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 7, 2010

___________

MIDDLEBURG FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Virginia (State or other jurisdiction of incorporation)	0-24159 (Commission File Number)		54-1696103 (I.R.S. Employer Identification No.)
111 West Washington Street Middleburg, Virginia (Address of principal executive offices)		20117 (Zip Code)

Registrant’s telephone number, including area code: (703) 777-6327

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

                                Officers.

Employment Agreement for Raj Mehra

On May 7, 2010, Middleburg Financial Corporation (the “Company”) entered into an employment agreement with Raj Mehra (the “Mehra Employment Agreement”), the Company’s Executive Vice President and Chief Financial Officer.  The term of the Mehra Employment Agreement is deemed to have commenced on May 1, 2010 and will continue until April 30, 2012, unless it is terminated earlier in accordance with its provisions.  Beginning on April 30, 2012 and each April 30 thereafter, the term of the Mehra Employment Agreement will automatically extend for an additional year, unless notice of non-renewal is provided or employment otherwise terminates under the Mehra Employment Agreement.  The Mehra Employment Agreement provides for an initial base salary of $190,000 per year.  Mr. Mehra is eligible to receive base salary increases and incentive, bonus compensation or other compensation as the Board of Directors may determine.  He is also entitled to participate in the Company’s employee benefit plans and programs for which he is or will be eligible.  Mr. Mehra will receive six weeks of paid time off each year.

The Mehra Employment Agreement provides for the termination of Mr. Mehra’s employment by the Company without “cause” and termination by him for “good reason” (as those terms are defined in the Mehra Employment Agreement). Termination under either of these circumstances will entitle Mr. Mehra to receive the following:

· his salary earned through the date of termination and accrued but unused paid time off;

· an amount equal to 200% of his current rate of annual salary then in effect;

· any bonus or other short term incentive compensation earned, but not yet paid, for prior years;

· the pro rata amount of any bonus or other short term incentive compensation that he would have received in the year in which his employment terminates; and

· if Mr. Mehra timely elects COBRA coverage, his then current benefits under group health and dental plans for the longer of one year or the remainder of the term of the Mehra Employment Agreement.

 Mr. Mehra will not be entitled to any such compensation and benefits if he breaches any of the covenants in the Mehra Employment Agreement relating to the protection of confidential information, non-disclosure, non-competition and non-solicitation. He will also not be entitled to any compensation or other benefits under the Mehra Employment Agreement if his employment is terminated for cause.

 If Mr. Mehra is terminated without cause or resigns for good reason within one year following a “change of control” (as defined in the Mehra Employment Agreement), he will receive an amount equal to 200% of his highest annual cash compensation earned after 2009 (subject to reduction to the extent that such payment constitutes an “excess parachute payment” under the Internal Revenue Code of 1986, as amended).

 The Mehra Employment Agreement contains restrictive covenants relating to the protection of confidential information, non-disclosure, non-competition and non-solicitation. The covenant not to compete continues generally for a period of 12 months following the last day of his employment, and the non-solicitation covenant continues generally for a period of 24 months following the last day of his employment.

 The full text of the Mehra Employment Agreement is attached as Exhibit 10.1 to this report and is incorporated by reference into this Item 5.02.

      Employment Agreement for Arch A. Moore, III

     Also on May 7, 2010, the Company entered into an employment agreement with Arch A. Moore, III (the “Moore Employment Agreement”), the Company’s Executive Vice President and Chief Lending Officer.  The Moore Employment Agreement supersedes and replaces Mr. Moore’s employment agreement dated September 17, 2007 (the “Prior Moore Employment Agreement”), which is included as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 20, 2007 and incorporated herein by reference.  Except as set forth below, the material terms of the Moore Employment Agreement are substantially similar to the Prior Moore Employment Agreement.

The term of the Moore Employment Agreement is deemed to have commenced on May 1, 2010 and will continue until April 30, 2012, unless it is terminated earlier in accordance with its provisions.  Beginning on April 30, 2012 and each April 30 thereafter, the term of the Moore Employment Agreement will automatically extend for one additional year, unless notice of non-renewal is provided or employment otherwise terminates under the Moore Employment Agreement.  The Moore Employment Agreement provides for a base salary of $206,142 per year.

The Moore Employment Agreement also is revised from the Prior Moore Employment Agreement to provide that Mr. Moore will receive an amount equal to 200% of his annual salary instead of 100% in the event the Company terminates his employment without “cause” or he terminates his employment for “good reason” (as those terms are defined in the Moore Employment Agreement).

The Moore Employment Agreement also contains several immaterial revisions from the Prior Moore Employment Agreement, including revisions to comply with Section 409A of the Internal Revenue Code.

The full text of the Moore Employment Agreement is attached as Exhibit 10.2 to this report and is incorporated by reference into this Item 5.02.

Supplement Benefit Plan

The Company also amended and restated its Supplemental Benefit Plan (the “SERP”) on May 7, 2010.  The amendments to the SERP include: (i) the addition of a lump sum payment to a

participant’s beneficiary in the amount of the balance of the participant’s account in the event of the participant’s death while employed by the Company; (ii) revisions to the participants’ benefit formulas; and (iii) other immaterial revisions, including revisions to comply with Section 409A of the Internal Revenue Code.

In addition, Raj Mehra is added as a participant in the SERP as of May 7, 2010.

The full text of the SERP is attached as Exhibit 10.3 to this report and is incorporated by reference into this Item 5.02.

Item 9.01.              Financial Statements and Exhibits.

 (d)               Exhibits.

Exhibit No.                                 Description

10.1                                      Employment Agreement, dated May 7, 2010, by and between Middleburg Financial Corporation and Raj Mehra.

10.2                                      Employment Agreement, dated May 7, 2010, by and between Middleburg Financial Corporation and Arch A. Moore, III.

10.3                                      Supplemental Benefit Plan, as amended and restated effective May 7, 2010.

SIGNATURES

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

  ;   MIDDLEBURG FINANCIAL CORPORATION

 (Registrant)

Date:  May 12, 2010                                                                      By:  /s/Gary R. Shook                      ;

Gary R. Shook

President

Chief Executive Officer

EXHIBIT INDEX

Exhibit No.                                  Description

10.1                                      Employment Agreement, dated May 7, 2010, by and between Middleburg Financial Corporation and Raj Mehra.

10.2                                      Employment Agreement, dated May 7, 2010, by and between Middleburg Financial Corporation and Arch A. Moore, III.

10.3                                      Supplemental Benefit Plan, as amended and restated effective May 7, 2010.

EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“AGREEMENT”), is made as of May 7, 2010, and is effective May 1, 2010, by and between Middleburg Financial Corporation (“Corporation”) and Raj Mehra (“Executive”).

WHEREAS, it is the desire of the Corporation to have the benefit of Executive's continued loyalty, service and counsel; and

WHEREAS, the Executive wishes to remain an employee of the Corporation; and

WHEREAS, the Corporation desires to protect its confidential information and guard against unfair competition; and

WHEREAS, Executive possesses certain valuable knowledge, professional skills and expertise which will contribute to the continued success of the business of the Corporation and its affiliates; and

WHEREAS, the Corporation and Executive desire to set forth, in writing, the terms and conditions of their agreements and understandings;

NOW, THEREFORE, in consideration of the mutual promises herein contained, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending legally to be bound, agree as follows:

Section 1.                      Employment.

(a)           The Corporation and Executive agree that Executive shall be employed to perform such services for the Corporation as may be assigned to Executive by the Corporation from time to time upon the terms and conditions herein provided. Executive’s services shall be rendered in an executive capacity and shall be of a type for which Executive is suited by background and training.

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

(c)           The Executive shall devote his full time and attention to the discharge of the duties undertaken by him hereunder.  Executive shall comply with all policies, standards and regulations of the Corporation now or hereafter promulgated, and shall perform his duties under this Agreement to the best of his abilities and in accordance with general business standards of conduct.

      (d)           Executive acknowledges that he is entering into this Agreement of his own free will and that he has had the benefit of the advice of, and is relying solely upon the advice of, independent counsel of his own choice.

Section 2.                      Term.

The term of this Agreement shall be deemed to have commenced on May 1, 2010 (the “Effective Date”), and, subject to Section 7(a), shall continue until April 30, 2012, unless sooner terminated in accordance with the provisions of Section 7.  Beginning on April 30, 2012, and each April 30th thereafter, the term of this Agreement and all its terms and provisions shall be automatically extended for one additional year, unless 30 days prior written notice of non-renewal is provided by the Corporation or Executive or unless employment under this Agreement is otherwise terminated in accordance with the provisions of Section 7.

Section 3.                      Compensation.

(a)           As compensation for the services to be rendered by the Executive under this Agreement, the Executive shall receive a base annual salary at the rate of One Hundred Ninety Thousand Dollars ($190,000.00) per year.  The Executive may receive base salary increases and incentive, bonus compensation or other compensation in the amounts determined by the Board of Directors of the Corporation.

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

(c)           Except as otherwise expressly set forth herein, no compensation shall be paid pursuant to this Agreement subsequent to any termination of Executive’s employment with the Corporation; provided, however, that Executive’s right to exercise stock options following a termination of employment shall be governed by the terms of the Corporation’s stock option plans and any stock option agreements between the Corporation and the Executive.  No stock options shall be granted to Executive after his employment terminates.

Section 4.                      Additional Benefits.

In addition to the usual and customary fringe benefits which are provided to the other executive officers of the Corporation, Executive shall be entitled to participate in the Corporation’s employee benefit plans and programs for which he is or will become eligible according to the terms of said plans or programs. It is understood that the Board of Directors may, in its sole discretion, establish, modify or terminate such plans or benefits. Fringe benefits available to Executive under this section include, but are not limited to, participation in the Corporation’s group health insurance, disability and life insurance plans, and participation in its qualified and non-qualified retirement plans.

2 

Section 5.                      Expense Account.

The Corporation shall reimburse Executive for reasonable and customary business expenses incurred during the term of this Agreement in the conduct of the Corporation’s business.  Such expenses will include business meals, out-of-town lodging and travel expenses of Executive and, when she accompanies him on Company business, Executive’s spouse.  In no event will there be reimbursement for items which are not reimbursable under written Corporation policy.  Executive agrees to timely submit records and receipts of reimbursable items and agrees that the Corporation can adopt reasonable rules and policies regarding such reimbursement.  The Corporation agrees to make prompt payment to the Executive following receipt and verification of such reports.

Section 6.                      Paid Time Off.

Executive shall be entitled to six (6) weeks of paid time off ("PTO") leave each year, which shall be taken at such time or times as may be approved by the Corporation and during which Executive’s compensation hereunder shall continue to be paid.

Section 7.                      Termination and Survival of Obligations.

(a)           Notwithstanding the termination of this Agreement or the termination of Executive’s employment for any reason, the parties shall be required to carry out any provisions of this Agreement which contemplate performance by them subsequent to such termination.  In addition, no termination of this Agreement shall affect any liability or other obligation of either party which shall have accrued prior to such termination, including, but not limited to, any liability, loss or damage on account of breach.  No termination of employment shall terminate the obligation of the Corporation to make payments of any vested benefits provided hereunder or the obligations of Executive under Sections 8, 9 and 10 of this Agreement.  The existence of any claim or cause of action of the Executive against the Corporation, whether predicated on this Agreement or not, shall not constitute a defense to the enforcement by the Corporation of the restrictions, covenants and agreements contained in this Agreement.

(b)           Executive’s employment hereunder may be terminated by Executive upon thirty (30) days written notice to the Corporation or at any time by mutual agreement in writing.  It shall not constitute a breach of this Agreement for the Corporation to suspend Executive’s duties and to place Executive on a paid leave during the thirty (30) day notice period.

(c)           This Agreement shall terminate upon death of Executive; provided, however, that in such event the Corporation shall pay to the estate of Executive the compensation, including salary and accrued but unused PTO, which otherwise would be payable to Executive through the end of the  month in which his death occurs.  Such amounts shall be paid at the end of the payroll period that follows the payroll period in which his employment terminates due to death.  Additionally, there shall be paid to the Executive’s estate (y) any bonus or other short term incentive compensation earned, but not yet paid, for any year prior to the year in which his death occurs and (z) any bonus or other short term incentive compensation for the year in which hi s death occurs that he would have received if he had lived, multiplied by a fraction, the numerator of which is the

3 

number of days in the year that precede the date on which his death occurs and the denominator of which is three hundred sixty-five.

Any bonus or other short term incentive compensation payable under this Section 7(c) shall be paid (i) on the date of payment to other employees eligible for bonuses or other short term incentive compensation under the same plan or plans, or, (ii) if no date or time frame for payment is specified in those plans, by March 15 of the calendar year following the calendar year in which the compensation is earned.

(d)(1)           The Corporation may terminate Executive’s employment other than for “Cause”, as defined in Section 7(e), at any time upon written notice to Executive, which termination shall be effective immediately.  Executive may resign thirty (30) days after notice to the Corporation for “Good Reason”, as hereafter defined.  In the event the Executive’s employment terminates pursuant to this Section 7(d)(1), Executive shall receive, at the end of the payroll period that follows the payroll period in which his employment terminates, his salary earned through the date of termination and accrued but unused PTO.  In the event the Executive’s employment terminates pursuant to this Section 7(d)(1), Executive sha ll also receive the following items on the later of the applicable date set forth below or the 60th day following his termination of employment, provided thatExecutive signs a release and waiver of claims reasonably satisfactory to the Corporation that becomes irrevocable within 60 days of his termination of employment, and provided further that any portion of the premium due to be paid by the Corporation during such 60-day period under item (iv) below shall be paid by the Corporation on the due date whether or not the release and waiver has been signed:

(i) An amount equal to 200% of his current rate of annual salary in effect immediately preceding such termination; and  

(ii) Any bonus or other short term incentive compensation earned, but not yet paid, for any year prior to the year in which his employment terminates; and  

(iii)       (iv) Any bonus or other short term incentive compensation for the year in which his employment terminates that he would have received if his employment had not terminated, multiplied by a fraction, the numerator of which is the number of days in the year that precede the date on which he is notified of the termination of his employment and the denominator of which is three hundred sixty-five; and   If Executive timely elects COBRA coverage, his current benefits under group health and dental plans will continue.  In such case, for the longer of one year or the remainder of the term of this Agreement: (a) Executive will receive such benefits at the rates paid by active participants, and (b) the Corporation will continue to pay its portion of such health and dental premiums.  In no event shall such benefits continue beyond the period permitted by COBRA, and periods of coverage under this Agreement shall offset Executive’s period of coverage under COBRA.  

4 

Twenty-nine percent (29%) of any amount due under Section 7(d)(1)(i) shall be paid on the first day of the seventh month following the date his employment terminates and the balance shall be paid in equal monthly installments on the first day of the seventeen (17) succeeding months.

Any amount due under Section 7(d)(1)(ii) or (iii) shall be paid on (i) the date of payment to other employees eligible for bonuses or other short term incentive compensation under the same plan or plans or, (ii) if no date or time frame for payment is specified in those plans, by March 15 of the calendar year following the calendar year in which the compensation is earned.  Notwithstanding the foregoing, if Executive is a “specified employee” under Section 409A of the Internal Revenue Code and Treasury Regulations (“Section 409A”) on the date of his termination, payment will be deferred under the preceding sentence to the first day of the seventh month following the date Executive’s employment terminates, to the extent required by Section 409A.

(d)(2)           Notwithstanding anything in this Agreement to the contrary, if Executive breaches Section 8 or 9 of this Agreement, Executive will not thereafter be entitled to receive any further compensation or benefits pursuant to this Section 7(d)(1).

(d)(3)           The Corporation shall not be required to make payment of, or provide any benefit under, Section 7(d)(1) to the extent such payment is prohibited by the terms of the regulations presently found at 12 C.F.R. part 359 or to the extent that any other governmental approval of the payment required by law is not received.

(d)(4)           For purposes of this Agreement, Good Reason shall mean:

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

(ii) Requiring the Executive to maintain his principal office outside of Loudoun County, Virginia, unless the Corporation moves its principal executive offices to the place to which the Executive is required to move:

(iii) A reduction by the Corporation of the Executive's base salary, as the same may have been increased from time to time:

(iv) The failure of the Corporation to provide the Executive with substantially the same fringe benefits that are provided to other executive officers of the Corporation;

5 

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

(vi) The failure of the Corporation to obtain the assumption of and agreement to perform this Agreement by any successor as contemplated in Section 11 hereof.

(e)           The Corporation shall have the right to terminate Executive’s employment under this Agreement at any time for Cause, which termination shall be effective immediately.  Termination for “Cause” shall mean material failure of the Executive to perform his duties under this Agreement, unlawful business conduct, theft, commission of a felony, a material violation of the Corporation’s work rules or policies; or a material breach of this Agreement.  The term “Cause” also shall include the failure of Executive for any reason within three (3) days after receipt by Executive of written notice from the Chief Executive Officer and President of the Corporation to correct, cease, or otherwise alter any action or omission that could materially or adversely affect the Corporation's profits or operations.  In the event Executive’s employment under this Agreement is terminated for Cause, Executive shall thereafter have no right to receive compensation or other benefits under this Agreement.

(f)           The Corporation may terminate Executive’s employment under this Agreement, after having established that the Executive is unable to perform his obligations under this Agreement because of the Executive's disability by giving to Executive written notice of its intention to terminate his employment due to inability to regularly perform his duties.  Executive's employment with the Corporation can be terminated effective on the 90th day after receipt of such notice if, within 90 days after such receipt, Executive shall fail to return to the full performance of the essential functions of his position on a regular basis with or without reasonable accommodations (and if Executive's disability has been established pursuant to the definition of “disabili ty” set forth below).  For purposes of this Agreement, “disability” means either (i) disability which after the expiration of more than 13 consecutive weeks after its commencement is determined to be total and permanent by a physician selected and paid for by the Corporation or its insurers, and acceptable to Executive or his legal representative, which consent shall not be unreasonably withheld; or (ii) disability as defined in the policy of disability insurance maintained by the Corporation or its Affiliates for the benefit of Executive, whichever shall be more favorable to Executive.  Notwithstanding any other provision of this Agreement, the Corporation shall comply with all requirements of the Americans with Disabilities Act, 42 U.S.C. § 12101 et. seq.

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

(h)(1)           If Executive’s employment is terminated without Cause within one year after a Change of Control shall have occurred or if he resigns for Good Reason within one year after a

6 

Change of Control shall have occurred, then the Corporation shall pay to Executive as compensation for services rendered to the Corporation a cash amount (subject to any applicable payroll or other taxes required to be withheld) equal to 200% of his highest annual rate of cash compensation earned after 2009.  If Executive is a “specified employee” under Section 409A on the date of his termination of employment, payment shall be made six months and one day after the date his employment terminates to the extent required by Section 409A.  Otherwise, payment shall be made on or no more than thirty (30) days before the date his employment terminates.  Payment under this Section 7(h)(1)) shall be in lieu of any amount that it is or might be due under Section 7(d).

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

(3)              It is the intention of the parties that no payment be made or benefit provided to Executive pursuant to this Agreement that would constitute an “excess parachute payment” within the meaning of Section 280G of the Code and any regulations thereunder, thereby resulting in a loss of an income tax deduction by the Corporation or the imposition of an excise tax on Executive under Section 4999 of the Code.  If the independent accountants serving as auditors for the Corporation on the date of a Change of  Control (or any other accounting firm designated by the Corporation) determine that some or all of
60; the payments or benefits scheduled under this Agreement, as well as any other payments or benefits on a Change of  Control, would be nondeductible by the Company under Section 280G of  the Code, then the payments scheduled under this Agreement will be reduced to one dollar less than the maximum amount which may be paid without causing any such payment or benefit to be nondeductible.  The determination made as to the reduction of benefits or payments required hereunder by the independent accountants shall be binding on the parties.  Executive shall have the right to designate within a reasonable period, which payments or benefits will be reduced provided, however, that if no direction is received from Executive, the Corporation shall implement the reductions in its discretion; provided, however, that no reduction shall be permitted that results in a deferral prohibited by Section 409A.

Section 8.                      Confidentiality/Nondisclosure.

Executive covenants and agrees that any and all information maintained as confidential by the Corporation and not generally known to the public concerning the customers, businesses and

7 

services of the Corporation of which he has knowledge or access as a result of his association with the Corporation in any capacity, shall be deemed confidential in nature and shall not, without the proper written consent of the Corporation, be directly or indirectly used, disseminated, disclosed or published by Executive to third parties other than in connection with the usual conduct of the business of the Corporation.  Such information shall expressly include, but shall not be limited to, information concerning the Corporation’s trade secrets, business operations, business records, customer lists or other customer information.  Upon termination of employment, the Executive shall deliver to the Corporation all property in his possession which belongs to the Corporation including all originals and copies of documents, forms, records or other information, in whatever form it may exist, concerning the Corporation or its business, customers, products or services.  This Section 8 shall not be applicable to any information which, through no misconduct or negligence of Executive, has been disclosed to the public by anyone other than Executive.

Section 9.                      Covenant Not to Compete and Related Covenants.

(a)           During the term of this Agreement and throughout any further period that he is an employee of the Corporation, and for the longer of:

 (x) twelve (12) months from and after the date that Executive is (for any reason) no longer employed by the Corporation; or

 (y) for a period of  twelve (12) months from the date of entry by a court of  competent jurisdiction of a final judgment enforcing this covenant in the event of a breach by Executive.

Executive covenants and agrees that he will not serve as the President, Chief Financial Officer or other executive officer of any bank or bank holding company within twenty-five (25) miles of headquarters of the Corporation or within five (5) miles of any bank branch operated by the Corporation.

(b)           During the term of this Agreement and throughout any further period that he is an employee of the Corporation, and for the longer of:

 (x) twenty-four (24) months from and after the date that Executive is (for any reason) no longer employed by the Corporation; or

(y) for a period of twenty-four (24) months from the date of entry by a court of competent jurisdiction of a final judgment enforcing this covenant in the event of a breach by Executive.

the Executive will not, directly or indirectly, on behalf of the Executive or any other person or entity, solicit or induce, or attempt to solicit or induce, any person currently employed by the Corporation to terminate his or her relationship with the Corporation.

(c)           During the term of this Agreement and throughout any further period that he is an employee of the Corporation, and for the longer of:

8 

(x) twenty-four (24) months from and after the date that Executive is (for any reason) no longer employed by the Corporation; or

(y) for a period of twenty-four (24) months from the date of entry by a court of competent jurisdiction of a final judgment enforcing this covenant in the event of  a breach by Executive.

the Executive will not, except to the extent necessary to carry out his duties as an employee of the Corporation, directly or indirectly provide Competitive Services (as defined below) to any Customer (as defined below), and shall not, directly or indirectly, on behalf of the Executive or any other person or entity, solicit or divert away or attempt to solicit or divert away any Customer of the Corporation for the purpose of selling or providing Competitive Services, provided the Corporation is then still engaged in the sale or provision of  Competitive Services.

(d)           It is agreed that notwithstanding the above to the contrary, Executive may engage in business ventures as long as they are not competitive with the Corporation.  Anything to the contrary notwithstanding, Executive may own, as a passive investor, securities of any public competitor corporation, so long as his direct holdings in any one such corporation shall not in the aggregate constitute more than one percent (1%) of the voting stock of such corporation.  The parties intend that the covenants and restrictions in this Section 9 be enforceable against Executive regardless of the reason that his employment by the Corporation may terminate and that such covenants and restrictions shall be enforceable against Executive even if this Agreement expires a fter a notice of nonrenewal is given by Executive or the Corporation under Section 2.  The existence of any claim or cause of action by the Executive against the Corporation, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Corporation of the restrictive covenants set forth in Sections 8 and 9 of this Agreement.

(e)           For purposes of this Agreement, the term “Customer” means any individual or entity to whom or to which the Corporation provided Competitive Services within two years of the date on which the Executive’s employment terminates.

(f)           For purposes of this Agreement, "Competitive Services" means providing financial products and services of the types that, as of the date of Executive’s termination of employment, are provided to Customers of the Corporation, whether such services are provided directly by the Corporation or by others under a contractual arrangement with the Corporation.

(g)           The Executive agrees that the covenants in this Section 9 are reasonably necessary to protect the legitimate interests of the Corporation, are reasonable with respect to the time and territory and do not interfere with the interests of the public.  The Executive further agrees that the descriptions of the covenants contained in this Section 9 are sufficiently accurate and definite to inform the Executive of the scope of the covenants.  Finally, the Executive agrees that the consideration set forth in this Agreement is full, fair and adequate to support the Executive’s obligations hereunder and the Corporation’s rights hereunder.  The Executive acknowledges that in the event the Executive’s employment with the Corporatio n is terminated for any reason, the Executive will be able to earn a livelihood without violating such covenants.

9 

(h)           The parties have attempted to limit the Executive’s right to compete only to the extent necessary to protect the Corporation from unfair competition.  The parties recognize, however, that reasonable people may differ in making such a determination.  Accordingly, the parties intend that the covenants contained in this Section 9 to be completely severable and independent, and any invalidity or unenforceability of any one or more such covenants will not render invalid or unenforceable any one or more of the other covenants.  The parties further agree that, if the scope or enforceability of a covenant contained in this Section 9 is in any way disputed at any time, and if permitted by applicable law, a court or other trier of fact may m odify and reform such provision to substitute such other terms as are reasonable to protect the Corporation’s legitimate business interests.

Section 10.                      Injunctive Relief, Damages, Etc.

The Executive agrees that, given the nature of the positions held by Executive with the Corporation, each and every one of the covenants and restrictions set forth in Sections 8 and 9 above are reasonable in scope, length of time and geographic area and are necessary for the protection of the significant investment of the Corporation in developing, maintaining and expanding its business.  Accordingly, the parties hereto agree that in the event of any breach by Executive of any of the provisions of Section 9 that monetary damages alone will not adequately compensate the Corporation for its losses and, therefore, that it shall be entitled to any and all legal or equitable relief available to it, specifically including, but not limited to, injunctive relief, and the Executive shall be liable for all damages, including actual an d consequential damages, costs and expenses, and legal costs and actual attorneys fees incurred by the Corporation as a result of taking action to enforce, or recover for any breach of Section 9.  The covenants contained in Section 9 shall be construed and interpreted in any judicial proceeding to permit their enforcement to the maximum extent permitted by law.

Section 11.                      Successors.

The Corporation will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business, stock or assets of the Corporation, by agreement in form and substance reasonably satisfactory to the Executive, to expressly assume and agree to perform this Agreement in its entirety.  Failure of the Corporation to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to the compensation described in Section 7(d).  As used in this Agreement, "Corporation” shall mean Middleburg Financial Corporation, and any successor to its respective business, stock or assets as aforesaid, which executes and delivers the agreement provided for in this Section 11 or which othe rwise becomes bound by all the terms and provisions of this Agreement by operation of law.

Section 12.                      Invalid Provisions.

The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.  Any provision in this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be valid and enforceable to the fullest extent permitted by law without

10 

invalidating or affecting the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Section 13.                      Notices.

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

Section 14.                      Arbitration.

With the exception of Sections 8 and 9 and the enforcement of said Sections (as set forth in Section 10), all other claims under this Agreement will be resolved by binding arbitration.

The parties agree that with the exception of controversies or claims arising out of Sections 8, 9 and 10, all controversies or claims arising out of or relating to this Agreement or Executive’s employment with the Corporation shall be submitted to final and binding arbitration.  The parties further agree that the arbitration will be conducted under the Federal Arbitration Act (“FAA”) and the procedural rules of the American Arbitration Association (“AAA”), specifically AAA’s National Rules for the Resolution of Employment Disputes.  Any arbitration proceeding and/or other procedural matter related to an arbitration proceeding, shall be conducted in Richmond, Virginia, at a location to be determined by the parties.  The par ties agree that such arbitration will be conducted before an experienced arbitrator chosen by the Corporation and the Executive.  In the event that the parties are unable to choose an arbitrator, the parties agree that one will be designated by the AAA in accordance with their rules and procedures.  The parties further agree that the arbitrator shall apportion the fees and costs of the arbitration pursuant to the rules of the AAA and applicable law.

Section 15.                      Governing Law.

Except where preempted by federal law, the Employment Agreement shall be subject to and construed in accordance with the laws of the Commonwealth of Virginia.

Section 16.                      Captions.

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

Section 17.                      Section 409A.

This Agreement is intended to comply with Section 409A to the extent Section 409A is applicable.  This Agreement shall be interpreted and administered accordingly.

11 

IN WITNESS WHEREOF, the parties have executed this Agreement on the 7th day of May, 2010.

MIDDLEBURG FINANCIAL CORPORATION

By:  /s/Gary R. Shook                                                                                                                  
60;                 

       Gary R. Shook

       President

By:  /s/Raj Mehra                                                                                                                                    ;     

        Raj Mehra

12 

EX-10.2

Exhibit 10.2

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“AGREEMENT”), is made as of May 7, 2010 and is effective May 1, 2010, by and between Middleburg Financial Corporation (“Corporation”) and Arch A. Moore, III (“Executive”).

WHEREAS, it is the desire of the Corporation to have the benefit of Executive's continued loyalty, service and counsel; and

WHEREAS, the Executive wishes to remain an employee of the Corporation; and

WHEREAS, the Corporation desires to protect its confidential information and guard against unfair competition; and

WHEREAS, Executive possesses certain valuable knowledge, professional skills and expertise which will contribute to the continued success of the business of the Corporation and its affiliates; and

WHEREAS, the Corporation and Executive desire to set forth, in writing, the current terms and conditions of their agreements and understandings, and intend that this Agreement shall supersede and replace the Employment Agreement between Corporation and Executive dated September 17, 2007;

NOW, THEREFORE, in consideration of the mutual promises herein contained, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending legally to be bound, agree as follows:

Section 1.                      Employment.

(a)           The Corporation and Executive agree that Executive shall be employed to perform such services for the Corporation as may be assigned to Executive by the Corporation from time to time upon the terms and conditions herein provided. Executive’s services shall be rendered in an executive capacity and shall be of a type for which Executive is suited by background and training.

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

(c)           The Executive shall devote his full time and attention to the discharge of the duties undertaken by him hereunder.  Executive shall comply with all policies, standards and regulations of the Corporation now or hereafter promulgated, and shall perform his duties under this Agreement to the best of his abilities and in accordance with general business standards of conduct.

(d)           Executive acknowledges that he is entering into this Agreement of his own free will and that he has had the benefit of the advice of, and is relying solely upon the advice of, independent counsel of his own choice.

Section 2.                      Term.

The term of this Agreement shall be deemed to have commenced on May 1, 2010 (the “Effective Date”), and, subject to Section 7(a), shall continue until April 30, 2012, unless sooner terminated in accordance with the provisions of Section 7.  Beginning on April 30, 2010, and each April 30th thereafter, the term of this Agreement and all its terms and provisions shall be automatically extended for one additional year, unless 30 days prior written notice of non-renewal is provided by the Corporation or Executive or unless employment under this Agreement is otherwise terminated in accordance with the provisions of Section 7.

Section 3.                      Compensation.

(a)           As compensation for the services to be rendered by the Executive under this Agreement, the Executive shall receive a base annual salary at the rate of Two Hundred Six  Thousand One Hundred Forty Two Dollars ($206,142.00) per year.  The Executive may receive base salary increases and incentive, bonus compensation or other compensation in the amounts determined by the Board of Directors of the Corporation.

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

(c)           Except as otherwise expressly set forth herein, no compensation shall be paid pursuant to this Agreement subsequent to any termination of Executive’s employment with the Corporation; provided, however, that Executive’s right to exercise stock options and his rights under stock grants following a termination of employment shall be governed by the terms of the Corporation’s stock option plans and any stock option agreements between the Corporation and the Executive.  No stock options shall be granted to Executive after his employment terminates.

Section 4.                      Additional Benefits.

In addition to the usual and customary fringe benefits which are provided to the other executive officers of the Corporation, Executive shall be entitled to participate in the Corporation’s employee benefit plans and programs for which he is or will become eligible according to the terms of said plans or programs. It is understood that the Board of Directors may, in its sole discretion, establish, modify or terminate such plans or benefits. Fringe benefits available to Executive under this section include, but are not limited to, participation in the Corporation’s group health insurance, disability and life insurance plans, and participation in its qualified and non-qualified retirement plans.

2 

Section 5.                      Expense Account.

The Corporation shall reimburse Executive for reasonable and customary business expenses incurred during the term of this Agreement in the conduct of the Corporation’s business.  Such expenses will include business meals, out-of-town lodging and travel expenses of Executive and, when she accompanies him on Company business, Executive’s spouse.  In no event will there be reimbursement for items which are not reimbursable under written Corporation policy.  Executive agrees to timely submit records and receipts of reimbursable items and agrees that the Corporation can adopt reasonable rules and policies regarding such reimbursement.  The Corporation agrees to make prompt payment to the Executive following receipt and verification of such reports.

Section 6.                      Paid Time Off.

Executive shall be entitled to six (6) weeks of paid time off ("PTO") leave each year, which shall be taken at such time or times as may be approved by the Corporation and during which Executive’s compensation hereunder shall continue to be paid.

Section 7.                      Termination and Survival of Obligations.

(a)           Notwithstanding the termination of this Agreement or the termination of Executive’s employment for any reason, the parties shall be required to carry out any provisions of this Agreement which contemplate performance by them subsequent to such termination.  In addition, no termination of this Agreement shall affect any liability or other obligation of either party which shall have accrued prior to such termination, including, but not limited to, any liability, loss or damage on account of breach.  No termination of employment shall terminate the obligation of the Corporation to make payments of any vested benefits provided hereunder or the obligations of Executive under Sections 8, 9 and 10 of this Agreement.  The existence of any claim or cause of action of the Executive against the Corporation, whether predicated on this Agreement or not, shall not constitute a defense to the enforcement by the Corporation of the restrictions, covenants and agreements contained in this Agreement.

(b)           Executive’s employment hereunder may be terminated by Executive upon thirty (30) days written notice to the Corporation or at any time by mutual agreement in writing.  It shall not constitute a breach of this Agreement for the Corporation to suspend Executive’s duties and to place Executive on a paid leave during the thirty (30) day notice period.

(c)           This Agreement shall terminate upon death of Executive; provided, however, that in such event the Corporation shall pay to the estate of Executive the compensation, including salary and accrued but unused PTO, which otherwise would be payable to Executive through the end of the  month in which his death occurs.  Such amounts shall be paid at the end of the payroll period that follows the payroll period in which his employment terminates due to death.  Additionally, there shall be paid to the Executive’s estate (y) any bonus or other short term incentive compensation earned, but not yet paid, for any year prior to the year in which his death occurs and (z) any bonus or other short term incentive compensation for the year in which his death occurs that he would have received if he had lived, multiplied by a fraction, the numerator of which is the

3 

number of days in the year that precede the date on which his death occurs and the denominator of which is three hundred sixty-five.

Any bonus or other short term incentive compensation payable under this Section 7(c) shall be paid (i) on the date of payment to other employees eligible for bonuses or other short term incentive compensation under the same plan or plans, or, (ii) if no date or time frame for payment is specified in those plans, by March 15 of the calendar year following the calendar year in which the compensation is earned.

(d)(1)           The Corporation may terminate Executive’s employment other than for “Cause”, as defined in Section 7(e), at any time upon written notice to Executive, which termination shall be effective immediately.  Executive may resign thirty (30) days after notice to the Corporation for “Good Reason”, as hereafter defined.  In the event the Executive’s employment terminates pursuant to this Section 7(d)(1), Executive shall receive, at the end of the payroll period that follows the payroll period in which his employment terminates, his salary earned through the date of termination and accrued but unused PTO.  In the event the Executive’s employment terminates pursuant to this Section 7(d)(1), Executive shall also receive the following items on the later of the applicable date set forth below or the 60th day following his termination of employment, provided thatExecutive signs a release and waiver of claims reasonably satisfactory to the Corporation that becomes irrevocable within 60 days of his termination of employment, and provided further that any portion of the premium due to be paid by the Corporation during such 60-day period under item (iv) below shall be paid by the Corporation on the due date whether or not the release and waiver has been signed:

(i) An amount equal to 200% of his current rate of annual salary in effect immediately preceding such termination; and

(ii) Any bonus or other short term incentive compensation earned, but not yet paid, for any year prior to the year in which his employment terminates; and

(iii) Any bonus or other short term incentive compensation for the year in which his employment terminates that he would have received if his employment had not terminated, multiplied by a fraction, the numerator of which is the number of days in the year that precede the date on which he is notified of the termination of his employment and the denominator of which is three hundred sixty-five; and

(iv) If Executive timely elects COBRA coverage, his current benefits under group health and dental plans will continue.  In such case, for the longer of one year or the remainder of the term of this Agreement: (a) Executive will receive such benefits at the rates paid by active participants, and (b) the Corporation will continue to pay its portion of such health and dental premiums.  In no event shall such benefits continue beyond the period permitted by COBRA, and periods of

4 

coverage under this Agreement shall offset Executive’s period of coverage under COBRA.

Twenty-nine percent (29%) of any amount due under Section 7(d)(1)(i) shall be paid on the first day of the seventh month following the date his employment terminates and the balance shall be paid in equal monthly installments on the first day of the seventeen (17) succeeding months.

Any amount due under Section 7(d)(1)(ii) or (iii) shall be paid on (i) the date of payment to other employees eligible for bonuses or other short term incentive compensation under the same plan or plans or, (ii) if no date or time frame for payment is specified in those plans, by March 15 of the calendar year following the calendar year in which the compensation is earned.  Notwithstanding the foregoing, if Executive is a “specified employee” under Section 409A of the Internal Revenue Code and Treasury Regulations (“Section 409A”) on the date of his termination, payment will be deferred under the preceding sentence to the first day of the seventh month following the date Executive’s employment terminates, to the extent required by Section 409A.

(d)(2)           Notwithstanding anything in this Agreement to the contrary, if Executive breaches Section 8 or 9 of this Agreement, Executive will not thereafter be entitled to receive any further compensation or benefits pursuant to this Section 7(d)(1).

(d)(3)           The Corporation shall not be required to make payment of, or provide any benefit under, Section 7(d)(1) to the extent such payment is prohibited by the terms of the regulations presently found at 12 C.F.R. part 359 or to the extent that any other governmental approval of the payment required by law is not received.

(d)(4)           For purposes of this Agreement, Good Reason shall mean:

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

(ii) Requiring the Executive to maintain his principal office outside of Loudoun County, Virginia, unless the Corporation moves its principal executive offices to the place to which the Executive is required to move:

(iii) A reduction by the Corporation of the Executive's base salary, as the same may have been increased from time to time:

(iv) The failure of the Corporation to provide the Executive with substantially the same fringe benefits that are provided to other executive officers of the Corporation;

 5

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

(vi) The failure of the Corporation to obtain the assumption of and agreement to perform this Agreement by any successor as contemplated in Section 11 hereof.

(e)           The Corporation shall have the right to terminate Executive’s employment under this Agreement at any time for Cause, which termination shall be effective immediately.  Termination for “Cause” shall mean material failure of the Executive to perform his duties under this Agreement, unlawful business conduct, theft, commission of a felony, a material violation of the Corporation’s work rules or policies; or a material breach of this Agreement.  The term “Cause” also shall include the failure of Executive for any reason within three (3) days after receipt by Executive of written notice from the Chief Executive Officer and President of the Corporation to correct, cease, or otherwise alter any action or omission that could materially or adversely affect the Corporation's profits or operations.  In the event Executive’s employment under this Agreement is terminated for Cause, Executive shall thereafter have no right to receive compensation or other benefits under this Agreement.

(f)           The Corporation may terminate Executive’s employment under this Agreement, after having established that the Executive is unable to perform his obligations under this Agreement because of the Executive's disability by giving to Executive written notice of its intention to terminate his employment due to inability to regularly perform his duties.  Executive's employment with the Corporation can be terminated effective on the 90th day after receipt of such notice if, within 90 days after such receipt, Executive shall fail to return to the full performance of the essential functions of his position on a regular basis with or without reasonable accommodations (and if Executive's disability has been established pursuant to the definition of “disability” set forth below).  For purposes of this Agreement, “disability” means either (i) disability which after the expiration of more than 13 consecutive weeks after its commencement is determined to be total and permanent by a physician selected and paid for by the Corporation or its insurers, and acceptable to Executive or his legal representative, which consent shall not be unreasonably withheld; or (ii) disability as defined in the policy of disability insurance maintained by the Corporation or its Affiliates for the benefit of Executive, whichever shall be more favorable to Executive.  Notwithstanding any other provision of this Agreement, the Corporation shall comply with all requirements of the Americans with Disabilities Act, 42 U.S.C. § 12101 et. seq.

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

(h)(1)           If Executive’s employment is terminated without Cause within one year after a Change of Control shall have occurred or if he resigns for Good Reason within one year after a

  6

Change of Control shall have occurred, then the Corporation shall pay to Executive as compensation for services rendered to the Corporation a cash amount (subject to any applicable payroll or other taxes required to be withheld) equal to 200% of his highest annual cash compensation earned after 2008.  If Executive is a “specified employee” under Section 409A on the date of his termination of employment, payment shall be made six months and one day after the date his employment terminates to the extent required by Section 409A.  Otherwise, payment shall be made on or no more than thirty (30) days before the date his employment terminates.  Payment under this Section 7(h)(1)) shall be in lieu of any amount that it is or might be due under Section 7(d).

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

(3)           It is the intention of the parties that no payment be made or benefit provided to Executive pursuant to this Agreement that would constitute an “excess parachute payment” within the meaning of Section 280G of the Code and any regulations thereunder, thereby resulting in a loss of an income tax deduction by the Corporation or the imposition of an excise tax on Executive under Section 4999 of the Code.  If the independent accountants serving as auditors for the Corporation on the date of a Change of  Control (or any other accounting firm designated by the Corporation) determine that some or all of  the payments or benefits scheduled under this Agreement, as well as any other payments or benefits on a Change of  Control, would be nondeductible by the Company under Section 280G of  the Code, then the payments scheduled under this Agreement will be reduced to one dollar less than the maximum amount which may be paid without causing any such payment or benefit to be nondeductible.  The determination made as to the reduction of benefits or payments required hereunder by the independent accountants shall be binding on the parties.  Executive shall have the right to designate within a reasonable period, which payments or benefits will be reduced provided, however, that if no direction is received from Executive, the Corporation shall implement the reductions in its discretion; provided, however, that no reduction shall be permitted that results in a deferral prohibited by Section 409A.

Section 8.                      Confidentiality/Nondisclosure.

Executive covenants and agrees that any and all information maintained as confidential by the Corporation and not generally known to the public concerning the customers, businesses and

7 

services of the Corporation of which he has knowledge or access as a result of his association with the Corporation in any capacity, shall be deemed confidential in nature and shall not, without the proper written consent of the Corporation, be directly or indirectly used, disseminated, disclosed or published by Executive to third parties other than in connection with the usual conduct of the business of the Corporation.  Such information shall expressly include, but shall not be limited to, information concerning the Corporation’s trade secrets, business operations, business records, customer lists or other customer information.  Upon termination of employment, the Executive shall deliver to the Corporation all property in his possession which belongs to the Corporation including all originals and copies of documents, forms, records or other information, in whatever form it may exist, concerning the Corporation or its business, customers, products or services.  This Section 8 shall not be applicable to any information which, through no misconduct or negligence of Executive, has been disclosed to the public by anyone other than Executive.

Section 9.                      Covenant Not to Compete and Related Covenants.

(a)           During the term of this Agreement and throughout any further period that he is an employee of the Corporation, and for the longer of:

 (x) twelve (12) months from and after the date that Executive is (for any reason) no longer employed by the Corporation; or

 (y) for a period of  twelve (12) months from the date of entry by a court of  competent jurisdiction of a final judgment enforcing this covenant in the event of a breach by Executive.

Executive covenants and agrees that he will not, directly or indirectly, either for himself or as a principal, agent, employee, employer, stockholder, co-partner or in any other individual or representative capacity whatsoever, make loans, supervise employees that solicit, make or approve commercial loans or serve as the President or Chief Operating Officer for any bank or bank holding company within twenty-five (25) miles of headquarters of the Corporation or within five (5) miles of any bank branch operated by the Corporation.

(b)           During the term of this Agreement and throughout any further period that he is an employee of the Corporation, and for the longer of:

 (x) twenty-four (24) months from and after the date that Executive is (for any reason) no longer employed by the Corporation; or

(y) for a period of twenty-four (24) months from the date of entry by a court of competent jurisdiction of a final judgment enforcing this covenant in the event of a breach by Executive.

the Executive will not, directly or indirectly, on behalf of the Executive or any other person or entity, solicit or induce, or attempt to solicit or induce, any person currently employed by the Corporation to terminate his or her relationship with the Corporation.

8 

(c)           During the term of this Agreement and throughout any further period that he is an employee of the Corporation, and for the longer of:

(x) twenty-four (24) months from and after the date that Executive is (for any reason) no longer employed by the Corporation; or

(y) for a period of twenty-four (24) months from the date of entry by a court of competent jurisdiction of a final judgment enforcing this covenant in the event of  a breach by Executive.

the Executive will not, except to the extent necessary to carry out his duties as an employee of the Corporation, directly or indirectly provide Competitive Services (as defined below) to any Customer (as defined below), and shall not, directly or indirectly, on behalf of the Executive or any other person or entity, solicit or divert away or attempt to solicit or divert away any Customer of the Corporation for the purpose of selling or providing Competitive Services, provided the Corporation is then still engaged in the sale or provision of  Competitive Services.

(d)           It is agreed that notwithstanding the above to the contrary, Executive may engage in business ventures as long as they are not competitive with the Corporation.  Anything to the contrary notwithstanding, Executive may own, as a passive investor, securities of any public competitor corporation, so long as his direct holdings in any one such corporation shall not in the aggregate constitute more than one percent (1%) of the voting stock of such corporation.  The parties intend that the covenants and restrictions in this Section 9 be enforceable against Executive regardless of the reason that his employment by the Corporation may terminate and that such covenants and restrictions shall be enforceable against Executive even if this Agreement expires after a notice of nonrenewal is given by Executive or the Corporation under Section 2.  The existence of any claim or cause of action by the Executive against the Corporation, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Corporation of the restrictive covenants set forth in Sections 8 and 9 of this Agreement.

(e)           For purposes of this Agreement, the term “Customer” means any individual or entity to whom or to which the Corporation provided Competitive Services within two years of the date on which the Executive’s employment terminates.

(f)           For purposes of this Agreement, "Competitive Services" means providing financial products and services of the types that, as of the date of this Agreement, are provided to Customers of the Corporation, whether such services are provided directly by the Corporation or by others under a contractual arrangement with the Corporation.

(g)           The Executive agrees that the covenants in this Section 9 are reasonably necessary to protect the legitimate interests of the Corporation, are reasonable with respect to the time and territory and do not interfere with the interests of the public.  The Executive further agrees that the descriptions of the covenants contained in this Section 9 are sufficiently accurate and definite to inform the Executive of the scope of the covenants.  Finally, the Executive agrees that the consideration set forth in this Agreement is full, fair and adequate to support the Executive’s obligations hereunder and the Corporation’s rights hereunder.  The Executive acknowledges that in

9 

the event the Executive’s employment with the Corporation is terminated for any reason, the Executive will be able to earn a livelihood without violating such covenants.

(h)           The parties have attempted to limit the Executive’s right to compete only to the extent necessary to protect the Corporation from unfair competition.  The parties recognize, however, that reasonable people may differ in making such a determination.  Accordingly, the parties intend that the covenants contained in this Section 9 to be completely severable and independent, and any invalidity or unenforceability of any one or more such covenants will not render invalid or unenforceable any one or more of the other covenants.  The parties further agree that, if the scope or enforceability of a covenant contained in this Section 9 is in any way disputed at any time, and if permitted by applicable law, a court or other trier of fact may modify and reform such provision to substitute such other terms as are reasonable to protect the Corporation’s legitimate business interests.

Section 10.                      Injunctive Relief, Damages, Etc.

The Executive agrees that, given the nature of the positions held by Executive with the Corporation, each and every one of the covenants and restrictions set forth in Sections 8 and 9 above are reasonable in scope, length of time and geographic area and are necessary for the protection of the significant investment of the Corporation in developing, maintaining and expanding its business.  Accordingly, the parties hereto agree that in the event of any breach by Executive of any of the provisions of Section 9 that monetary damages alone will not adequately compensate the Corporation for its losses and, therefore, that it shall be entitled to any and all legal or equitable relief available to it, specifically including, but not limited to, injunctive relief, and the Executive shall be liable for all damages, including actual and consequential damages, costs and expenses, and legal costs and actual attorneys fees incurred by the Corporation as a result of taking action to enforce, or recover for any breach of Section 9.  The covenants contained in Section 9 shall be construed and interpreted in any judicial proceeding to permit their enforcement to the maximum extent permitted by law.

Section 11.                      Successors.

The Corporation will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business, stock or assets of the Corporation, by agreement in form and substance reasonably satisfactory to the Executive, to expressly assume and agree to perform this Agreement in its entirety.  Failure of the Corporation to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to the compensation described in Section 7(d).  As used in this Agreement, "Corporation” shall mean Middleburg Financial Corporation, and any successor to its respective business, stock or assets as aforesaid, which executes and delivers the agreement provided for in this Section 11 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

Section 12.                      Invalid Provisions.

The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force

10 

and effect.  Any provision in this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be valid and enforceable to the fullest extent permitted by law without invalidating or affecting the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Section 13.                      Notices.

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

Section 14.                      Arbitration.

With the exception of Sections 8 and 9 and the enforcement of said Sections (as set forth in Section 10), all other claims under this Agreement will be resolved by binding arbitration.

The parties agree that with the exception of controversies or claims arising out of Sections 8, 9 and 10, all controversies or claims arising out of or relating to this Agreement or Executive’s employment with the Corporation shall be submitted to final and binding arbitration.  The parties further agree that the arbitration will be conducted under the Federal Arbitration Act (“FAA”) and the procedural rules of the American Arbitration Association (“AAA”), specifically AAA’s National Rules for the Resolution of Employment Disputes.  Any arbitration proceeding and/or other procedural matter related to an arbitration proceeding, shall be conducted in Richmond, Virginia, at a location to be determined by the parties.  The parties agree that such arbitration will be conducted before an experienced arbitrator chosen by the Corporation and the Executive.  In the event that the parties are unable to choose an arbitrator, the parties agree that one will be designated by the AAA in accordance with their rules and procedures.  The parties further agree that the arbitrator shall apportion the fees and costs of the arbitration pursuant to the rules of the AAA and applicable law.

Section 15.                      Governing Law.

Except where preempted by federal law, the Employment Agreement shall be subject to and construed in accordance with the laws of the Commonwealth of Virginia.

Section 16.                      Captions.

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

Section 17.                      Section 409A.

This Agreement is intended to comply with Section 409A to the extent Section 409A is applicable.  This Agreement shall be interpreted and administered accordingly.

11 

IN WITNESS WHEREOF, the parties have executed this Agreement on the 7th day of May, 2010, and, by their signatures, agree that such execution shall constitute a cancellation, effective May 1, 2010, of the Employment Agreement between the parties dated September 17, 2007, and replacement of such 2007 Employment Agreement with this Agreement.

MIDDLEBURG FINANCIAL CORPORATION

By: /s/Gary R. Shook                                                                                                                          

       Gary R. Shook

       President

By:  /s/Arch A. Moore, III                                                                                                             

       Arch A. Moore, III

  12

EX-10.3

Exhibit 10.3

MIDDLEBURG FINANCIAL CORPORATION

SUPPLEMENTAL BENEFIT PLAN

As Amended and Restated

through May 7, 2010

Middleburg Financial Corporation

Supplemental Benefit Plan

As Amended and Restated

through May 7, 2010

TABLE OF CONTENTS

	Page
INTRODUCTION	1
ARTICLE I DEFINITIONS	2
1.01           Account	2
1.02           Annual Compensation	2
1.03           Beneficiary	2
1.04           Board	2
1.05           Change in Control	3
1.06           Code	3
1.07           Committee	3
1.08           Company	3
1.09           Company Contribution	3
1.10           Credited Service	3
1.11           Disability or Disabled	3
1.12           Eligible Employeee	3
1.13           ERISA	3
1.14           Participant	4
1.15           Plan	4
1.16           Plan Year	4
1.17           Retirement Date	4
ARTICLE II  PARTICIPATION	5
2.01           Eligibility to Participate	5
2.02           Removal From Participation	5
ARTICLE III  BENEFITS	6
3.01           Contributions	6
3.02           Vesting	6
3.03           Investment of Accounts	7
ARTICLE IV  DISTRIBUTIONS	8
4.01           Timing of Payment	8
4.02           Form of Payment	8
4.03           Death or Disability	8

Supplemental Benefit Plan

i 

Middleburg Financial Corporation

Supplemental Benefit Plan

As Amended and Restated

through May 7, 2010

	Page
4.04 Forfeiture	8
4.05 No Acceleration	9
ARTICLE V        ADMINISTRATION	10
5.01           Administrator	10
5.02           Indemnification	10
5.03           Claims Procedure	10
ARTICLE VI      AMENDMENT AND TERMINATION	11
6.01         Amendment	11
6.02         Termination	11
ARTICLE VII     MISCELLANEOUS	12
7.01           Effect on Employment Rights	12
7.02           Unfunded Plan	12
7.03           Retired Participant Not an Employee	12
7.04           Non-Alienation	12
7.05           Construction of the Plan	12
7.06           Binding Nature	12
7.07           Goverining Law	13
ARTICLE VIII    ADOPTION	14
EXHBIT I	15

Supplemental Benefit Plan

  ii

Middleburg Financial Corporation

Supplemental Benefit Plan

As Amended and Restated

through May 7, 2010

INTRODUCTION

The Board of Directors of Middleburg Financial Corporation adopted the Supplemental Benefit Plan, effective July 1, 2004, for the purpose of attracting and retaining qualified individuals to serve as officers and managers of the Company.

The Plan is intended to be unfunded and maintained primarily for the purpose of providing deferred compensation for a “select group of management or highly compensated employees” (as such phrase is used in the Employee Retirement Income Security Act of 1974).  The Plan must be administered and construed in a manner that is consistent with that intent.

Effective January 1, 2005, 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 comply with the applicable requirements of section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and Treasury Regulations thereunder 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.

It is specifically intended that all elections, consents and modifications thereto under the Plan will comply with the requirements of Code section 409A (including any transition or grandfather rules thereunder).  The Company is authorized to adopt rules or regulations deemed necessary or appropriate in connection therewith to anticipate and/or comply with the requirements of Code section 409A (including any transition or grandfather rules thereunder) and to declare any election, consent or modification thereto void if non-compliant with Code section 409A.

The Plan is amended and restated, effective May 7, 2010, to change the benefit formula, to add new participants, and to provide for a benefit under the Plan upon a participant’s death.

Supplemental Benefit Plan

  1

Middleburg Financial Corporation

Supplemental Benefit Plan

As Amended and Restated

through May 7, 2010

ARTICLE I

DEFINITIONS

The following phrases or terms have the indicated meanings:

1.01           Account

Account means the notional account established and maintained for each Participant in accordance with Article III hereof, for bookkeeping purposes only, to measure the value of the Company Contributions made under the Plan and the earnings thereon.

1.02           Annual Compensation

Annual Compensation means the Participant’s annual base cash compensation, plus bonuses or commissions, including any pre-tax deferrals, earned in a Plan Year.

1.03           Beneficiary

Beneficiary means the person, persons, entity, entities or the estate of a Participant entitled to receive benefits under the Plan in accordance with a properly completed beneficiary designation form.  If a Participant fails to complete a beneficiary designation form, or if the form is incomplete, Beneficiary means the Participant’s estate.  A Participant may amend or change his Beneficiary designation in accordance with procedures established by the Committee.

1.04           Board

Board means the Board of Directors of Middleburg Financial Corporation.

1.05           Change in Control

Change in Control means any of the following: (i) any person, including a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the owner or beneficial owner of Corporation securities having twenty percent or more of the combined voting power of the then outstanding Corporation securities that may be cast for the election of the Corporation’s directors, other than as a result of an issuance of securities initiated by Corporation, or open market purchases approved by the Board, as long as the majority of the Board approving the purchase is a majority at the time the purchases are made; (ii) a contested election of directors in which less than a majority of the individuals nominated by the Board of the Corporation are elected; or (iii) a merger or consolidation of Corporation with, or i nto, another corporation or the sale, conveyance or other transfer of substantially all of the assets or stock of Corporation if, immediately following such transaction, those who were directors of the Corporation immediately before such transaction do not constitute at least a majority of the surviving or resulting corporation.  In the event that there is a transaction under a plan which

Supplemental Benefit Plan

  2

Middleburg Financial Corporation

Supplemental Benefit Plan

As Amended and Restated

through May 7, 2010

involves a Change of Control of the Corporation, then the date of Change of Control shall be the date that the last step in the plan causes a Change of Control of the Corporation to occur.

1.06           Code

Code means the Internal Revenue Code of 1986, as amended.

1.07           Committee

Committee means the Compensation Committee of the Company’s Board of Directors.

1.08           Company

Company means Middleburg Financial Corporation, designated subsidiaries, and successors thereto.

1.09           Company Contribution

Company Contribution means the contribution described in Plan section 3.01 and which is credited to a Participant’s Account.

1.10           Credited Service

Credited Service means the Participant’s completed years of service with the Company, beginning with the Participant’s date of hire.

1.11           Disability or Disabled

Disability or Disabled shall mean the Participant 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.

1.12           Eligible Employee

Eligible Employee means a Senior Manager of the Company with a minimum of one year of service as vice president (or higher) of the Company.

1.13           ERISA

ERISA means the Employee Retirement Income Security Act of 1974, as amended.

Supplemental Benefit Plan

3 

Middleburg Financial Corporation

Supplemental Benefit Plan

As Amended and Restated

through May 7, 2010

1.14           Participant

Participant means a member of senior management who has been selected by the Committee to participate in the Plan and who has not been removed therefrom, pursuant to Article II.

1.15           Plan

Plan means the Middleburg Financial Corporation Supplemental  Benefit Plan.

1.16           Plan Year

Plan Year means the fiscal year of the Company, which is the calendar year.

Supplemental Benefit Plan

4 

Middleburg Financial Corporation

Supplemental Benefit Plan

As Amended and Restated

through May 7, 2010

ARTICLE II

PARTICIPATION

2.01           Eligibility to Participate

Participation in the Plan shall be limited to Eligible Employees of the Company who are designated by the Committee to participate in the Plan.  The Committee shall have sole, absolute and complete discretion to select Eligible Employees as Participants.  The Committee shall inform each Participant of his designation as a Participant.

2.02           Removal From Participation

The Committee shall have sole, absolute and complete discretion to remove a Participant from the Plan.  Upon removal, the Participant shall not be eligible for additional Company Contributions but shall be credited with any additional years of Credited Service, if any, during his continued employment with the Company.

Supplemental Benefit Plan

5 

Middleburg Financial Corporation

Supplemental Benefit Plan

As Amended and Restated

through May 7, 2010

ARTICLE III

BENEFITS

3.01           Contributions

(a)           Effective for Plan Years beginning January 1, 2010, as of the last day of each Plan Year, the Company shall credit the Account of each Participant listed on Exhibit I attached hereto an amount equal to a percentage of such Participant’s Annual Compensation.  The percentage for each Participant is shown on Exhibit I.

(b)           Effective for Plan Years through December 31, 2009, as of the last day of each Plan Year, the Company shall credit to a Participant’s Account an amount equal to the sum of (1) and (2) where:

(1)           equals the Participant’s Annual Compensation in excess of the Social Security Wage Base as in effect for the Plan Year times the percentage paid by the Company on behalf of the Participant under the Federal Security Act; and

(2)           equals the Participant’s Annual Compensation in excess of the dollar amount specified in Code section 414(q)(1)(B)(i), as adjusted in accordance with Code section 415(d) ($90,000 for 2004) times the rate of employer matching contribution made by the Company for the Plan Year under the Company’s 401(k) Savings Plan.

(c)           No Company contribution shall be made under Plan Section 3.01(a) or 3.01(b) for a Participant who is not an Eligible Employee as of December 31 of the Plan Year for which the contribution is credited.

(d)           In addition to the amounts credited in accordance with Sections 3.01(a) and (b) above, the Company shall credit to the Account of Arch Moore (Executive Vice President – Chief Lending Officer), an opening account balance, as of July 1, 2004, equal to (a) the amount that would have been credited each year to such Participant’s Account under Section 3.01(b) above based on Annual Compensation earned from calendar years 1999 through 2003 plus (b) earnings on each year’s credited amount equal to a rate of 6% credited annually.

3.02           Vesting

(a)           Subject to Plan Section 4.04, each Participant shall be fully vested in his Account upon the completion of six years of Credited Service, death or Disability.

(b)           A Participant who terminates employment from the Company (other than due to death or Disability) prior to completing six years of Credited Service shall vest in his Account in accordance with the following schedule:

Supplemental Benefit Plan

6 

Middleburg Financial Corporation

Supplemental Benefit Plan

As Amended and Restated

through May 7, 2010

Years of Credited Service	Vested percentage
One or less	0%
More than one, but less than two	20%
More than two, but less than three	40%
More than three, but less than four	60%
More than four, but less than five	80%
Five or more	100%

(c)           A Participant who terminates his employment prior to the completion of six years of Credited Service, death or Disability, shall forfeit the non-vested portion of his Account.

(d)           Notwithstanding the above, a Participant shall be fully vested in his Account upon a Change in Control of the Company.

3.03           Investment of Accounts

(a)           Each Participant shall be entitled to direct the deemed investment of the amounts credited to his Account in any of the investment choices or combination of investment choices as may be offered by the Committee from time to time in accordance with the rules, regulations and procedures established by the Committee.  The Committee may add or remove investment choices in its sole discretion.  Commencing January 1, 2010, a Participant’s Account will be credited with earnings for a Plan Year in an amount equal to the one-year U.S. Treasury Daily Yield Curve Rate quoted for December 1 of the year immediately preceding such Plan Year plus 150 basis points.  Such earnings rate will continue i n effect until another earnings rate or deemed investment choice, if any, is announced by the Committee.

(b)           Each Participant’s Account shall be credited with earnings and losses in accordance with such Participant’s investment choices or the rate of earnings provided in Plan Section 3.03(a) as applicable.  Earnings and losses shall begin to accrue with respect to amounts credited to the Participant’s Account in accordance with the procedures established by the Committee.

Supplemental Benefit Plan

  7

Middleburg Financial Corporation

Supplemental Benefit Plan

As Amended and Restated

through May 7, 2010

ARTICLE IV

DISTRIBUTIONS

4.01           Timing of Payment

Except as provided in Plan sections 4.03 or 4.04, a Participant shall begin to receive distributions from his Account on the first day of the month following his “separation from service” (within the meaning of Code section 409A and Treasury Regulations thereunder) with the Company, other than in the event of Participant’s Disability, which shall be governed by Plan section 4.03.  Notwithstanding the foregoing, if a Participant is a “specified employee” (within the meaning of Code section 409A and Treasury Regulations thereunder) on the date of his or her separation from service, benefits under this Plan will commence on the first day of the month following the six-month anniversary of the date of the Participant’s separation from service to the extent required by Code section 409A and Treasury Regulations thereunder.  The first payment shall include the payments, if any, required to be delayed under the preceding sentence.

4.02 Form of Payment

Any payment from a Participant’s Account shall be made in cash in equal or substantially equal quarterly installments over a ten-year period, except as provided in Section 4.03 below.

4.03           Death or Disability

(a)           In the event of a Participant’s death while employed by the Company, the balance of such Participant’s Account as of the date of Participant’s death shall be paid to the Participant’s Beneficiary on the first day of the month following the Participant’s death in a single lump sum payment.

(b)           If the Participant dies after benefits have commenced under this Article, his Beneficiary shall be entitled to the remaining balance of such Participant’s Account, payable over the remaining installment period.

(c)           In the event of Participant’s Disability, the balance of such Participant’s Account shall be paid to the Participant (or the Participant’s legal representative) commencing on the first day of the month following the date the Participant is determined to be Disabled and in the form provided in Plan section 4.02 or over such shorter period as may be permitted by Treasury Regulation, notice or ruling.

4.04           Forfeiture

(a)           Notwithstanding any other provisions in the Plan, a Participant shall forfeit his entire interest in the Plan if he is (i) dismissed for Cause (or is permitted to resign or retire in lieu of dismissal) or (ii) separates from service and becomes employed within one year after

Supplemental Benefit Plan

 8

Middleburg Financial Corporation

Supplemental Benefit Plan

As Amended and Restated

through May 7, 2010

separation from service with an entity that is deemed to be in Competition with the Company; provided, however, that this clause (ii) does not apply in the event of Participant’s termination of employment following a Change in Control.

(b)           For purposes of this Section 4.04, “Cause” means the Participant’s failure to perform the material functions of his job or any reason other than for Disability; unlawful business conduct; theft; commission of a felony; or the failure of the Participant, within 10 days after receipt by the Participant of written notice from the Board to correct, cease or otherwise alter any act or omission that materially or adversely affects the Company’s profits or operations.

(c)           For purposes of this Section 4.04, “Competition” means to directly or indirectly, either as a principal, agent, employee, employer, stockholder, co-partner or any other individual or representative capacity whatsoever: (i) engage in a Competitive Business anywhere with a 25 mile radius of any office operated by the Company or on the date the Participant’s employment terminates; or (ii) solicit, or assist any other person or business entity in soliciting, any depositors or other customers of the Company to make deposits in or to become customers of any other financial institution conducting a Competitive Business; or (iii) induce any individuals to terminate their employment with the Company.  As used in this Plan, the term “Competiti ve Business” means all banking and financial products and services that are substantially similar to those offered by the Company on the date that the Participant’s employment terminates.

4.05 No Acceleration

No acceleration of any payment or benefit is permitted under this Plan unless in accordance with Code section 409A and Treasury Regulations or other applicable guidance thereunder.

Supplemental Benefit Plan

9 

Middleburg Financial Corporation

Supplemental Benefit Plan

As Amended and Restated

through May 7, 2010

ARTICLE V

ADMINISTRATION

5.01           Administrator

The Plan is administered by the Committee.  The Committee has complete authority to take any steps the Committee, in its sole discretion, deems necessary or appropriate to carry out the purposes of the Plan.  The Committee has sole, absolute and discretionary authority to interpret the provisions of the Plan.  Without limiting the generality of the foregoing, the Committee may prescribe interpretive rules, procedures and forms for the administration of the Plan.  In addition, the Committee in its sole discretion may delegate ministerial duties with respect to the administration of the Plan to employees of the Company or to third parties.

5.02           Indemnification

The Company shall indemnify and save harmless each member of the Board against any and all expenses and liabilities arising out of membership on the Board, excepting only expenses and liabilities arising out of a member’s own willful misconduct.  Expenses against which a member of the Board shall be indemnified hereunder shall include without limitation, the amount of any settlement or judgment, costs, counsel fees, and related charges reasonably incurred in connection with a claim asserted, or a proceeding brought or settlement thereof.  The foregoing right of indemnification shall be in addition to any other rights to which any such member may be entitled.

5.03           Claims Procedure

All claims for benefits shall be in writing in a form satisfactory to the Committee.  If the Committee wholly or partially denies a Participant’s or Beneficiary’s claim for benefits, the Committee shall review the Participant’s claim in accordance with applicable procedures described in the Employee Retirement Income Security Act of 1974.

Supplemental Benefit Plan

  10

Middleburg Financial Corporation

Supplemental Benefit Plan

As Amended and Restated

through May 7, 2010

ARTICLE VI

AMENDMENT AND TERMINATION

6.01           Amendment

Except as provided below, the Board shall have full authority to amend the Plan prospectively or retroactively in any respect without the consent of any Participant or Beneficiary.  However, the Plan may not be amended to affect adversely benefits due to Participants who are fully or partially vested in accordance with Plan section 3.02.  For purposes of this Plan, benefits earned and vested to the date of any such amendment shall be calculated as if the Plan were terminated on the date of such amendment.

6.02           Termination

The Board, in its sole, absolute and complete discretion, may discontinue and terminate the Plan at any time without the consent of any Participant or Beneficiary, who shall have no further right to benefits under the Plan; provided, however, that such action shall not adversely affect benefits due to Participants who are fully or partially vested in accordance with Plan section 3.02 as the date of such termination.  Any such termination shall be carried out in accordance with Code section 409A and Treasury Regulations or other applicable guidance thereunder.

Supplemental Benefit Plan

11 

Middleburg Financial Corporation

Supplemental Benefit Plan

As Amended and Restated

through May 7, 2010

ARTICLE VII

MISCELLANEOUS

7.01           Effect on Employment Rights

Nothing contained in this Plan shall be deemed to give any Participant or employee the right to be retained in the service of the Company or to interfere with the right of the Company to discharge any Participant or employee at any time regardless of the effect which such discharge shall have upon him as a Participant in the Plan.

7.02           Unfunded Plan

Benefits under the Plan are unfunded.  The rights of a Participant or Beneficiary shall be solely those of any unsecured general creditor of the Company.  Should the Company choose to invest in insurance contracts or other specific assets with a view towards providing an informal source of funds to pay benefits hereunder, any such asset shall be held in the Company’s name and shall be subject to the claims of its general creditors, and no Participant shall have any special claim or lien on any such asset.  No trust or security interest is intended to be created by this document.

7.03           Retired Participant Not an Employee

A retired Participant shall not be considered an employee for any purpose under the law.

7.04           Non-Alienation

Except insofar as this provision may be contrary to applicable law, no sale, transfer, alienation, assignment, pledge, collateralization, or attachment of any benefits under this Plan shall be valid or recognized by the Committee.

7.05           Construction of the Plan

For the purposes of the Plan, the singular shall include the plural and vice versa; and the use of any gender shall include all genders.

7.06           Binding Nature

This Plan shall be binding upon the inure to the benefit of the Company, its successors and each Participant and his heirs, executors, administrators and legal representatives.

Supplemental Benefit Plan

12 

Middleburg Financial Corporation

Supplemental Benefit Plan

As Amended and Restated

through May 7, 2010

7.07           Governing Law

To the extent not preempted by federal law, the Plan shall be governed by the laws of the Commonwealth of Virginia, including its choice of law rules, except to the extent those rules would require the application of the law of a state other than Virginia, as in effect at the time of their adoption and executing, respectively.

Supplemental Benefit Plan

13 

Middleburg Financial Corporation

Supplemental Benefit Plan

As Amended and Restated

through May 7, 2010

ARTICLE VIII

ADOPTION

The Corporation has adopted this restated Plan pursuant action taken by the Board.

As evidence of its adoption of the Plan, Middleburg Financial Corporation has caused this document to be signed by its President and CEO this 12th day of May 2010, as amended and restated through such date.

MIDDLEBURG FINANCIAL CORPORATION

                                                                                                          /s/Gary R. Shook 0;  

Supplemental Benefit Plan

14 

Middleburg Financial Corporation

Supplemental Benefit Plan

As Amended and Restated

through May 7, 2010

EXHIBIT I

This Exhibit I applies for Plan Years commencing on and after January 1, 2010.

Name	Plan Section 3.01(a) Date of Participation	Plan Section 3.01(a) Benefit Percentage
Gary Shook	May 7, 2010	14.0%
Arch Moore	May 7, 2010	24.4%
Raj Mehra	May 7, 2010	8.5%
Jeff Culver	May 7, 2010	2.1%

Supplemental Benefit Plan

15