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): September 4, 2020

VILLAGE BANK AND TRUST FINANCIAL CORP.

(Exact Name of Registrant as Specified in Charter)

Registrant’s Telephone Number, Including Area Code: (804) 897-3900

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:

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

On September 4, 2020, Village Bank (the “Bank”), a wholly-owned subsidiary of Village Bank and Trust Financial Corp. (the “Company”), entered into an employment agreement with Max C. Morehead, Jr., current Executive Vice President of Commercial Banking of the Bank.

The new employment agreement supersedes and replaces Mr. Morehead’s prior Change of Control agreement with the Bank, dated March 24, 2020. The initial term of the new agreement is effective as of September 4, 2020 and will expire on September 4, 2023; provided that on September 4, 2022 and on each September 4^th thereafter (each a “Renewal Date”), the agreement will be automatically extended for an additional 12-month period. The agreement will not, however, be extended if either party gives written notice of non-renewal at least 90 days before the Renewal Date. Pursuant to the agreement, Mr. Morehead is entitled to receive an annual base salary of no less than $202,000. The Bank’s Board of Directors or Compensation Committee will review his base salary at least annually and may increase his salary in its discretion. Mr. Morehead is entitled to cash bonuses and stock-based awards in such amounts as may be determined by the Bank’s Board of Directors or Compensation Committee in accordance with the terms and conditions of the applicable incentive plans in effect for senior executives of the Bank. Mr. Morehead will maintain his status in the Village Bank Supplemental Executive Retirement Plan with an annual retirement benefit of $25,000 for 15 years.

If Mr. Morehead is terminated without “Cause” (as defined in the agreement) or resigns for “Good Reason” (as defined in the agreement), he will be paid the sum of (i) his annual base salary plus (ii) an annual bonus amount equal to 15% of his annual base salary. Such severance benefit is contingent upon Mr. Morehead signing a customary release and waiver of claims in favor of the Bank. As defined in the agreement, the term “Cause” includes a material failure to perform his duties, unlawful or unethical business conduct, dishonesty, willful violation of any law, rule or regulation (other than traffic violations or similar offense), a material violation of the Bank’s work rules, code of ethics or policies, or a material breach of the agreement. As defined in the agreement, the term “Good Reason” includes a material change or reduction in Mr. Morehead duties or authority, a change in his title, a reduction in his salary, a material reduction in his benefits, the failure by the Bank to obtain the assumption of, and agreement to perform, the agreement by any successor, or a failure by the Bank to renew the agreement.

If, within 24 months following a “Change of Control” (as defined in the agreement) of the Company, Mr. Morehead is terminated by the Bank without Cause, he terminates his employment for Good Reason, or the Bank fails to renew his agreement, he will be paid a lump sum cash payment equal to two times the sum of (i) his annual base salary plus (ii) an annual bonus amount equal to 15% of his annual base salary. Such change of control benefit is contingent upon Mr. Morehead signing a customary release and waiver of claims in favor of the Bank. As defined in the agreement, the term “Change of Control” includes, among other things, the acquisition by any person or group of securities of the Company representing at least 50% of the Company’s outstanding shares of common stock or voting power, certain merger transactions, and a sale of all or substantially all of the Company’s assets.

The foregoing summary description is qualified in its entirety by reference to the agreement, a copy of which is attached to this report as Exhibit 10.1 and is incorporated herein by reference.

The following exhibit is filed herewith:

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.