB and Douglas J. Glenn.

10.4 Amendment No. 2 to the Supplemental Retirement Agreement between The Bank of Hampton Roads and Jack W. Gibson.

10.5 Supplemental Retirement Agreement between The Bank of Hampton Roads and Douglas J. Glenn.

10.6 Credit Agreement, dated as of May 29, 2008 by and between Compass Bank and HRB.

10.7 Pledge Agreement, dated as of May 29, 2008 by and between Compass Bank and HRB.

99.1 Press Release, dated June 2, 2008.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Hampton Roads Bankshares, Inc.

Date: June 2, 2008 By: /s/ Jack W. Gibson

Jack W. Gibson

Vice Chairman, President and Chief Executive Officer

EXHIBIT INDEX

Exhibit No. Description

10.1 Fourth Amendment to Employment Agreement by and between HRB and Jack W. Gibson.

10.2 Fourth Amendment to Employment Agreement by and between HRB and Donald W. Fulton, Jr..

10.3 First Amendment to Employment Agreement by and between HRB and Douglas J. Glenn.

10.4 Amendment No. 2 to the Supplemental Retirement Agreement between The Bank of Hampton Roads and Jack W. Gibson.

10.5 Supplemental Retirement Agreement between The Bank of Hampton Roads and Douglas J. Glenn.

10.6 Credit Agreement, dated as of May 29, 2008 by and between Compass Bank and HRB.

10.7 Pledge Agreement, dated as of May 29, 2008 by and between Compass Bank and HRB.

99.1 Press Release, dated June 2, 2008.

EX-10

Exhibit 10.1

CREDIT AGREEMENT

This Credit Agreement (this “Agreement”), dated as of May 29, 2008, is entered into by and between Compass Bank, an Alabama banking corporation (together with its successors and assigns, “Compass”), and Hampton Roads Bankshares, Inc., a Virginia corporation (the “Borrower”), which owns all of the issued and outstanding capital stock of The Bank of Hampton Roads, a Virginia banking corporation (the “Bank”). All capitalized terms not defined herein shall have the meanings ascribed to them in the Note or Pledge Agreement, as applicable.

ARTICLE I.

THE LOAN

Section 1.01.Loan and Use of Proceeds.  Compass shall, upon the terms and subject to the conditions set forth in this Agreement, extend credit to the Borrower in the form of a loan (the “Loan”) in the aggregate principal amount of TWENTY-THREE MILLION DOLLARS ($23,000,000.00) (the “Principal Balance”). The Loan shall be used by the Borrower in connection with its acquisition of Shore Financial Corporation, a Virginia corporation, and its subsidiary Shore Bank, a Virginia corporation (the “Shore Acquisition”). As applies to any on-going obligations, covenants, conditions, and representations and warranties, all references herein to “Bank” or “Bank Entities” shall include Shore Bank and its affiliates (as applicable), once the acquisition is consummated, unless specifically excluded or modified.

Section 1.02.Note.  The Loan shall be evidenced by a promissory note (the “Note”) prepared by Compass counsel substantially in the form of Exhibit A attached hereto, payable to the order of Compass, executed by the Borrower, in the amount of the Principal Balance, bearing interest from the date funds are advanced thereunder at the rate specified, and being otherwise payable as set forth in this Agreement.

ARTICLE II.

REPRESENTATIONS AND WARRANTIES

In extending credit pursuant to this Agreement upon the closing of the Loan (the “Closing”), Compass has relied upon the following representations and warranties by the Borrower, all of which shall survive Closing:

Section 2.01.Organization, Power, Authority and Binding Effect.  The Borrower is a Virginia corporation which is duly organized, validly existing, and in good standing in the State of Virginia and all other jurisdictions where it is required to qualify to do business, and has all necessary licenses, permits, and governmental approvals necessary for the present and proposed conduct of its business.  The Borrower has all necessary corporate power and authority to execute and deliver and perform under this Agreement, the Note, and the other documents evidencing or otherwise relating to or delivered in connection with the Loan or any other liability of the Borrower to Compass (collectively, the “Credit Documents”). Upon execution and delivery hereof and thereof, the Credit Documents will constitute valid and binding obligations of the Borrower and/or the other parties thereto, enforceable in accordance with their respective terms (subject to applicable bankruptcy laws and similar laws affecting creditors’ rights), and the Note will be entitled to the benefits of the Credit Documents.

Section 2.02.No Violations.  None of the Borrower, the Bank, or any subsidiary or affiliate of either of them (collectively or individually, the “Bank Entities”) is in default and no event has occurred which, but for the giving of notice or the passage of time or both, under any Indebtedness, or under any other agreement or instrument to which any of the Bank Entities is a party or by which any of the Bank Entities is or may be bound or subject, which could materially affect this Agreement, the credit extended hereunder, the Credit Documents, or the financial condition of the Borrower.  Neither the execution and delivery of any of the Credit Documents nor compliance with the terms and provisions hereof and thereof, nor the performance of the transactions contemplated herein or therein will: (i) violate any provision of law or of any applicable statute, regulation, rule, order, writ, injunction, or decree of any court or governmental authority; (ii) conflict or be inconsistent with, or result in any breach of, any of the terms, covenants, conditions, or provisions of, or constitute a default under, any indebtedness, obligation, agreement, or instrument to which the Borrower is a party, or by which the Borrower is or may be subject or bound; or (iii) result in the creation or imposition of (or the obligation to create or impose) any lien, charge, security interest, or encumbrance upon any of the property or assets of the Borrower except as provided in this Agreement in favor of Compass.

Section 2.03.Financials.  All financial statements of the Bank and the Borrower supplied to Compass correctly and fairly set forth in accordance with generally accepted accounting principles consistently applied (“GAAP”), the results of operations for such periods and the financial condition of the Bank and the Borrower at such dates, and there have been no material adjustments made or proposed to such statements or material adverse changes in the financial condition, business, properties, or operations of the Bank or the Borrower.

Section 2.04.Litigation, Proceedings, Etc. There are no actions, suits, claims, proceedings, or investigations (whether or not purportedly on behalf of the any of the Bank Entities) pending or, to the knowledge of the Borrower, threatened or in prospect before any court, agency or other tribunal, or governmental authority against any of the Bank Entities which, if adversely determined, would result in any material adverse change in the business, properties, prospects, financial condition, earnings, results of operations, or earnings capacity of any of the Bank Entities, or which question the validity of the Loan or the Credit Documents, or any action or instrument contemplated hereby or thereby.  None of the Bank Entities is currently affected by any strike or other labor disturbance, and is not in default in any material respect under any material judgment, order, injunction, rule, ruling, or regulation of any court or governmental authority.  Each of the Bank Entities is in compliance with all laws, rules, regulations, orders, memoranda, and agreements applicable to them or to which they are parties. Except as certified in writing by the Borrower to Compass, none of the Bank Entities is subject to any regulatory cease and desist or other orders or memoranda, and based upon their latest regulatory examination, as applicable, none of them knows of, or has reason to believe that any applicable regulatory agency is contemplating any such action.

Section 2.05.Tax Returns and Payments.  Each of the Bank Entities have filed all tax returns and reports required by law to be filed, and all taxes, fees, assessments, and other governmental charges (other than those presently payable without interest or penalty) upon the Bank Entities, or any of their respective properties or income, have been paid in full and reflected in their respective financial statements.

Section 2.06.Accuracy and Completeness.  All Credit Documents and other information and documents submitted by the Borrower to Compass prior to the Closing, and at any time thereafter, shall constitute representations and warranties to Compass, and no representation or warranty contains or shall contain any untrue statement of a material fact or omits or shall omit to state a material fact necessary to make such representation or warranty not misleading in light of the circumstances under which it was given.

 

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Section 2.07.Regulatory Approvals.  Every requisite approval of all state and federal regulatory authorities which was required to be obtained prior to the Borrower’s taking any of the actions or consummating any of the transactions contemplated by this Agreement and the Shore Acquisition, have been obtained.

Borrower shall affirm to Compass, in writing, each or the foregoing representations and warranties for Shore Bank within thirty (30) days subsequent to the closing of the Shore Acquisition.

ARTICLE III.

CONDITIONS

Section 3.01. Conditions for Loan.  Compass’ obligation to make the Loan is subject to the following conditions:

(a)           There shall be no Event of Default or condition or event which, after notice or lapse of time or both, would constitute such an Event of Default;

(b)           Compass shall have received from counsel to the Borrower favorable opinions in satisfactory scope and form, as to all matters reasonably requested by Compass substantially in the form of Exhibit B attached hereto;

(c)           The Borrower shall deliver to Compass duly executed Credit Documents and all other documents or instruments which Compass shall require in connection with extension of credit under the Loan;

(d)           The Borrower shall have received and shall have provided to Compass evidence of all necessary approvals of federal and state regulatory agencies, if required, regarding the Loan; and

(e)           The Borrower shall continue to fulfill all of the terms, representations, warranties, and covenants of the Credit Documents.

Section 3.02.Continuing Rights, Obligations and Covenants. The parties agree that the following rights, obligations and covenants shall apply until the Loan is repaid in full, in accordance with this Agreement and the Note:

(a) INTENTIONALLY DELETED;

(b)           If requested by Compass, Compass shall have received a certificate of the president or other executive officer(s) of the Borrower substantially in the form of Exhibit C attached hereto, stating (i) that all representations and warranties contained in this Agreement and in all other Credit Documents are true and accurate as of the date of the Closing; (ii) that there exists no Event of Default under this Agreement or under any other Credit Document, or any condition or event which with the giving of notice or the passage of time, or both, would become an Event of Default under this Agreement or under any other Credit Document; and (iii) any other fact or representation reasonably requested by Compass in its sole discretion; and

(c)           Each of the Bank Entities shall be in compliance with all material laws, regulations, orders, memoranda, and requirements applicable to them.

ARTICLE IV.

AFFIRMATIVE COVENANTS

Section 4.01. Stock Rights. The Borrower shall exercise all stock or preemptive rights which become available to the Borrower by reason of the Borrower’s ownership of the Bank stock and the stock of Shore Bank, when acquired.

Section 4.02.Financial and Other Information.  The Borrower shall make available to Compass such financial information, reports, and documents concerning the financial condition and operations of the Borrower and the Bank as Compass may reasonably request.  Without limiting the generality of the foregoing, the Borrower shall provide to Compass the following:

(a) Quarterly call reports of the Bank within sixty (60) days after the close of the quarter;

(b) Annual year-end call reports for the Bank within sixty (60) days after the close of the year; and

(c)           Annual audited consolidated financial statements of the Borrower and its subsidiaries, prepared in accordance with GAAP, including the parent-only financial statements, within one hundred-twenty (120) days of the close of each year.

Section 4.03.Continued Existence, Protection of Property, Insurance.  The Borrower shall do or cause to be done all that is necessary to:

(a)           Preserve its and the Bank’s respective existences and to keep in full force and effect all applicable governmental permits, licenses, charters, consents, and franchises, and to comply with all applicable laws;

(b)           Preserve and protect its and the Bank’s property and conduct and operate its and the Bank’s businesses in a safe and sound manner;

(c)          Timely, accurately, and completely make and file all reports and other filings to applicable governmental authorities; and

(d)           Maintain for it and the Bank adequate insurance with insurance companies of recognized responsibility (i) insurance coverage to such extent and against such risks, including fire, casualty, and theft, as is customary with commercial banks and bank holding companies, (ii) necessary workmen’s compensation insurance, (iii) employee and officer blanket or individual bonds in amounts not less than those required under applicable statute, or governmental rule, order, or regulation, but in no event less than the amount of such bonds carried by commercial banks of comparable size in the Bank’s region, and (iv) such other insurance or bonds as may be required by law.

Section 4.04.Notice of Adverse Events.  The Borrower shall promptly notify Compass of the filing of any notice, suit, claim, action, proceeding, or investigation in or by any court or any other governmental authority in which an adverse decision could reasonably be expected to have a material adverse effect upon the Bank Entities and shall promptly notify Compass of the occurrence of any material adverse order, judgment, settlement, determination, or other adverse event.  The Borrower shall also promptly notify Compass of the occurrence of any other event which could have a material adverse effect upon the Bank Entities.  The Borrower also shall notify Compass within five (5) days of the imposition of, or entering into by, with respect to any of the Bank Entities, any cease and desist order, memorandum of understanding, or other order or agreement by or with any state or federal authority.

Section 4.05.Inspection of Properties and Books.  So long as any Indebtedness is owing to Compass, and to the extent inspection of such records is not expressly prohibited by applicable law or regulation, Compass shall have the right, at such reasonable times during regular business hours and intervals as Compass may reasonably request, to (a) visit and inspect the Borrower and the Bank and their assets; (b) examine such entities’ books of account (and to make copies thereof and extracts therefrom); (c) discuss the affairs, finances, and accounts of the Borrower and the Bank; and (d) be advised as to the same by their respective officers.

 

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Section 4.06.Compliance.  The Borrower shall cause the Bank Entities to comply in all material respects to all laws, rules, regulations, orders, and memoranda applicable to each of them respectively.

ARTICLE V.

NEGATIVE COVENANTS

The Borrower covenants and agrees that from the date of this Agreement and until payment in full of the principal of and interest on the Note, unless Compass shall otherwise consent in writing, it will not cause or allow, nor will it cause or permit the Bank Entities, as applicable, to cause or allow, either directly or indirectly:

Section 5.01. Capital Ratios.

(a)           The Bank to fail to maintain a “well capitalized” rating from its primary federal regulator, as that term is defined by rule, regulation, or policy statement of the Bank’s primary federal regulator; or

(b)           The Bank to fail to comply at all times with the capital requirements of all applicable state and federal laws and regulatory authorities, including without limitation, minimum primary capital- and total capital-to-total assets ratios and other leverage or risk-based capital ratios.

Section 5.02 Management.

(a)           Any change or changes in the Borrower’s or the Bank’s boards of directors such that a majority of the directors in office on the date of this Agreement are no longer directors of the Borrower and the Bank, as applicable; provided, however, that subsequent to the Shore Acquisition, Compass shall not unreasonably withhold its consent should Borrower determine to change a majority of the directors of Shore Bank and/or appoint or elect all or a majority of a board of directors for the Bank without interlock to the Borrower; or

(b)           Any Change in Control of the Bank Entities. “Change in Control” means (a) the date that any one person, or more than one person, acting as a group, acquires ownership of common voting stock that, together with stock held by such person or group constitutes more than 25% of the stock of the Bank Entities or (b) for which notification to and the approval of the Board of Governors of the Federal Reserve System or other banking agency is required.

Section 5.03.Restriction on Dividends.  The Bank to become subject to any restrictions on the declaration, setting aside, or payment of dividends by the Bank that would prohibit or restrict the Bank’s paying dividends to the Borrower to enable the Borrower to pay all amounts outstanding under the Loan when due, or have the declaration, setting aside, or payment of such dividends subject, in whole or in part, to any prior notice to, or approval of, any person, entity, or governmental or regulatory authority.

Section 5.04.Financial Ratios and Indicators. The Bank Entities as applicable, to fail to maintain certain financial ratios and indicators as set forth in Schedule 1 attached hereto and incorporated herein by reference.

Section 5.05.Cash Expenditures; Indebtedness. The Borrower to create, incur, assume, guarantee, agree to purchase or repurchase or provide funds, or otherwise become or remain liable on any Indebtedness of any type whatsoever, except Indebtedness to Compass under this Agreement or such other debt specifically approved by Compass. For purposes of this Agreement, “Indebtedness” includes all indebtedness, liabilities and obligations, matured or unmatured, liquidated or unliquidated, direct or indirect, primary, secondary, absolute or contingent, and whether arising by contract, operation of law or otherwise, including, without limit, obligations to creditors (including without limit, Compass) for borrowed money. Herein “Indebtedness” shall exclude interest rate swap contracts entered into by the Borrower, FHLB indebtedness, intercompany debt among the Borrower and/or Bank Entities or their affiliates or subsidiaries and short term unsecured indebtedness such as federal funds purchased by the Borrower’s subsidiaries for liquidity purposes or otherwise, to the extent such transactions are entered into in the Borrower’s subsidiaries’ ordinary course of business.

Section 5.06. Acquisitions; Mergers; Reorganizations, Etc. Any of the Bank Entities to:

(a) Sell all or substantially all of their assets; or

(b)          Enter into, perform under, or consummate any merger, consolidation, reorganization, conversion, exchange offer, asset acquisition, tender, or takeover offer or other acquisition, reorganization, recapitalization agreement, or transaction; provided, however, that any of the Bank Entities may enter into the foregoing events by a binding agreement which is presented to Compass prior to being executed and is expressly subject to Compass’ consent to same and without penalty to such Bank Entities in the event that Compass’ consent is withheld.

Section 5.07.Articles of Incorporation; Bylaws; Domicile; Federal Regulator.  Any material change, alteration, amendment, or repeal of any provision of the Borrower’s or the Bank’s articles of incorporation (or other charter document) or by-laws, as they exist on the date of this Agreement, or any change of the Borrower’s or the Bank’s jurisdiction of incorporation, or any change in the Bank’s primary state or federal regulator; provided, however, that Compass has consented to the change to Article VIII of the Borrower’s articles of incorporation as proposed for consideration by Borrower’s shareholders at Borrower’s annual meeting on May 22, 2008, and attached hereto as Schedule II, whether or not such amendment is effective as of the date of this Agreement. .

Section 5.08.Certain Restrictions Regarding Securities. Any reverse stock splits, or purchases, redemptions, retirements or reclassifications of the capital stock, other securities or evidences of indebtedness (other than FDIC-insured deposits repurchase agreements entered into in the ordinary course of the Bank’s business) of any class, series, or issue whatsoever of the Bank Entities.

Section 5.09.Liens.  Any of the Bank Entities to mortgage, pledge, grant or permit to exist any security interest in or lien or encumbrance upon any of its assets of any kind, whether now owned or hereafter acquired, except that the Bank may pledge government securities to secure government deposits and repurchase agreements to the extent required by law and investment securities and/or loans to secure FHLB loans.

ARTICLE VI.

EVENTS OF DEFAULT AND REMEDIES OF COMPASS

Section 6.01.Events of Default. Upon the occurrence of any one or more of the following events (“Events of Default”), written notice thereof to the Borrower by Compass and the expiration of any applicable cure or grace period expressly provided in this Agreement:

 

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(a)           Any representation or warranty made in connection with the execution and delivery of any of the Credit Documents, or otherwise made by the Borrower or the Bank to Compass heretofore or at any time while any Liabilities to Compass are outstanding shall prove at any time to be or have been false or misleading in any material respect;

(b)           The Borrower fails to make, in full, within ten (10) business days of the due date therefor, any payment of the principal of, or interest or other charges on, the Note or if there shall occur any Default or Event of Default under any other document or instrument evidencing, securing, or otherwise relating to any of the Liabilities;

(c)           The occurrence of any default in the due and punctual performance or observance of any other term, covenant, condition, or agreement contained in any of the Credit Documents and Borrower’s failure to correct such default within five (5) business days;

(d)           Any of the Bank Entities authorize, enter into, or consummate any plan of liquidation, reorganization, dissolution, or winding-up the business of such entity, or request any regulatory body or agency to take charge of and liquidate the affairs of any of them;

(e)           Any regulatory body or agency declares or determines that the Bank is insolvent or in an unsound or unsafe condition, that it is unsafe for the Bank to continue business, or that any event has occurred or any condition exists that would permit any regulatory body or agency to take possession of the property or business of the Bank;

(f)            Any regulatory body or agency enters or issues a cease and desist or similar order against the Bank or shall make application to vacate the Bank’s charter, or designates and appoints a liquidator or receiver to take charge of the Bank’s assets and affairs or if the Borrower or the Bank enter into any memorandum of understanding or similar arrangement with any federal or state regulatory authority;

(g) The FDIC notifies the Bank of its intent to terminate the Bank’s status as an insured bank;

(h) Any of the Bank Entities:

(i)          Files a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an arrangement with creditors or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution, or receivership or liquidation law or statute, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law or if corporate action shall be taken for the purpose of effecting any of the foregoing;

 (ii) Admits in writing its inability to pay its debts as they mature;

 (iii) Makes a general assignment for the benefit of creditors;

(iv)        Applies for or consents to the appointment of a receiver or liquidator, voluntarily or otherwise, for its property;

 (v) Is adjudicated a bankrupt or insolvent; or

(vi)       Has filed against it, an involuntary petition in bankruptcy or a petition seeking reorganization or an arrangement with creditors, or other involuntary petition seeking to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution, or receivership or liquidation law or statute, which petition is not dismissed within sixty (60) days after the filing thereof;

(i)            An order, judgment, or decree is entered, without the application, approval or consent of a Bank Entity by any court of competent jurisdiction, approving a petition seeking reorganization of such Bank Entity, or of all or a substantial part of the properties or assets of any of them or appointing a receiver, trustee or liquidator of such Bank Entity and such order, judgment, or decree continues unstayed and in effect for a period of sixty (60) days;

(j)            Any of the Bank Entities allows a final judgment, or a penalty or fine imposed by any regulatory or governmental authority to be obtained against any of them which is not promptly paid or appealed and properly secured pending appeal;

(k)           Any federal or state authority having jurisdiction over any aspect of the business or affairs of the Bank Entities finds such Bank Entity in material violation of any federal or state law, rule, regulation, or order;

(l)            Any federal or state authority having jurisdiction over any aspect of the business or affairs of the Bank Entities finds that the Loan materially violates any federal or state law, rule, or regulation, or if Compass notifies such Bank Entity that the Loan, or any aspect thereof, materially violate or violates any federal or state law, rule or regulation;

(m)          Any other Indebtedness, obligation, or liability of the Bank Entities, including without limit, deposit liabilities, and liabilities for borrowed money, the deferred purchase price of property, and all obligations of the Bank Entities under leases of any nature, is not paid when due, whether by acceleration, upon demand or otherwise, or is required to be prepaid (other than by a regularly scheduled and required prepayment) prior to the stated maturity or due date thereof, or any event of default or any condition or event which would become a default upon notice, the lapse of time, or both exists with respect thereto;

(n)           The Borrower or the Bank shall authorize or issue any additional capital stock without the prior written consent of Compass, except such capital stock issued by the Borrower in connection with its employee benefit or stock based compensation plans, including, but not limited to, its 401(k), dividend reinvestment plan, and executive savings plan; or

(o) There occurs:

(i)           Any default or event of default under the Credit Documents or any other document executed by the Borrower or the Bank in favor of Compass or any agreement, memorandum, or order to which the Borrower or the Bank is a party or subject; or

(ii)           Any material adverse change in the financial condition of the Borrower or the Bank or if Compass, in the exercise of its sole judgment, determines that any event or condition has occurred that materially increases its risk;

then Compass, at any time, without additional notice to the Borrower, may declare the unpaid outstanding amount of and interest and other charges on the Loan immediately due and payable, together with any other Liabilities of the Borrower to Compass, and such amounts thereupon shall become immediately due and payable, without presentment, demand, protest, notice of protest, or notice of any kind, all of which are hereby expressly waived by the Borrower, and if not paid in full promptly, Compass may exercise all rights given to it under the laws of the State of Alabama and any other state or the Credit Documents, including without limitation, the filing of actions in law or in equity. The Borrower hereby waives, as to the Loan and the Note, any rights of exemption under the Constitution and laws of the United States, the State of Alabama, and of any other state or jurisdiction.

 

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ARTICLE VII.

MISCELLANEOUS

Section 7.01.Notices.  Any notice shall be deemed conclusively to have been received and shall be effective on the earlier of the date on which same was personally delivered to the addressee thereof or on the third business day after the day on which such demands or notices were mailed to the address set forth below (or at such other address as such party shall specify to the other party in writing):

If to the Borrower:

Jack W. Gibson, Vice-Chairman, President

and Chief Executive Officer

Hampton Roads Bankshares, Inc.

999 Waterside Drive, Suite 200

Norfolk, Virginia 23510

Telephone: (757) 217-1000

Fax: (757) 217-3656

with a copy to:

William A. Old, Jr.

Williams Mullen

999 Waterside Drive, Suite 1700

Norfolk, Virginia 23510

Telephone: (757) 622-3366

Fax: (757) 629-0660

wold@williamsmullen.com

If to Compass: Compass Bank

Attn: T. Ray Sandefur

15 South 20th Street

Post Office Box 10566

Birmingham, Alabama 35296

(205) 297-4808 voice

(205) 297-6273 fax

trs@compassbank.com

Section 7.02.Expenses of Loan.  The Borrower shall pay all out-of-pocket expenses incurred by Compass from time to time in connection with the enforcement of Compass’ rights in connection with the Loan and the Credit Documents, including but not limited to, the reasonable fees and disbursements of counsel to Compass, but excluding Compass’ expenses for any due diligence conducted prior to the execution of the Credit Documents.

Section 7.03.Set-Off. As security for the Borrower’s obligations under this Agreement, Compass is hereby granted a continuing lien upon any and all monies, securities, and other property of the Borrower and the proceeds thereof, now or in transit to Compass from or for the Borrower whether for safekeeping, custody, pledge, transmission, collection, in trust, or otherwise, and also upon any and all deposit balances (general or special) and credits of the Borrower with, and any and all claims of the Borrower against, Compass at any time existing; and upon the occurrence of any Event of Default, Compass may, without notice, apply or set-off the same against the Indebtedness hereby secured.

Section 7.04.No Waiver, Cumulative Remedies.  No failure or delay on the part of Compass in exercising any right, power, or privilege under the Credit Documents, and no course of dealing between the Borrower and Compass shall operate as a waiver thereof; nor shall a single or partial exercise of any right, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power, or privilege.  The rights, remedies, and powers provided in the Credit Documents are cumulative and not exclusive of any rights, powers, or remedies provided by law or otherwise available.  Any such right, remedy, or power may be exercised from time to time, independently or concurrently, and as often as Compass shall deem expedient.  No waiver of any Event of Default shall extend to any subsequent Event of Default.  No modification, amendment, or waiver of any provision of the Credit Documents, or any other departure by the Borrower herefrom or therefrom, shall be effective unless the same shall be in writing and signed by Compass and then such waiver or consent shall be effective only in the specific instance and for the specific purpose and duration for which given.  No notice to, or demand on, the Borrower in any case shall entitle the Borrower to any other or further notice or demand in the same, similar, or other circumstances.

Section 7.05.Assigns, Binding Effect.  Wherever in this Agreement reference is made to either of the parties to this Agreement or to the Bank, such reference shall be deemed to include the respective heirs, representatives, successors, and assigns of such person or entity; provided, however, that neither any Indebtedness of the Borrower to Compass under this Agreement nor any rights, obligations, or duties hereunder may be transferred, assigned, or delegated by the Borrower without Compass’s prior written consent.

Section 7.06.Further Assurances.  The Borrower shall execute and deliver such documents, instruments, and agreements as Compass may reasonably request in connection with the transactions contemplated by this Agreement, and in connection with the Indebtedness incurred hereunder.

Section 7.07.Governing Law.  The Credit Documents, and the rights and obligations of the parties hereunder and thereunder shall be governed by and be construed in accordance with the laws of the State of Alabama, except as may be otherwise expressly set forth therein, and except where required to be governed by or construed in accordance with the laws of another state or jurisdiction to be enforceable.  the Borrower acknowledges that the negotiation of the provisions of each of the Credit Documents took place in the State of Alabama; that all such documents were executed in Jefferson County, Alabama, or if executed elsewhere, will become effective only upon Compass’s receipt and acceptance thereof in Jefferson County, Alabama (provided, however, that Compass shall have no obligation to give, nor shall the Borrower be entitled to receive, notice of such receipt and acceptance in order for the Credit Documents to become effective and valid and binding obligations of the Borrower); and that all of such documents were or will be executed and delivered to Compass to induce Compass to extend credit to the Borrower.  Notwithstanding the foregoing, nothing contained in this Section 7.07 shall prevent Compass from bringing any action or exercising any rights against the Borrower, any of its properties, or any security for the Loan in any other state or jurisdiction.  Initiating such action or proceeding or taking any such action in any other state shall in no event constitute a waiver by Compass of any of the foregoing.

 

972067.3 13

Section 7.08.Indemnification.  The Borrower shall indemnify and hold harmless Compass from and against any and all claims, charges, losses, expenses, and costs, including reasonable attorneys’ fees, resulting from any claims, actions, or proceedings in connection with the execution, delivery, and performance of the Credit Documents. The indemnification provided in this Section 7.08 shall survive the payment in full of the Loan.

Section 7.09.Severability.  In case any one or more of the provisions contained in any of the Credit Documents should be invalid, illegal, or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions contained herein or therein shall not in any way be affected or impaired thereby.

Section 7.10.Captions.  The captions to sections of this Agreement are provided for convenience of reference only and shall not be considered in construing the intent of the parties or for any other purpose.

Section 7.11.Sealed Instrument.  It is the parties’ intent that this Agreement is and shall have the effect of a sealed instrument under law.

Section 7.12.Entire Agreement.  This Agreement, together with the other Credit Documents, embodies the entire agreement and understanding between the parties, supersedes all prior agreements and understandings relating to the subject matter hereof, and may not be amended except by written agreement of the Borrower and Compass.

Section 7.13.Relationship of Parties.  Notwithstanding anything to the contrary contained or implied in this Agreement or in any of the other Credit Documents, or by an action taken pursuant hereto or thereto, Compass shall not be deemed a partner, joint venturer, or participant in any venture or partnership with any of the Bank Entities, and the Borrower hereby indemnifies and agrees to defend and hold Compass harmless (including the payment of attorneys’ fees) from any and all damages resulting from such a construction of the parties’ relationship.  The requirements herein, and the restrictions imposed in this Agreement, are for the sole protection and benefit of Compass.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed under seal by their respective duly authorized officers as of the day and year first above written.

Hampton Roads Bankshares, Inc..

By: s/ Jack W. Gibson

Jack W. Gibson, Vice-Chairman, President and CEO

Compass Bank

By: s/ T. Ray Sandefur

T. Ray Sandefur, Senior Vice President

STATE OF Virginia )

)

CITY OF NORFOLK )

I, the undersigned, Notary Public in and for said County in said State, hereby certify that __________________, whose name as _____________________ of HAMPTON ROADS BANKSHARES, INC., a Virginia corporation, is signed to the foregoing instrument and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument, she, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation.

Given under my hand this the _____ day of May, 2008.

_________________________________

Notary Public

[NOTARIAL SEAL] My commission expires:  

My Registration No.: ________________

STATE OF ALABAMA )

)

COUNTY OF Jefferson )

I, the undersigned, Notary Public in and for said County in said State, hereby certify that __________________, whose name as _____________________of Compass Bank, an Alabama banking corporation, is signed to the foregoing instrument and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation.

Given under my hand this the _____ day of May, 2008.

_________________________________

Notary Public

[NOTARIAL SEAL] My commission expires:  

 

972067.3 14

EXHIBIT A

FORM OF PROMISSORY NOTE

$23,000,000 May ___, 2008

Birmingham, Alabama

FOR VALUE RECEIVED, the undersigned Hampton Roads Bankshares, Inc., a Virginia corporation (the “Borrower”), hereby promises to pay to the order of Compass Bank, an Alabama banking corporation (“Compass”), at its office at 15 South 20th Street, Birmingham, Alabama 35233, or at such other place as Compass may direct in the United States, in lawful money of the United States of America constituting legal tender in payment of all debts and dues, public and private, together with interest thereon calculated at the rate and in the manner set forth in this Note, the principal amount of TWENTY-THREE MILLION DOLLARS ($23,000,000.00) (the “Principal Balance”). The loan shall be made, interest shall accrue, and payments shall be made in accordance with that certain Credit Agreement between the Borrower and Compass dated as of the date hereof (the “Credit Agreement” and, together with all other documents and instruments evidencing, securing, or otherwise relating to the indebtedness evidenced by this Note, the “Credit Documents”) and the following provisions:

1. Definitions. The following terms, as used in this Note, shall have the following meanings:

(a)           “Applicable Interest Period” shall mean the period of time beginning on the date of this Note or the first (1st) day of any month following the last day of any preceding Applicable Interest Period, as applicable, and ending on the last day of the calendar month of such Applicable Interest Period.

(b)           “Authorized Agent” shall mean Jack W. Gibson, Borrower’s Vice-Chairman, President and Chief Executive Officer or any other agent of the Borrower from time to time designated, in a writing executed by the Borrower and delivered to Compass.

(c)           “Business Day” shall mean any day, Monday through Friday, on which Compass is open for the conduct of its general banking business.

(d)           “Compass Bank Prime” as used in this Note is a reference rate established by Compass for use in computing and adjusting interest and is subject to increase, decrease, or change at Compass’s discretion. Each change in the applicable interest rate hereunder resulting from a change in “Compass Bank Prime” shall become effective on the day on which such change in “Compass Bank Prime” occurs.

(e)           “Interest Payment Date” shall mean the last day of March, June, September, and December until all outstanding amounts evidenced by this Note have been paid in full, commencing on the date hereof.

(f) “LIBOR Rate” shall mean the London InterBank Offering Rate.

2.Loan Amount. Compass shall loan the amount of $23,000,000 to the Borrower under this Note and the Credit Agreement, which the Borrower shall use for the purposes set forth in the Credit Agreement.

3.Payment.  The Borrower promises to pay accrued interest quarterly, on or before each Interest Payment Date, and to pay annual principal payments, as set forth below; provided, however, that the first Interest Payment Date shall be July 1, 2008.  The balance of the principal and all accrued and unpaid interest on this Note and all charges under this Note and the Credit Documents shall be due and payable on July 1, 2018.

Due Date Principal Payment Amount

_________, 2009 $1,000,000

_________, 2010 $1,500,000

_________, 2011 $2,000,000

_________, 2012 $2,250,000

_________, 2013 $2,750,000

_________, 2014 $3,000,000

_________, 2015 $3,500,000

_________, 2016 $3,750,000

_________, 2017 $4,000,000

_________, 2018 $4,250,000

4. Interest.   

(a)         Interest shall accrue on the Principal Balance and interest thereon at the applicable interest rate determined and calculated as set forth below.

(b)           The applicable interest rate under this Note shall be determined and paid and shall be equal to Compass Bank Prime minus one hundred (100) basis points, floating; provided, however, that the applicable interest rate under this Note shall not be less than four percent (4.00%) or more than the maximum rate allowed by applicable law.

(c)           On and after the occurrence of an Event of Default, the Principal Balance shall bear interest at a rate equal to five (5) percentage points in excess of Compass Bank Prime from time to time prevailing at Compass, calculated in the manner set forth herein.

(d)           Interest on the Principal Balance and interest thereon shall be calculated, charged, and paid on the basis of a 360-day year applied to the actual number of days upon which the Principal Balance is outstanding, by multiplying the product of the Outstanding Principal Balance and the applicable rate set forth herein by the actual number of days elapsed, and dividing by 360.

(e)           Compass uses various referencing rates or indices in establishing interest rates, including but not limited to, the Compass Bank Prime, the LIBOR Rate, and the LIBOR Index Rate. The Borrower acknowledges that Compass may lend to others at rates of interest at, or greater or less than, such indices or the rates provided in this Note.

5.Late Charge. The Borrower shall pay a late charge in an amount equal to five percent (5 %) of any payment which is not received by Compass within ten (10) days of the date on which the same is due and payable.

 

972067.3 15

6.Maturity. The entire Outstanding Principal Balance, interest, and all other charges under this Note and the other Credit Documents shall be due and payable in full on July 1, 2018, which shall be the maturity date of this Note.

7.Prepayment. This Note may be prepaid (i) in whole at any time without penalty or (ii) in part at any time without penalty on any Interest Payment Date, provided that any partial prepayment shall be in an amount which is an integral multiple of $10,000, and shall be accompanied by an amount equal to all accrued interest and other charges on the amount so prepaid.

8.Indemnity. The Borrower hereby agrees to indemnify Compass, its officers, employees, and agents from any cost or loss arising from their actions taken or omitted to be taken in good faith based upon communications between the Borrower and Compass. The obligations of the Borrower under this Section shall survive payment of this Note.

9. Credit Documents. This Note is included in the indebtedness referred to in the Credit Documents and is entitled to the benefits of those documents, but neither this reference to those documents nor any provisions thereof shall affect or impair the absolute and unconditional obligations of the Borrower to pay the principal of and interest on this Note when due.

10.Events of Default. The occurrence of any one or more of the following events shall constitute an event of default under this Note (“Events of Default”):

(a)           Default in the payment of the principal or interest on this Note within ten (10) business days from when such payment is due and payable;

(b)           Failure by the Borrower or any other person or entity to observe any covenant or obligation contained in the Credit Agreement or any other Credit Document or in any other instrument executed in connection with or securing this Note, subject to any applicable cure periods; or

(c)           The occurrence of any default or event of default specified in the Credit Agreement, the other Credit Documents, or in any other instrument executed in connection with or securing this Note.

Upon the occurrence of an Event of Default, or at any time thereafter during the continuance of any such event, the holder, with written notice to the Borrower, may declare this Note and indebtedness evidenced hereby to be forthwith due and payable, whereupon this Note and the indebtedness evidenced hereby shall become forthwith due and payable, both as to principal and interest, without presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived, anything contained in this Note or in any of the Credit Documents or in any other instrument executed in connection with this Note to the contrary notwithstanding. No failure of any holder of this Note to accelerate the indebtedness evidenced hereby or to exercise any other right hereunder shall be construed as a novation or modification of this Note, or the obligations evidenced hereby, or a waiver of the holder’s right to thereafter insist upon strict compliance with the terms of this Note without prior notice of such intention being given to the Borrower.

11.Waivers. The Borrower hereby waives demand, presentment for payment, notice of dishonor, protest, and notice of protest and diligence in collection or bringing suit and agrees that the holder of this Note may accept partial payment or release, without discharging or releasing any unreleased collateral or the obligations evidenced by this Note. The Borrower further waives any and all rights of exemption, both as to personal and real property, under the constitution or laws of the United States, the State of Alabama, or any other state.

12.Attorneys’ Fees The Borrower agrees to pay reasonable attorneys’ fees and costs incurred by the holder of this Note in collecting or attempting to collect this Note, whether by suit or otherwise.

13.Miscellaneous. As used herein, the terms “Borrower,” “Compass,” and “holder” shall be deemed to include their respective successors, legal representatives, and assigns, whether by voluntary action of the parties or by operation of law. This Note is given under the seal of all parties hereto, and it is intended that this Note is and shall constitute and have the effect of a sealed instrument according to law.  This Note has been negotiated, and is being executed and delivered in Birmingham, in the State of Alabama, or if executed elsewhere, shall become effective upon the Compass’s receipt and acceptance of the executed original of this Note in the State of Alabama; provided, however, that Compass shall have no obligation to give, nor shall the Borrower be entitled to receive, any notice of such acceptance for this Note to become a binding obligation of the Borrower.  The Borrower hereby submits to jurisdiction in the State of Alabama. This Note shall be governed by and be construed in accordance with the laws of the State of Alabama.  It is intended, and the Borrower and the holder of this Note specifically agree, that the laws of the State of Alabama governing interest shall apply to this Note and to this transaction.  This Note may not be modified except by written agreement signed by the Borrower and the holder hereof, or by their respective successors or assigns.

IN WITNESS WHEREOF, Borrower has caused this Note to be executed, sealed and delivered as of the date first set forth above.

HAMPTON ROADS BANKSHARES, INC.

By: _________________________________

Jack W. Gibson, Vice-Chairman, President and CEO

STATE OF Virginia )

)

CITY OF NORFOLK )

I, the undersigned, Notary Public in and for said County in said State, hereby certify that _________________, whose name as _________________________ of Hampton Roads Bankshares, Inc., a Virginia corporation, is signed to the foregoing instrument and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument, she, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation.

Given under my hand this the _____ day of May, 2008.

_________________________________

Notary Public

[NOTARIAL SEAL] My commission expires:  

My Registration No.: ________________

 

972067.3 16

EX-10

Exhibit 10.2

PLEDGE AGREEMENT

This Pledge Agreement (this “Agreement”), dated as of May 29, 2008, is entered into by and between Compass Bank, an Alabama banking corporation (together with its successors and assigns, “Compass”), and Hampton Roads Bankshares, Inc., a Virginia corporation (the “Borrower”), which owns one hundred percent (100%) of the issued and outstanding capital stock of The Bank of Hampton Roads, a Virginia banking corporation (the “Company”). Borrower has entered into a definitive agreement with Shore Financial Corporation, a Virginia corporation (“Shore Financial”), pursuant to which Borrower shall acquire Shore Financial and its wholly-owned subsidiary, Shore Bank, a Virginia banking corporation (“Shore Bank”). It is the intention of the parties that the stock of Shore Bank be pledged as additional Collateral for the Liabilities, at the time Borrower acquires Shore Financial.

1.Creation of Security Interest. In consideration of one or more credit facilities made available, or to be made available, to the Borrower by Compass, and to secure all indebtedness, obligations, and liabilities of the Borrower to Compass whether now or hereafter incurred, existing, or arising and whether absolute or contingent (hereinafter collectively called “Liabilities”), including without limitation that existing or arising pursuant to, related to, or evidenced by that certain Credit Agreement between the Borrower and Compass dated as of May 29, 2008 (the “Credit Agreement”), that certain Promissory Note from the Borrower to Compass dated as of May ___, 2008 (the “Note”), and the other documents evidencing, securing, or otherwise relating to or delivered in connection with the credit facility made available pursuant to the Credit Agreement, as any of the same may be amended, renewed, increased, or replaced from time to time, or any other liability of the Borrower to Compass (collectively and together with this Agreement, the “Credit Documents”), and including without limitation, any indebtedness, obligation, or liability of any Borrower under any interest rate, currency, equity, credit or commodity, swap, cap, floor, collar, or similar agreement or arrangement, any foreign currency exchange transaction, cross currency rate swap, currency option or any combination of or option with respect to, any of the foregoing or similar transactions for the purpose of hedging exposure to fluctuations in interest rates, exchange rates, currency, stock, portfolio or loan valuations or commodity prices, the Borrower hereby assigns, transfers, grants to and pledges with Compass title to and a security interest in the Collateral described and defined in paragraph 2 of this Agreement.

2.             Collateral. This Agreement covers the following described property, whether now owned or existing or hereafter created, acquired or arising (collectively, the “Collateral”):

(a)           _______________ shares of the common stock of the Company, represented by Stock Certificate Number ___, constituting not less than 100% of the total issued and outstanding capital stock of the Company, delivered or to be delivered and deposited with Compass, all other money and property heretofore delivered or which shall hereafter be delivered to or come into the possession, custody, or control of Compass in any manner or for any purpose whatsoever during the existence of this Agreement, whether held in a general or special account or deposit or for safekeeping or otherwise, and all other capital stock of the Company now owned or hereafter acquired by the Borrower, together with all distributions, property, and rights received or receivable by the Borrower or to which the Borrower shall become entitled by virtue of the Borrower’s ownership of the property described above, including without limitation, all stock rights, rights to subscribe, liquidating dividends, stock dividends, dividends paid in stock, new securities, cash dividends, moneys and other rights, dividends, securities, or other property which the Borrower is now or may hereafter become entitled to receive on account of the property described in this paragraph 2, all of which shall be accepted, protected, and enforced by the Borrower and delivered to Compass immediately in the exact form received and accompanied by appropriate stock powers, to be held by Compass as additional collateral under this Agreement, and until receipt by Compass, all such distributions, property, and rights shall be held by the Borrower in trust for Compass as Compass’s agent; and all proceeds of, accessions and additions to, and substitutions for, all of the foregoing.

(b)           _______________ shares of the common stock of Shore Bank, represented by Stock Certificate Number ___, constituting not less than 100% of the total issued and outstanding capital stock of Shore Bank, delivered or to be delivered and deposited with Compass, all other money and property heretofore delivered or which shall hereafter be delivered to or come into the possession, custody, or control of Compass in any manner or for any purpose whatsoever during the existence of this Agreement, whether held in a general or special account or deposit or for safekeeping or otherwise, and all other capital

 

972948.1

stock of the Shore Bank now owned or hereafter acquired by the Borrower, together with all distributions, property, and rights received or receivable by the Borrower or to which the Borrower shall become entitled by virtue of the Borrower’s ownership of the property described above, including without limitation, all stock rights, rights to subscribe, liquidating dividends, stock dividends, dividends paid in stock, new securities, cash, moneys and other rights, dividends, securities, or other property which the Borrower is now or may hereafter become entitled to receive on account of the property described in this paragraph 2, all of which shall be accepted, protected, and enforced by the Borrower and delivered to Compass immediately in the exact form received and accompanied by appropriate stock powers, to be held by Compass as additional collateral under this Agreement, and until receipt by Compass, all such distributions, property, and rights shall be held by the Borrower in trust for Compass as Compass’s agent; and all proceeds of, accessions and additions to, and substitutions for, all of the foregoing.

3. Obligations of the Borrower.

(a)           Notwithstanding the fact that Compass may hold the Collateral and regardless of the value thereof, the Borrower shall remain liable for the payment in full of the Liabilities and any other sums or expenses due or to become due from the Borrower to Compass and shall timely pay all such sums in accordance with the Note or other applicable Credit Documents.

(b)           Upon the occurrence or existence of any Default pursuant to the Credit Documents, the Borrower, without notice except as may otherwise be expressly provided in the Credit Documents, immediately shall pay in full all Liabilities to Compass.

(c)           The Borrower shall pay to Compass all expenses and expenditures, including but not limited to reasonable attorneys’ fees actually incurred or paid by Compass incidental to holding, collecting, exchanging, preserving, exercising rights in respect of, or realizing upon any of the Collateral or the Liabilities.

(d)           The Borrower shall, at its expense, make, do, execute, deliver, or file any act, thing, statement, instrument, document, or other paper in such form and substance as Compass may request in order to create, preserve, perfect, or validate any security interest or to enable Compass to exercise or enforce its rights with respect to such security interest.

4.             Compass’ Obligations. Compass’ duty with respect to the Collateral shall be solely one of reasonable care in the physical custody of Collateral in its possession, and shall not include any obligation to collect any sums due in respect thereof or to preserve rights against prior parties or any other rights relative thereto, nor the duty to send notices, perform services, or take any action in connection with the management of the Collateral. Compass shall be deemed conclusively to have exercised reasonable care in the custody of the Collateral by taking such action for purposes of preserving rights in the Collateral, as the Borrower may request in writing, but no failure, omission, or delay by Compass in complying with any such request or refusal to comply with any such request, shall be deemed to be a failure to exercise reasonable care. Compass also shall be obligated to send only such notices as are expressly required in this Agreement.

5.             Default. The occurrence of any Event of Default under the Credit Agreement or under any Credit Document shall constitute a Default under this Agreement (“Default”).

6. Compass’ Rights and Remedies Upon Default.

(a)           Upon the occurrence of any Default pursuant to the Credit Documents, and at any time thereafter, with such notice as required by any or all of the Credit Documents, and at the Borrower’s expense, Compass may, but shall not be obligated to:

(i)            collect by legal proceedings or otherwise all dividends, interest, principal payments, income, and other sums now or hereafter payable upon or on account of the Collateral, and hold the same as Collateral or apply the same to any Liabilities, the manner, distribution and application to be in Compass’s sole discretion;

 

972948.1 2

(ii)           enter into any extension, reorganization, deposit, merger or consolidation agreement, or any agreement in any manner relating to or affecting the Collateral; accept other property in exchange for such Collateral and do and perform such acts and things as it may deem proper, and any money or property received in exchange for such Collateral shall be applied to the Liabilities or thereafter held by Compass pursuant to the provisions of this Agreement;

(iii)          demand, sue for, collect, or make any compromise or settlement with reference to the Collateral as Compass, in its sole discretion, chooses;

(iv) process and preserve the Collateral;

(v)           transfer the Collateral to Compass’s name or the name of its nominee to transfer and/or exercise as to the Collateral all the rights, powers, and remedies of an owner; provided, however, to the extent the Collateral consists of equity securities registered under Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”) and as defined in SEC Rule 13d-1(d), or any other securities the holding of which would subject Compass to the reporting requirements of Sections 13(d) or 13(g) of the Exchange Act, Compass shall have no right, prior to its formal declaration of default, to make such transfer or to vote or dispose of such securities; and

(vi) perform any of the Borrower’s obligations under this Agreement.

Compass’ remedies as described shall be expressly subject to all necessary regulatory or governmental approvals from any federal or state authority having jurisdiction over any aspect of the business or affairs of the Borrower, the Company or Shore Bank, and, further, any action by Compass pursuant to §6(a)(ii) of this Agreement shall be done in a commercially reasonable manner.

(b)           Upon the occurrence of any Default, Compass, in addition to all rights and remedies described in paragraph (a), is hereby granted full power and authority to:

(i)            sell, assign, and deliver all or any part of the Collateral at public or private sale, without notice to any party if the Collateral is perishable, threatens to decline speedily in value, or is of a type customarily sold on a recognized market, otherwise upon at least ten (10) days’ notice sent to the address shown hereon or shown on any records of Compass;

(ii)           bid upon and purchase any or all of the Collateral sold at a public sale, and to the extent permitted by applicable law, become the purchaser at any private sale, in either event free from any right of redemption in the Borrower, which right is hereby expressly waived, and apply any unpaid Liabilities toward or in full satisfaction of the purchase price in a commercially reasonable manner subject to all necessary regulatory or governmental approvals from any federal or state authority having jurisdiction over any aspect of the business or affairs of the Borrower, the Company or Shore Bank;

(iii)          apply the proceeds of any sale or other disposition of the Collateral first to the payment of expenses incurred by Compass in making such sale or disposition, including without limitation reasonable attorneys’ fees; second, to the payment of such expenses or liabilities as may have been incurred by Compass incidental to holding, collecting, exchanging, preserving, exercising rights in respect of or realizing upon any of the Collateral or upon the Liabilities, or any effort to that end; third, to the payment of the principal debt hereby secured and the interest thereon; and fourth, to the payment of any other Liabilities then existing and due to Compass from the Borrower; and

(iv)          exercise all rights and remedies available to Compass under the Credit Agreement and related Credit Documents and in addition to, modification of, or conjunction with those rights and remedies described in paragraph 6(a) and in this paragraph 6(b), all of which shall be cumulative, Compass shall have the rights and remedies provided in the Uniform Commercial

 

972948.1 3

Code as enacted in Alabama at the date of this Agreement (the “Alabama UCC”) and other rights and remedies available at law or in equity.

(c)          The Borrower shall continue to be liable to Compass for any deficiency remaining after any sale or other disposition of Collateral conducted pursuant to this Agreement, together with interest thereon at the rate specified in any document evidencing the Liabilities, and if none, at the rate applicable to judgments. Any proceeds of such sale or other disposition remaining after the allocation prescribed in paragraph 6(b)(iii) shall be returned to the Borrower or whomsoever may then be lawfully entitled thereto.

(d)           The Borrower hereby waives all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, and notices of acceptance of this pledge and of the existence, creation, or incurrence of new or additional indebtedness.

7.           Borrower’s Rights and Remedies. Subject to the provisions of this Agreement, the Borrower shall have only those rights and remedies provided in the Alabama UCC.

8.           Additional Agreements, Representations, and Warranties. The Borrower hereby represents, warrants, and agrees that:

(a)           Demand, notice, protest, and all demands and notices of any action taken by Compass except those expressly required in this Agreement are hereby waived, and any indulgence of Compass, substitution for, exchange of, or release of Collateral, or addition or release of any person liable on the Collateral or on the Liabilities is hereby consented to;

(b)           The Borrower has full power and authority to execute and deliver this Agreement and the other Credit Documents and to pledge Collateral under this Agreement, and that with respect to Collateral pledged hereunder, at the time the Collateral is deposited with Compass, the Borrower has the unrestricted right to transfer the same and to grant a security interest therein, that the Collateral is not subject to the interest of any person other than the Borrower, and that the Borrower will defend the Collateral and its proceeds or accessions against the claims and demands of all third persons;

(c)           With respect to all property delivered to Compass as Collateral: the same are genuine, free from liens, adverse claims, default, prepayment, defenses and conditions precedent, except as disclosed thereby and otherwise disclosed to or known by Compass, that all persons appearing to be obligated thereon have authority and capacity to contract and are bound as they appear to be, and that the same comply with all applicable laws concerning form, content, and manner of preparation and execution;

(d)           All financial or credit statements and any other information provided to Compass in connection with the Liabilities prior to, contemporaneously with, or subsequent to, execution of this Agreement are or shall be true, correct, complete, valid, and genuine;

(e)           Demands or notices shall be deemed conclusively to have been received and shall be effective on the earlier of the date on which same was personally delivered to the addressee thereof or on the third business day after the day on which such demands or notices were mailed to the address set forth below (or at such other address as such party shall specify to the other party in writing):

If to the Borrower:

Jack W. Gibson, Vice-Chairman, President

and Chief Executive Officer

Hampton Roads Bankshares, Inc.

999 Waterside Drive, Suite 200

Norfolk, Virginia 23510

Telephone: (757) 217-1000

Fax: (757) 217-3656

 

972948.1 4

with a copy to:

William A. Old, Jr.

Williams Mullen

999 Waterside Drive, Suite 1700

Norfolk, Virginia 23510

Telephone: (757) 622-3366

Fax: (757) 629-0660

wold@williamsmullen.com

If to Compass:

Compass Bank

Attn: T. Ray Sandefur

15 South 20th Street

Post Office Box 10566

Birmingham, Alabama 35296

(205) 297-4808 voice

(205) 297-6273 fax

trs@compassbank.com ;

(f)            The Borrower shall and does hereby grant to Compass a continuing irrevocable power of attorney coupled with an interest, exercisable only after any Default, and shall and does hereby make, constitute, and appoint Compass as the Borrower’s true and lawful attorney-in-fact for the Borrower and in the Borrower’s name, place, and stead and on the Borrower’s behalf and for the Borrower’s use and benefit, to complete, execute, and file one or more Forms 144 under SEC Rule 144 or any notices under any similar rule or regulation of any securities authority, with full power and authority to do, take, and perform all and every act and thing whatsoever requisite, proper, or necessary to be done in the exercise of the rights and powers herein granted as fully and to all intents and purposes as the Borrower might or could do if personally present;

(g)           Upon request by Compass, the Borrower shall (i) complete and execute one or more SEC Forms 144 in respect of Collateral, or cooperate fully with Compass in complying with SEC Rule 144; and (ii) cooperate fully with Compass in the preparation of any securities disclosure or registration documents deemed necessary or desirable by Compass in connection with Compass’s sale of Collateral, including without limitation, providing to Compass all information requested by Compass relating to the Borrower or the Collateral;

(h)           Upon request by Compass, the Borrower shall provide to Compass copies of all filings of any issuer of Collateral and correspondence with any securities authority, together with such other financial and other information regarding the Borrower, the issuer(s) of all Collateral and their respective businesses, affairs, and conditions as Compass may from time to time request;

(i)            Notwithstanding anything to the contrary contained or implied in this Agreement or in any other Credit Document, if at any time Compass shall determine to sell all or any part of Collateral pursuant to paragraph 6, and Collateral or portion thereof being sold has not been registered under any applicable securities laws, Compass, in its sole discretion, may sell Collateral or any portion thereof in a private sale and in such other manner and under such circumstances as Compass may deem necessary or advisable in order that such Collateral lawfully may be sold without such registration, and without limiting the generality of the foregoing, Compass, in its sole discretion may (i) proceed to sell Collateral or any portion thereof through non-public sale, whether or not a registration statement has been filed, (ii) approach and negotiate with as few as one possible purchaser, and (iii) restrict such sale to a purchaser who will represent and agree that such purchaser is purchasing for purchaser’s own account for investment purposes and not with a view toward the distribution or sale of such Collateral, and who satisfies such other conditions as at that time may be required in order for Compass to conduct a lawful non-public sale of such

 

972948.1 5

Collateral; and in the event of any non-public sale, Compass shall be and is hereby authorized to sell all or any part of Collateral at a price that Compass, in its sole discretion, deems reasonable under the circumstances, irrespective of whether a higher price might be realized if the sale were deferred until after registration under the securities laws, and in no event shall Compass have any obligation to sell any Collateral at a public sale or cause the registration of any Collateral as a condition to selling the same;

(j)            Compass shall be deemed conclusively to have acted in a commercially reasonable manner (i) by selling any Collateral in a public or private offering or sale, in a sale or offering of a limited quantity of securities or to a limited number of purchasers or offerees, or pursuant to any available exemption from registration; (ii) by selling “control” or “restricted” securities pursuant to Section 4(4) of the Securities Act of 1933, as amended; (iii) by selling or offering any securities for sale in accordance with this paragraph 8; or (iv) in taking any other action prescribed in or otherwise in complying with this Agreement;

(k)           Except as may be otherwise set forth on an addendum to this Agreement, no part of the Collateral constitutes “margin stock” as defined in Federal Reserve Board (“Board”) Regulation U (12 C.F.R. Part 221) and no part of the proceeds of the credit facility secured hereby shall be used, directly or indirectly, for the purpose of purchasing or carrying any “margin stock” or reducing or retiring any indebtedness which originally was incurred to purchase or carry such “margin stock,” or for any purpose which might constitute “purpose credit” within the meaning of Regulation U, Regulation X or Regulation G of the Board;

(l)            The Borrower, the issuer(s) of the Collateral, and their respective officers, associates, and agents have complied, and shall continue to comply with, all applicable securities laws, rules, regulations, orders, and requirements in respect of the Collateral, and after any Default and upon request by Compass, the Borrower shall cooperate fully and assist Compass in complying with all such laws, rules, regulations, orders, and requirements; and

(m)          After any Default, Compass may disclose to any prospective purchaser with which Compass is negotiating to sell any Collateral pursuant to paragraph 6, any or all information in Compass’s possession, regarding such Collateral or the issuer thereof which Compass deems necessary or desirable.

9. Mutual Agreements.

(a)           With Borrower’s consent, which consent shall not be unreasonably withheld, Compass may assign any liability or obligation of the Borrower, and in case of such assignment, Compass may deliver the whole or any part of the Collateral to the transferee who shall succeed to all the powers and rights of Compass in respect thereof, and Compass shall thereafter be forever relieved and fully discharged from any liability or responsibility with respect to the transferred Collateral; provided, however, that Borrower’s consent shall not be required in the event that Compass assigns any liability or obligation of the Borrower to an affiliate or successor-in-interest of Compass.

(b)           “Compass” and “Borrower” as used in this Agreement shall include the heirs, executors, administrators, successors, representatives, receivers, trustees, and assigns of those parties.

(c)           If more than one the Borrower signs this Agreement, references herein in singular form shall refer to all of the undersigned the Borrowers, and their liability shall be joint and several.

(d)           The laws of the State of Alabama shall govern the construction of and the interests, rights, and duties of the parties to this Agreement.

(e)           The Borrower hereby submits to jurisdiction in the State of Alabama for any action or cause of action arising hereunder.

(f)            The Borrower hereby authorizes Compass to file one or more UCC financing statements and amendments thereto with respect to the Collateral.

 

972948.1 6

                IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed under seal by their respective duly authorized officers as of the day and year first above written.

Hampton Roads Bankshares, Inc.

By: s/ Jack W. Gibson

Jack W. Gibson

Its Vice-Chairman, President and Chief Executive Officer

Compass Bank

By: s/ T. Ray Sandefur

T. Ray Sandefur

Its Senior Vice President

STATE OF VIRGINIA )

)

CITY OF NORFOLK )

I, the undersigned, Notary Public in and for said City in said State, hereby certify that Jack W. Gibson, whose name as Vice-Chairman, President and Chief Executive Officer of Hampton Roads Bankshares, Inc., a Virginia corporation, is signed to the foregoing instrument and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation.

Given under my hand this the _____ day of May, 2008.

Notary Public

[NOTARIAL SEAL] My commission expires:  

My Registration No.: __________

STATE OF ALABAMA )

)

COUNTY OF Jefferson )

I, the undersigned, Notary Public in and for said County in said State, hereby certify that T. Ray Sandefur, whose name as Senior Vice President of Compass Bank, an Alabama banking corporation, is signed to the foregoing instrument and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation.

Given under my hand this the _____ day of May, 2008.

Notary Public

[NOTARIAL SEAL] My commission expires:  

 

972948.1 7

EX-10

Exhibit 10.3

Fourth Amendment

To

Employment Agreement

THIS FOURTH AMENDMENT TO EMPLOYMENT AGREEMENT (the “Amendment”) is made as of this 27^th day of May, 2008, by and between THE BANK OF HAMPTON ROADS, INC. (“BHR”), a banking corporation organized and existing under the laws of the Commonwealth of Virginia, its successors and assigns, HAMPTON ROADS BANKSHARES, INC. (“HRB”), a Virginia corporation, its successors and assigns (collectively BHR and HRB shall be the Bank or Employer and otherwise deemed synonymous as the context may require); and JACK W. GIBSON (the “Executive”).

WHEREAS, BHR and the Executive entered into an Employment Agreement dated October 9, 1987, (as amended, the “Agreement”), and the Agreement has been amended by Amendment to Employment Agreement, Second Amendment to Employment Agreement, and Third Amendment to Employment Agreement; and

WHEREAS, HRB was incorporated on February 28, 2001, and pursuant to a corporate reorganization (the “Reorganization”) became the new parent company of BHR; and

WHEREAS, since the Reorganization, the Executive has served and continues to serve as an executive officer of both BHR and HRB; and

WHEREAS, the Bank and Executive now desire to amend the Agreement to reflect the Executive’s employment relationship with BHR and HRB and to amend certain other provisions of the Agreement;

NOW, THEREFORE, the parties agree as follows:

1. Section 1 of the Agreement is deleted and replaced by the following:

1.           EMPLOYMENT: The Employer agrees to employ the Executive to perform services for the Employer and the Executive agrees to serve the Employer upon the terms and conditions herein provided. The Executive shall be an executive officer of both HRB and BHR. He agrees to serve as the President and Chief Executive Officer of BHR and as the Vice-Chairman, President and Chief Executive Officer of HRB. The Executive shall perform such managerial duties and responsibilities as shall be assigned to him by the Board of Directors of each of HRB and BHR, consistent with his positions and titles.

2.          The second paragraph of Section 3(b) of the Agreement is deleted and replaced by the following:

For purposes of this Agreement, the term “a change in control” shall mean (a) the date that any one person, or more than one person, acting as a group,

acquires ownership of stock of HRB (the “Parent Company”) that, together with stock held by such person or group constitutes more than 50% of the total fair market value or total voting power of the stock of the Parent Company, (b) the date any one person, or more than one person, acting as a group, acquires (or has acquired ownership during the 12 month period ending on the date of the most recent acquisition be such person) ownership of stock of the Company possessing 30%or more of the total voting power of the stock, or (c) the date a majority of the members of the Company’s Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Parent Company’s Board before the date of the appointment or election. The right herein conferred upon the Executive to terminate his employment for good reason may be exercised by the Executive at any time during the terms of this Agreement at his sole discretion, and any failure by the Executive to exercise this right after he has “good reason” to do so shall not be deemed a waiver of the right.

3. The following is added at the end of Section 4(c) of the Agreement:

Any cash reimbursement that the Company may make to the Executive with respect to the Company’s obligation to provide substantially similar benefits, shall be paid before the last day of the calendar year following the calendar year in which the expense is incurred. The Executive may not exchange the right to reimbursement or to an in–kind benefit for another reimbursement or benefit and may not receive cash in lieu of an in–kind benefit or right to reimbursement.

4.            Current Section 5 of the Agreement (“Miscellaneous”) is renumbered to be Section 6, and new Section 5 is added to the Agreement as follows:

5.           Provisions Regarding Section 409A of the Internal Revenue Code.

(a)          Compliance with Section 409A of the Internal Revenue Code (“Code”). Any benefit, payment or other right provided by the Plan shall be provided or made in a manner, and at such time, in such form and subject to such election procedures (if any), as complies with the applicable requirements of Code section 409A to avoid a plan failure described in Code section 409A(a)(1), including without limitation, deferring payment until the occurrence of a specified payment event described in Code section 409A(a)(2). Notwithstanding any other provision hereof or document pertaining hereto, the Plan shall be so construed and interpreted to meet the applicable requirements of Code section 409A to avoid a plan failure described in Code section 409A(a)(1).

(b) Delay in Distributions. To the extent required by Section 409A of the Code, in the event the Executive is a “specified employee” as provided in Section 409A(a)(2)B)(i) on his date of termination from employment, any amounts payable hereunder shall be paid no earlier than the first business day after the six month anniversary of the his date of termination. Whether the Executive is a specified employee and whether an amount payable to the Executive hereunder is subject to Section 409A of the Code shall be determined by the Company.

(c) Gross-Up Payments. The Third Amendment to the Agreement requires the Company to pay the Executive a Gross-Up Payment in certain events. Notwithstanding any contrary provision in the Third Amendment, all Gross-Up Payments due to the Executive shall be paid no later than the end of the calendar year next following the calendar year in which the Executive remits the related taxes.

5.          Except as amended by this Amendment, the Agreement as originally adopted and amended is hereby ratified and affirmed.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and year first above written.

THE BANK OF HAMPTON ROADS, INC.

By: /s/ Emil A. Viola

Emil A. Viola, Chairman

HAMPTON ROADS BANKSHARES, INC.

By:/s/ Emil A. Viola

Emil A. Viola, Chairman

EXECUTIVE:

/s/ Jack W. Gibson

Jack W. Gibson

EX-10

Exhibit 10.4

Fourth Amendment

To

Employment Agreement

THIS FOURTH AMENDMENT TO EMPLOYMENT AGREEMENT (the “Amendment”) is made as of this 27^th day of May, 2008, by and between THE BANK OF HAMPTON ROADS, INC. (“BHR”), a banking corporation organized and existing under the laws of the Commonwealth of Virginia, its successors and assigns, HAMPTON ROADS BANKSHARES, INC. (“HRB”), a Virginia corporation, its successors and assigns (collectively BHR and HRB shall be the Bank or Employer and otherwise deemed synonymous as the context may require); and DONALD W. FULTON, JR. (the “Executive”).

WHEREAS, BHR and the Executive entered into an Employment Agreement dated July 16, 2003, (as amended, the “Agreement”), and the Agreement has been amended by Amendment to Employment Agreement, Second Amendment to Employment Agreement, and Third Amendment to Employment Agreement; and

WHEREAS, HRB was incorporated on February 28, 2001, and pursuant to a corporate reorganization (the “Reorganization”) became the new parent company of BHR; and

WHEREAS, the Executive has served and continues to serve as an executive officer of both BHR and HRB; and

WHEREAS, the Bank and Executive now desire to amend the Agreement to reflect the Executive’s employment relationship with BHR and HRB and to amend certain other provisions of the Agreement;

NOW, THEREFORE, the parties agree as follows:

1. Section 1 of the Agreement is deleted and replaced by the following:

1.           EMPLOYMENT: The Employer agrees to employ the Executive to perform services for the Employer and the Executive agrees to serve the Employer upon the terms and conditions herein provided. The Executive shall be an executive officer of both HRB and BHR. He agrees to serve as the Senior Vice President and Chief Financial Officer of BHR and as the Senior Vice President and Chief Executive Officer of HRB. The Executive shall perform such managerial duties and responsibilities as shall be assigned to him by the Chief Executive Officers of each of HRB and BHR, consistent with his positions and titles. The Executive shall devote his time and attention on a full-time basis to the discharge of the duties undertaken by him hereunder.

2.          The second paragraph of Section 3(b) of the Agreement is deleted and replaced by the following:

For purposes of this Agreement, the term “a change in control” shall mean (a) the date that any one person, or more than one person, acting as a group, acquires ownership of stock of HRB (the “Parent Company”) that, together with stock held by such person or group constitutes more than 50% of the total fair market value or total voting power of the stock of the Parent Company, (b) the date any one person, or more than one person, acting as a group, acquires (or has acquired ownership during the 12 month period ending on the date of the most recent acquisition be such person) ownership of stock of the Company possessing 30%or more of the total voting power of the stock, or (c) the date a majority of the members of the Company’s Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Parent Company’s Board before the date of the appointment or election. The right herein conferred upon the Executive to terminate his employment for good reason may be exercised by the Executive at any time during the terms of this Agreement at his sole discretion, and any failure by the Executive to exercise this right after he has “good reason” to do so shall not be deemed a waiver of the right.

3. The following is added at the end of Section 4(c) of the Agreement:

Any cash reimbursement that the Company may make to the Executive with respect to the Company’s obligation to provide substantially similar benefits, shall be paid before the last day of the calendar year following the calendar year in which the expense is incurred. The Executive may not exchange the right to reimbursement or to an in–kind benefit for another reimbursement or benefit and may not receive cash in lieu of an in–kind benefit or right to reimbursement.

4.            Current Section 5 of the Agreement (“Miscellaneous”) is renumbered to be Section 6, and new Section 5 is added to the Agreement as follows:

5.           Provisions Regarding Section 409A of the Internal Revenue Code.

(a)          Compliance with Section 409A of the Internal Revenue Code (“Code”). Any benefit, payment or other right provided by the Plan shall be provided or made in a manner, and at such time, in such form and subject to such election procedures (if any), as complies with the applicable requirements of Code section 409A to avoid a plan failure described in Code section 409A(a)(1), including without limitation, deferring payment until the occurrence of a specified payment event described in Code section 409A(a)(2). Notwithstanding any other provision hereof or document pertaining hereto, the Plan shall be so construed and interpreted to meet the applicable requirements of Code section 409A to avoid a plan failure described in Code section 409A(a)(1).

(b) Delay in Distributions. To the extent required by Section 409A of the Code, in the event the Executive is a “specified employee” as provided in Section 409A(a)(2)B)(i) on his date of termination from employment, any amounts payable hereunder shall be paid no earlier than the first business day after the six month anniversary of the his date of termination. Whether the Executive is a specified employee and whether an amount payable to the Executive hereunder is subject to Section 409A of the Code shall be determined by the Company.

(c) Gross-Up Payments. The Third Amendment to the Agreement requires the Company to pay the Executive a Gross-Up Payment in certain events. Notwithstanding any contrary provision in the Third Amendment, all Gross-Up Payments due to the Executive shall be paid no later than the end of the calendar year next following the calendar year in which the Executive remits the related taxes.

5.          Except as amended by this Amendment, the Agreement as originally adopted and amended is hereby ratified and affirmed.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and year first above written.

THE BANK OF HAMPTON ROADS, INC.

By: /s/ Emil A. Viola

 Emil A. Viola, Chairman

HAMPTON ROADS BANKSHARES, INC.

By: /s/ Emil A. Viola

 Emil A. Viola, Chairman

EXECUTIVE:

/s/ Donald W. Fulton, Jr.

Donald W. Fulton, Jr.

EX-10

Exhibit 10.5

First Amendment

To

Employment Agreement

THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (the “Amendment”) is made as of this 27^th day of May, 2008, by and between THE BANK OF HAMPTON ROADS, INC. (“BHR”), a banking corporation organized and existing under the laws of the Commonwealth of Virginia, its successors and assigns, HAMPTON ROADS BANKSHARES, INC. (“HRB”), a Virginia corporation, its successors and assigns (collectively BHR and HRB shall be the Bank or Employer and otherwise deemed synonymous as the context may require); and DOUGLAS J. GLENN (the “Executive”).

WHEREAS, BHR, HRB and the Executive entered into an Employment Agreement dated November 1, 2007, (the “Agreement”); and

WHEREAS, the Bank and Executive now desire to amend the Agreement to reflect provisions required by Section 409A of the Internal Revenue Code of 1986, as amended;

NOW, THEREFORE, the parties agree as follows:

1. The following is added at the end of Section 4(d) of the Agreement:

Any cash reimbursement that the Company may make to the Executive with respect to the Company’s obligation to provide substantially similar benefits, shall be paid before the last day of the calendar year following the calendar year in which the expense is incurred. The Executive may not exchange the right to reimbursement or to an in–kind benefit for another reimbursement or benefit and may not receive cash in lieu of an in–kind benefit or right to reimbursement.

2.            Current Section 8 of the Agreement (“Miscellaneous”) is renumbered to be Section 9, and new Section 8 is added to the Agreement as follows:

8.           Provisions Regarding Section 409A of the Internal Revenue Code.

(a)          Compliance with Section 409A of the Internal Revenue Code (“Code”). Any benefit, payment or other right provided by the Plan shall be provided or made in a manner, and at such time, in such form and subject to such election procedures (if any), as complies with the applicable requirements of Code section 409A to avoid a plan failure described in Code section 409A(a)(1), including without limitation, deferring payment until the occurrence of a specified payment event described in Code section 409A(a)(2). Notwithstanding any other provision hereof or document pertaining hereto, the Plan shall be so construed and interpreted to meet the applicable requirements

of Code section 409A to avoid a plan failure described in Code section 409A(a)(1).

(b) Delay in Distributions. To the extent required by Section 409A of the Code, in the event the Executive is a “specified employee” as provided in Section 409A(a)(2)B)(i) on his date of termination from employment, any amounts payable hereunder shall be paid no earlier than the first business day after the six month anniversary of the his date of termination. Whether the Executive is a specified employee and whether an amount payable to the Executive hereunder is subject to Section 409A of the Code shall be determined by the Company.

(c) Gross-Up Payments. Notwithstanding any contrary provision in Section 6 of this Agreement, all Gross-Up Payments due to the Executive shall be paid no later than the end of the calendar year next following the calendar year in which the Executive remits the related taxes.

3.          Except as amended by this Amendment, the Agreement as originally adopted and amended is hereby ratified and affirmed.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and year first above written.

THE BANK OF HAMPTON ROADS, INC.

By: /s/ Emil A. Viola

 Emil A. Viola, Chairman

HAMPTON ROADS BANKSHARES, INC.

By: /s/ Emil A. Viola

 Emil A. Viola, Chairman

EXECUTIVE:

/s/ Douglas J. Glenn

Douglas J. Glenn

EX-10

Exhibit 10.6

Amendment No. 2

To The

Supplemental Retirement Agreement

Between

The Bank of Hampton Roads

And

Jack W. Gibson

THIS AMENDMENT No. 2 made effective this 27^th day of May, 2008, by and between THE BANK OF HAMPTON ROADS, a banking corporation organized and existing under the laws of the Commonwealth of Virginia (the “Bank”) and JACK W. GIBSON (the “Executive”).

WHEREAS, effective January 1, 1993, the Bank and the Executive entered into a Supplemental Retirement Agreement (the “Agreement”) to provide for the payment of deferred compensation by the Bank to the Executive; and

WHEREAS, on December 9, 2003, the Agreement was amended by agreement of the Bank and the Executive; and

WHEREAS, the Bank and Executive now desire to amend the Agreement, effective immediately, as follows:

1. Section 1.04 of the Agreement is amended to read as follows:

1.04 “Change in Control” means (a) the date that any one person, or more than one person, acting as a group, acquires ownership of stock of the Parent Company that, together with stock held by such person or group constitutes more than 50% of the total fair market value or total voting power of the stock of the Parent Company, (b) the date any one person, or more than one person, acting as a group, acquires (or has acquired ownership during the 12 month period ending on the date of the most recent acquisition be such person) ownership of stock of the Parent Company possessing 30% or more of the total voting power of the stock, or (c) the date a majority of the members of the Parent Company’s Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Parent Company’s Board before the date of the appointment or election.

2. Section 1.06 of the Agreement is amended to read as follows:

1.06 “Benefit Computation Base” shall mean the average of the Executive’s compensation including bonuses (but excluding profit sharing contributions) from the Corporation and the Parent Company for his three

1

highest compensation completed calendar years prior to the year during which the Plan Retirement Date occurs.

3. Section 1.09 is added to the Agreement to read as follows:

1.09 “Disability” or “disability” shall mean that the Executive: (a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (b) is receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company because of any medically determinable physical or mental impairment expected to result in death or expected to last for a continuous period of not less than 12 months.

4. The definition of Parent Company is added as Section 1.10:

1.10 “Parent Company” shall mean Hampton Roads Bankshares, Inc.

5. Section 3.01 is replaced as follows:

3.01 Retirement Benefit: The Executive shall receive his Normal Retirement Benefit on the first day of the month following the attainment of his Plan Retirement Date.

6. Section 3.02 is deleted in its entirety.

7. The first sentence of Section 3.03 is replaced with the following:

3.03 Retirement Death Benefit. The Corporation agrees that if the Executive shall die before receiving the fifteen (15) annual payments, it will continue to make such annual payments to such individual or individuals as the Executive may have designated in writing, filed with and approved by the Corporation, until the expiration of fifteen (15) years from the date such payments commence.

8. Section 4.01 of the Agreement is amended to read as follows:

4.01       Death Prior to Retirement. In the event the Executive should die while actively employed by the Corporation at any time after January 1, 2008, but prior to Plan Retirement Date, the Corporation shall pay the greater of [a] the sum of Five Hundred Thousand Dollars ($500,000.00) in equal annual installments of Fifty Thousand Dollars ($50,000.00) for a period of ten (10) years, or [b] the Normal Retirement Benefit calculated using the Executive’s date of death as the date of his termination of employment with the Corporation, to such individual or individuals as the

2

Executive may have designated in writing, filed with and approved by the Corporation. The said annual payments shall begin on the first day of the third month following the Executives date of death. In the absence of any effective designation of beneficiary by the Executive, any such amounts becoming due and payable upon the death of the Executive shall be payable to his duly qualified executor or administrator, or, if none shall be appointed, as provided by applicable law.

9. Section 5.03 is replaced as follows:

5.03 Benefits Payable When an Executive’s Services Are Terminated Following A Change in Control. If the termination of an Executive’s service occurs within twenty-four (24) months following a Change in Control, then Executive will be entitled to a lump sum payment equal to his (i) Normal Retirement Benefit increased by 50% if he has not attained his Plan Retirement Date, or (ii) the sum of his remaining installment payments increased by 50% if he has attained his Plan Retirement Date. This amount shall be paid to the Executive on the first day of the second month following the month in which such severance occurs. For example, assume that: (a) the Executive’s annual benefit is $50,000, (b) he received 5 annual installments under the terms of the plan and (c) the Change in Control occurs before the 6^th annual installment. The Executive would be entitled to a lump sum payment of $750,000 which is the sum of the remaining 10 installments of $50,000 increased by 50%.

10. Section 14.01 of the Agreement is deleted.

11. Article Fifteen is added as follows:

15.01     Compliance with Section 409A of the Internal Revenue Code (“Code”). Any benefit, payment or other right provided by the Plan shall be provided or made in a manner, and at such time, in such form and subject to such election procedures (if any), as complies with the applicable requirements of Code section 409A to avoid a plan failure described in Code section 409A(a)(1), including without limitation, deferring payment until the occurrence of a specified payment event described in Code section 409A(a)(2). Notwithstanding any other provision hereof or document pertaining hereto, the Plan shall be so construed and interpreted to meet the applicable requirements of Code section 409A to avoid a plan failure described in Code section 409A(a)(1).

15.02 Delay in Distributions. To the extent required by Section 409A of the Code, in the event the Executive is a “specified employee” as provided in Section 409A(a)(2)B)(i) on his date of termination from employment, any amounts payable hereunder shall be paid no earlier than the first business day after the six month anniversary of the his date of termination.

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Whether the Executive is a specified employee and whether an amount payable to the Executive hereunder is subject to Section 409A of the Code shall be determined by the Company.

15.03 Anti-Acceleration. The Company shall not accelerate the time over which payments shall be made to the Executive; provided, however, the Company, in its discretion, may accelerate payments under the Plan in accordance with each of the payment events contained in Treasury Regulation section 1.409A-3(j)(4)(ii) through (xiv).

12.        In all other respects, the Agreement as originally adopted and amended is hereby ratified and affirmed.

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IN WITNESS WHEREOF, the Bank, by its duly authorized officer, has caused this Amendment No. 2 to be duly executed, and the Executive has hereunto set his hand and seal, as of the day and year first above written.

THE BANK OF HAMPTON ROADS

By: /s/ Emil A. Viola

             Emil A. Viola, Chairman

ATTEST:

/s/ Tiffany K. Glenn

Tiffany K. Glenn, Secretary

EXECUTIVE:

/s/ Jack W. Gibson

Jack W. Gibson

Acknowledged and Affirmed:

HAMPTON ROADS BANKSHARES, INC.

By: /s/ Emil A. Viola

             Emil A. Viola, Chairman

ATTEST:

/s/ Tiffany K. Glenn

Tiffany K. Glenn, Secretary

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EX-10

Exhibit 10.7

SUPPLEMENTAL RETIREMENT AGREEMENT

THIS SUPPLEMENTAL RETIREMENT AGREEMENT (“Agreement”), made and entered into this 27^th day of May, 2008, by and between the Bank of Hampton Roads, a banking corporation organized and existing under the laws of the commonwealth of Virginia, hereinafter called the Corporation, and Douglas J. Glenn, hereinafter called the Executive.

WITNESSETH:

WHEREAS, the Executive was employed by the Corporation on November 1, 2007 as its Executive Vice President and General Counsel;

WHEREAS, the terms of this Agreement were contained in summary form in a letter outlining the terms of employment between the Corporation and the Executive dated September 11, 2007; and,

WHEREAS, the Corporation and the Executive now desire to enter into this Agreement as follows:

ARTICLE ONE

Definitions

1.01 “Agreement Effective Date” is November 1, 2007.

1.02 “Plan Retirement Date” is the Executive’s 65^th birthday.

1.03       “Plan Administrator” shall mean the Board of Directors of the Corporation or their designee.

1.04      “Change in Control” means (a) the date that any one person, or more than one person, acting as a group, acquires ownership of stock of the Parent Company that, together with stock held by such person or group constitutes more than 50% of the total fair market value or total voting power of the stock of the Parent Company, (b) the date any one person, or more than one person, acting as a group, acquires (or has acquired ownership during the 12 month period ending on the date of the most recent acquisition be such person) ownership of stock of the Parent Company possessing 30% or more of the total voting power of the stock, or (c) the date a majority of the members of the Parent Company’s Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Parent Company’s Board before the date of the appointment or election.

1.05      “Accrued Benefit” shall mean the Executive’s Normal Retirement Benefit calculated on the basis of the Benefit Computation Base as of the date on which the Executive’s employment with the Corporation is terminated (to include voluntary retirement), multiplied by a fraction: the numerator of which is: if employment is terminated prior to November 1, 2012, the numerator is

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zero (0); if employment is terminated on or after November 1, 2012 the numerator is the number of completed calendar months the Executive has participated under this Agreement after November 1, 2007 to a maximum of 180; and the denominator of which is the number 180.

1.06       “Benefit Computation Base” shall mean the average of the Executive’s compensation including bonuses (but excluding profit sharing contributions) from the Corporation and the Parent Company for his three highest compensation completed calendar years prior to the year during which the Plan Retirement Date occurs.

1.07      “Normal Retirement Benefit” shall mean an annual benefit payable in fifteen (15) equal installments equal to the greater of: (a) fifty percent (50%) of the Executive’s Benefit Computation Base, or (b) $150,000.

1.08      ”Actuarial Equivalent” shall mean a benefit of equivalent current value to the benefit which could otherwise have been provided to the Executive, computed on the basis of an interest rate of (7.0%) per year.

1.09       “Disability” or “disability” shall mean that the Executive: (a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (b) is receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company because of any medically determinable physical or mental impairment expected to result in death or expected to last for a continuous period of not less than 12 months.

1.10 “Parent Company” shall mean Hampton Roads Bankshares, Inc.

ARTICLE TWO

2.01       Employment. The Corporation agrees to employ the Executive in such capacity as the Corporation may from time to time determine. The Executive will continue in the employ of the Corporation in such capacity and with such duties and responsibilities as may be assigned to him, and with such compensation as may be determined from time to time by the Board of Directors of the Corporation. Executive agrees to devote his full time and attention exclusively to the business and affairs of the Corporation, except during vacation periods and to use his best efforts to furnish faithful and satisfactory services to the Corporation. The Executive further agrees that during the period of his employment pursuant to this Agreement he will not have any other business affiliations without the approval of the Board of Directors of the Corporation.

The supplemental retirement benefits provided by this Agreement are granted by the Corporation as a fringe benefit and are not part of any salary reduction plan or an arrangement deferring a bonus or a salary increase. The Executive has no option to take any current payment or bonus in lieu of these salary continuation benefits.

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ARTICLE THREE

3.01       Retirement Benefit. The Executive shall receive his Normal Retirement Benefit on the first day of the month following the attainment of his Plan Retirement Date.

3.02       Retirement Death Benefit. The Corporation agrees that if the Executive shall so retire, but shall die before receiving the fifteen (15) annual payments, it will continue to make such annual payments to such individual or individuals as the Executive may have designated in writing, filed with and been approved by the Corporation, until the expiration of fifteen (15) years from the date such payments commence. In the absence of any effective designation of beneficiary any such amounts becoming due and payable upon the death of the Executive shall be payable to his duly qualified executor or administrator.

ARTICLE FOUR

4.01       Death Prior to Retirement. In the event the Executive should die while actively employed by the Corporation at any time after November 1, 2027 but prior to his retirement from the Corporation, the Corporation shall pay the greater of [a] the sum of Five Hundred Thousand Dollars ($500,000.00) in equal annual installments of Fifty Thousand Dollars ($50,000.00) for a period of ten (10) years, or [b] the Normal Retirement Benefit calculated using the Executive’s date of death as the date of his termination of employment with the Corporation, to such individual or individuals as the Executive may have designated in writing, filed with and approved by the Corporation. The said annual payments shall begin on the first day of the third month following the Executive’s date of death. In the absence of any effective designation of beneficiary by the Executive, any such amounts becoming due and payable upon the death of the Executive shall be payable to his duly qualified executor or administrator, or, if none shall be appointed, as provided by applicable law.

ARTICLE FIVE

5. 01      Involuntary Termination. If the Corporation terminates the Executive’s employment prior to his Plan Retirement Date for “Cause”, the Executive Shall not be entitled to any benefits under the terms of this Agreement. For purposes of this Agreement, “Cause shall mean:

(a) deliberate dishonesty with respect to the Corporation or any subsidiary or affiliate thereof;

(b) conviction of a crime involving moral turpitude; or

(c) gross and willful failure to perform a substantial portion of the Executive’s duties and, responsibilities hereunder, which failure continues for more than thirty days after written notice given to the Executive pursuant to a two-thirds vote of the Board of Directors then in office, such vote set forth in reasonable detail the nature of such failure.

5.02 Other Termination of Service. The corporation reserves the right to terminate the

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employment of the Executive at any time prior to retirement. In the event that the employment of the Executive shall terminate prior to his Plan Retirement Date, other than by his death or his discharge for actions inimical to the Corporate interests, but including his disability, then this Agreement shall terminate upon the date of such termination of employment and the Corporation shall pay to the Executive as severance compensation the present value (“Actuarial Equivalent”) of his “Accrued Benefit”. This amount shall be paid to the Executive in a LUMP SUM with the payment due on the first day of the second month following the month in which such severance occurs.

5.03       Benefits Payable When An Executive’s Services Are Terminated Following A Change In Control. If the termination of an Executive’s service occurs within twenty-four (24) months following a Change in Control, then Executive will be entitled to a lump sum payment equal to his (i) Normal Retirement Benefit increased by 50% if he has not attained his Plan Retirement Date, or (ii) the sum of his remaining installment payments increased by 50% if he has attained his Plan Retirement Date. This amount shall be paid to the Executive on the first day of the second month following the month in which such severance occurs. For example, assume that: (a) the Executive’s annual benefit is $50,000, (b) he received 5 annual installments under the terms of the plan and (c) the Change in Control occurs before the 6^th annual installment. The Executive would be entitled to a lump sum payment of $750,000 which is the sum of the remaining 10 installments of $50,000 increased by 50%.

ARTICLE SIX

6.01 Alienability. Neither the Executive, his widow, nor any other beneficiary under this Agreement shall have any power or right to transfer, assign, anticipate, hypothecate, mortgage, commute, modify, or otherwise encumber in advance any of the benefits payable hereunder, nor shall any of said benefits be subject to seizure for the payment of any debts, judgments, alimony or separate maintenance, owed by the Executive or his beneficiary or any of them, or be transferable by operation of law in the event of bankruptcy, insolvency, or otherwise. In the event the Executive or any beneficiary attempts assignment, commutation, hypothecation, transfer, or disposal of the benefit hereunder the Corporation’s liabilities shall forthwith cease and terminate.

ARTICLE SEVEN

7.01       Participation in Other Plans. Nothing contained in this Agreement shall be construed to altar, abridge, or in any manner affect the rights and privileges of the executive to participate in and be covered by any pension, profit-sharing, group insurance, bonus or similar employee plans which the Corporation may now or hereafter have.

ARTICLE EIGHT

8.01       Funding. The Corporation reserves the absolute right at its sole and exclusive discretion either to fund the obligations of the Corporation undertaken by this agreement or to refrain from funding the same, and to determine the extent, nature, and method of such funding. Should the

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Corporation select to fund this Agreement, in whole or in part, through the medium of life insurance or annuities, or both, the Corporation shall be the owner and beneficiary of the policy. The Corporation reserves the absolute right, in its sole discretion, to terminate such life insurance or annuities, as well as any other funding program, at any time, either in whole or in part. At no time shall the Executive be deemed to have any right, title or interest in or to any specified asset or assets of the Corporation, including, but not by way of restriction, any insurance or annuity contract or contracts or the proceeds therefrom.

Any such policy shall not in any way be considered to be security of the performance of the obligations of this Agreement. It shall be, and remain, a general, unpledged, unrestricted asset of the Corporation.

If the Corporation purchases a life insurance or annuity policy on the life of the Executive, he agrees to sign any papers that may be required for that purpose and to undergo any medical examination or tests which may be necessary.

If the Executive is asked to submit information to an insurance company and if the Executive makes a material misrepresentation in an application for any insurance that may be used by the Corporation to insure any or all of its obligations under this Agreement, and if as a result of that material misrepresentation the insurance company is not required to pay all or any part of the benefits provided under that insurance, the Executive shall forfeit all rights and benefits payable under this Agreement.

8.02       This Article shall not be construed as giving the Executive or his beneficiary any greater rights than those of any other unsecured creditor of the Corporation.

ARTICLE NINE

9.01       Reorganization. The Corporation shall not merge or consolidate into or with another corporation, or reorganize, or sell substantially all of its assets to another corporation, firm, or person unless and until such succeeding or continuing corporation, firm, or person agrees to assume and discharge the obligations of the Corporation under this Agreement. Upon the occurrence of such event, the term “Corporation” as used in this Agreement shall be deemed to refer to such successor or survivor Corporation.

ARTICLE TEN

10.01     Benefits and Burdens. This Agreement shall be binding upon and inure to the benefit of the Executive and his personal representatives, and the Corporation, and any successor organization which shall succeed to substantially all of either the Corporation’s assets or its business without regard to the form of such succession.

ARTICLE ELEVEN

11.01     Communications. Any notice or communication required of either party with respect to this Agreement shall be made in writing and may either be delivered personally or sent by first

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class mail to: Bank of Hampton Roads, 999 Waterside Dr., Suite 200, Norfolk, VA 23510. Each party shall have the right by written notice to change the place to which any notice may be addressed.

ARTICLE TWELVE

12.01     Not a Contract of Employment. This Agreement shall not be deemed to constitute a contract of employment between the parties hereto, nor shall any provision hereof restrict the right of the Corporation to discharge the Executive, or restrict the right of the Executive to terminate his employment.

ARTICLE THIRTEEN

13.01     Claims Procedure. In the event that benefits under this Plan Agreement are not paid to the Executive (or his beneficiary on the case of the Executive’s death), and such person feel entitled to receive them, a claim shall be made in writing to the Plan Administrator within sixty (60) days from the date payments are not made. Such claim shall be reviewed by the Plan Administrator and the Corporation. If the claim is denied, in full or in part, the Plan Administrator shall provide a written notice within ninety (90) days setting forth the specific reasons for denial, specific reference to the provisions of this Agreement upon which the denial is based, and any additional material or information necessary to perfect the claim, if any. Also, such written notice shall indicate the steps to be taken if a review of the denial is desired.

If a claim is denied and a review is desired, the Executive (or his beneficiary in the case of the Executive’s death), shall notify the Plan Administrator in writing within sixty (60) days (and a claim shall be deemed denied if the Plan Administrator does not take any action within the aforesaid ninety (90)day period). In requesting a review, the Executive or his beneficiary may review this Plan Agreement or any documents relating to it and submit any written issues and comments he or she may feel appropriate. In its sale discretion the Plan Administrator shall then review the claim and provide a written decision within sixty (60) days. This decision likewise shall state the specific reason for the decision and shall include reference to specific provisions of this Plan Agreement on which the decision is based.

For purposes of implementing this claims procedure (but not for any other purpose), (___________) is hereby designated as the Named Fiduciary and Plan Administrator of this Plan Agreement.

ARTICLE FOURTEEN

14.01     This agreement shall be construed in accordance with and governed by the laws of the Commonwealth of Virginia.

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ARTICLE FIFTEEN

15.01     Compliance with Section 409A of the Internal Revenue Code (“Code”). Any benefit, payment or other right provided by the Plan shall be provided or made in a manner, and at such time, in such form and subject to such election procedures (if any), as complies with the applicable requirements of Code Section 409A(a)(1), including without limitation, deferring payment until the occurrence of a specified payment event described in Code Section 409A(a)(2). Notwithstanding any other provision hereof or document pertaining hereto, the Plan shall be so construed and interpreted to meet the applicable requirements of Code Section 409A to avoid a plan failure described in Code Section 409A(a)(1).

15.02     Delay in Distributions. To the extent required by Section 409A of the Code, in the event the Executive is a “specified employee” as provided in Section 409A(a)(2)(b)(i) on his date of termination from employment, any amounts payable hereunder shall be paid no earlier than the first business day after the six month anniversary of the date of termination. Whether the Executive is a specified employee and whether an amount payable to the Executive hereunder is subject to Section 409A of the Code shall be determined by the Company.

15.03 Anti-Acceleration. The Company shall not accelerate the time over which payments shall be made to the Executive; provided, however, the Company, in its discretion, may accelerate payments under the Plan in accordance with each of the payment events contained in Treasury Regulation section 1.409A-3(j)(4)(ii) through (xiv).

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IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly executed and its corporate seal affixed, duly attested by its Secretary, and the Executive has hereunto sat his hand and seal at Norfolk, Virginia, the day and year first above written.

THE BANK OF HAMPTON ROADS

By: /s/  Emil A. Viola

Emil A. Viola, Chairman

ATTEST:

/s/ Tiffany K. Glenn

Tiffany K. Glenn, Secretary

EXECUTIVE:

/s/ Douglas J. Glenn

Douglas J. Glenn

Acknowledged and Affirmed:

HAMPTON ROADS BANKSHARES, INC.

By: /s/  Emil A. Viola

Emil A. Viola, Chairman

ATTEST:

/s/ Tiffany K. Glenn

Tiffany K. Glenn, Secretary

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EX-99

Exhibit 99.1

PRESS RELEASE	Contact:	Hampton Roads Bankshares, Inc.
		Jack W. Gibson
For Immediate Release		Vice Chairman, President and
		Chief Executive Officer
		(757) 217-1000

HAMPTON ROADS BANKSHARES, INC. ACQUIRES

SHORE FINANCIAL CORPORATION

NORFOLK, VIRGINIA, June 2, 2008: Hampton Roads Bankshares, Inc. (NASDAQ: HMPR) (the “Company”), the financial holding company for Bank of Hampton Roads, announced today that Shore Financial Corporation was merged with and into the Company. The transaction closed on Friday, May 30, 2008, and became effective on June 1, 2008, at 12:01 a.m.

Shore Financial Corporation shareholders had the option to receive 1.8 shares of the Company or $22.00 for each share of Shore Financial Corporation stock that they owned. The Company was able to accommodate the election preference made by each shareholder.

Shore Financial Corporation’s previously wholly-owned subsidiary, Shore Bank, will maintain its competitive distinction and brand by operating as a subsidiary of the Company. Shore Bank serves the Eastern Shore of Maryland and Virginia through eight full-service banking facilities and twenty-two ATMS. Through its affiliates, Shore Bank also offers title insurance and investment products. Scott C. Harvard will continue to serve as President and Chief Executive Officer of Shore Bank and as an Executive Vice President of the Company.

More than 97% of the shareholders of each institution who voted on the proposal at the shareholder meetings, voted in favor of the acquisition.

About Hampton Roads Bankshares

Hampton Roads Bankshares, Inc. is a financial holding company that was formed in 2001 and is headquartered in Norfolk, Virginia. The Company’s primary subsidiaries are Bank of Hampton Roads, which opened for business in 1987, and Shore Bank, which opened in 1961. The Banks engage in general community and commercial banking business, targeting the needs of individuals and small to medium-sized businesses. Currently, Bank of Hampton Roads operates eighteen banking offices in the Hampton Roads region of southeastern Virginia. Shore Bank serves the Eastern Shore of Maryland and Virginia through eight banking offices and twenty-two ATMS. Through its affiliates, Shore Bank also offers title insurance and investment products. Shares of Hampton Roads Bankshares common stock are traded on the NASDAQ Global Select Market under the symbol HMPR. Additional information about the Company and its subsidiaries can be found at www.hamptonroadsbanksharesinc.com.

Certain statements in this report may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, predictions, expectations, or beliefs about events or results or otherwise are not statements of historical facts. Although the Company believes that its expectations with respect to certain forward-looking statements are based upon reasonable assumptions within the bounds of its

existing knowledge of its business and operations, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Actual future results and trends may differ materially from historical results or those anticipated depending on a variety of factors. For an explanation of the risks and uncertainties associated with forward-looking statements, please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, and other reports filed and furnished to the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statements made in this press release and this release shall not constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction in which such solicitation would be unlawful.

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