VALLEY FINANCIAL CORP /VA/
RESTRICTED STOCK AGREEMENT DATED JULY 5, 2005
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<DESCRIPTION>RESTRICTED STOCK AGREEMENT DATED JULY 5, 2005
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2"><B>EXHIBIT 10.25 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2"><B>VALLEY FINANCIAL CORPORATION </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>R<SMALL>ESTRICTED</SMALL> S<SMALL>TOCK</SMALL>
A<SMALL>GREEMENT</SMALL> </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">July&nbsp;5, 2005 </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">Andrew B. Agee </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Valley Bank </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Dear Andy, </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">I am pleased to inform you that effective as of July&nbsp;5, 2005, Valley Financial Corporation (the &#147;Company&#148;) approved a grant to you of
shares of Company common stock, subject to the restrictions described below (the &#147;Restricted Shares&#148;). The grant is subject to the terms and conditions of this letter agreement (the &#147;Agreement&#148;) and the Valley Financial
Corporation 2005 Key Employee Equity Award Plan (the &#147;Plan&#148;), a copy of which has been provided to you, receipt of which is hereby acknowledged. The terms of the Plan are incorporated into this Agreement by reference. In the case of any
inconsistency between the Plan and this Agreement, the terms of the Plan shall control. Any term used in this Agreement that is defined in the Plan shall have the same meaning given to that term in the Plan. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">7. <U>Restricted Stock Award</U>. The Company shall transfer 500 Restricted Shares to you as of July&nbsp;5, 2005, (the &#147;Grant Date&#148;). The fair
market value of the Restricted Shares as of the Grant Date has been determined by the Company to be $12.50 per share. You have the right to elect to include the value of the Restricted Shares in gross income in the year of transfer pursuant to
Internal Revenue Code section 83(b) by completing the &#147;Election to Include Value of Restricted Property in Gross Income in Year of Transfer Under Code Section&nbsp;83(b)&#148; form (the &#147;83(b) Election Form&#148;), attached as Exhibit A to
this Agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">8. <U>Restrictions</U>. Except as provided in this Agreement, the Restricted Shares are nontransferable and are subject to
a substantial risk of forfeiture. Your interest in the Restricted Shares shall become transferable and non-forfeitable (&#147;Vested&#148;) as of the date provided in Section&nbsp;3 of this Agreement (the &#147;Vesting Date&#148;), if you are an
employee of the Company as of the applicable Vesting Date and have been so employed throughout the period beginning on the date of this Agreement and ending on the applicable Vesting Date and all of the following conditions have been satisfied in
their entirety based on the Company&#146;s financial statements for the years ending December&nbsp;31, 2005, 2006 and 2007, respectively: </FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">a)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">The Company shall have total assets of at least $600,000,000.00 as of December&nbsp;31, 2007; and </FONT></TD></TR></TABLE>

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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">b)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">The Company shall have achieved at least 15% average annual earnings per share growth year to year for each of the three fiscal years ending December&nbsp;31, 2005, 2006 and 2007;
and </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">c)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">The Company shall have at least a 15% return on average equity for fiscal year 2007. </FONT></TD></TR></TABLE> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">d)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">If any one of the above conditions are not satisfied in their entirety, the Restricted Shares will not vest and will be automatically forfeited on January&nbsp;31, 2008
</FONT></TD></TR></TABLE> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">3. <U>Vesting</U> </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">(a) Vesting Dates: January&nbsp;31, 2008 </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(b) <U>Death or Disability</U><I></I>. If you die
or become Disabled (as defined below) before all of the Restricted Shares become Vested, all of the Restricted Shares shall be transferable and non-forfeitable as of the date of your death or Disability. For purposes of this Agreement, the term
&#147;Disabled&#148; or &#147;Disability&#148; means a condition resulting from bodily injury or disease that renders you unable to perform any and every duty pertaining to your employment with the Company. The Board of Directors of the Company, in
its sole discretion, will determine whether you are Disabled based on medical evidence and your eligibility for benefits under the long-term disability policy maintained by the Company, if any. The date of the Board of Director&#146;s determination
will be considered your date of Disability for purposes of this Agreement. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(c) The Company, in its sole discretion, may
accelerate the vesting of your Restricted Shares. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">4. <U>Custody of Certificates</U>. The Company shall retain custody of all stock
certificates evidencing Restricted Shares. You shall not be entitled to obtain custody of your stock certificate until you become Vested in your Restricted Shares. The stock certificate shall bear a legend referencing this Agreement and describing
the terms and conditions of the applicable restrictions on transfer. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">5. <U>Restrictions on Transfer of Restricted Shares</U>. By signing
the Agreement, you agree that you will not sell or transfer your Vested Restricted Shares to a third party unless the Company does not agree to purchase such stock, as provided under Section&nbsp;6 below, and the Company approves the sale to the
third party. As a consequence of the foregoing, the certificates for Restricted Shares shall contain a legend substantially in the following form: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2">The sale or other transfer of the Shares of Stock represented by this certificate, whether voluntary, involuntary or by operation of law, is subject to certain restrictions on transfer set forth in the 2005 Valley Financial Corporation Key
Employee Equity Plan, in the rules and administration procedures adopted pursuant to such Plan and in an Agreement dated April&nbsp;27, 2005. A copy of the Plan, such rules and procedures and such Restricted Stock Agreement may be obtained from the
Secretary of Valley Financial Corporation. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">6. <U>Effect of Termination of Employment</U>. If your employment with the Company terminates for any or
no reason (other than retirement, Disability or death), all Restricted Shares that are not then Vested shall be forfeited. You shall not be entitled to any payment for or compensation with respect to such unvested Restricted Shares. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">7. <U>Tax Liability and Income Tax Withholding</U>. You agree as a condition of this Restricted Stock award to pay to the Company, or make arrangements
satisfactory to the Company regarding the payment to the Company of, the aggregate amount of any federal, state or local income taxes of any kind required by law to be withheld with respect to the Restricted Shares when the fair market value of the
Restricted Shares become taxable. You hereby authorize the Company to sell all or any part of the Restricted Shares if necessary to protect the Company from incurring a withholding tax liability. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">8. <U>Adjustments</U>. If the number of outstanding shares of Company stock is increased or decreased as a result of a subdivision or consolidation of
shares, the payment of a stock dividend, stock split, or any other similar changes in capitalization, the number of Restricted Shares shall be appropriately adjusted by the Company, whose determination shall be binding. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">9. <U>Employment Rights</U>. The award of Restricted Shares under this Agreement does not confer upon you any right to continue as an employee of the
Company or limit in any respect the right of the Company to terminate your employment. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">10. <U>Shareholder Rights</U>. You will have the
right to receive dividends and distributions and will have the right to vote Restricted Shares, both unvested and Vested. If any such dividends or distributions are paid in share of the Company&#146;s stock, the shares will be subject to the same
restrictions on transferability and the other provisions of this Agreement as are the Restricted Shares with respect to which they were distributed. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">11. <U>Governing Law</U>. This Agreement shall be governed by the laws of Virginia. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">12. <U>Acceptance of
Award</U>. You may accept this award and elect to receive the Restricted Shares by signing and returning the enclosed copy of this Agreement. Your signature will evidence your agreement to the terms and conditions set forth in this Agreement and the
Plan. This Agreement will not be effective until is signed and returned. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">13. <U>Entire Agreement, Amendment</U>. This Agreement
constitutes the entire agreement between you and the Company and shall be binding upon your legatees, distributees, and personal representatives and the successors of the Company. This Agreement may only be amended by a writing signed by both you
and the Company. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><DIV ALIGN="right">
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<TD VALIGN="top" COLSPAN="3"><FONT FACE="Times New Roman" SIZE="2">Valley Financial Corporation</FONT></TD></TR>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">By:</FONT></TD>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">/s/ Ellis L. Gutshall</FONT></TD></TR>
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<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">President / Chief Executive Officer</FONT></TD></TR>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Date:</FONT></TD>
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<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">July&nbsp;5, 2005</FONT></TD></TR>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Signature:</FONT></TD>
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<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">/s/ Andrew B. Agee</FONT></TD></TR>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2"><B>Exhibit A </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2"><B>VALLEY FINANCIAL CORPORATION </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>R<SMALL>ESTRICTED</SMALL> S<SMALL>TOCK</SMALL> A<SMALL>WARD</SMALL>
</B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>Election to Include Value of Restricted Property in Gross Income </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>in Year of Transfer Under Code Section&nbsp;83(b) </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The undersigned hereby
elects to have the provisions of Section&nbsp;83(b) of the Internal Revenue Code of 1986, as amended (the &#147;Code&#148;), apply to purchases and grants of the property described below. The undersigned provides the following information in
accordance with Treasury Regulation Section&nbsp;1.83-2: </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B><I>1. The name, address and taxpayer identification number of the undersigned
are: </I></B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:13%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Name _________________________________________ </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; margin-left:13%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Address _______________________________________ </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; margin-left:13%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">______________________________________________ </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; margin-left:13%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Social Security No. ________-________-______________ </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2"><B><I>2. Description of property with respect to which the election is being made: </I></B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2">__________ shares of restricted common stock of Valley Financial Corporation (the &#147;Company&#148;) awarded to the taxpayer pursuant to an Agreement between the taxpayer and the Company dated as of _____________, 2005. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B><I>3. The date on which property is transferred and the taxable year for which the election is made: </I></B></FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The shares of restricted stock were awarded and transferred to the taxpayer as of _____________, 2005. The taxable year to which this
election relates is calendar year 2005. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B><I>4. The nature of the restriction(s) to which the property is subject: </I></B></FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The shares of restricted stock are forfeitable and not transferable until the Vesting date and only then if all of the conditions set
forth in Section&nbsp;2 off the Restricted Stock Agreement have occurred or been satisfied. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B><I>5. Fair market value:
</I></B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The aggregate fair market value of shares of restricted common stock subject to this election, as described in
Section&nbsp;2 above (determined with regard to nonlapse restrictions only), is $<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2"><B><I>6. Amount paid for property: </I></B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Except for services to be rendered, no
consideration was paid for the shares of restricted stock. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B><I>7. Furnishing statement to employer: </I></B></FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">A copy of this statement has been furnished to Valley Financial Corporation. </FONT></P> <P
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Dated: ____________________</FONT></TD></TR>
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