FIRST AMENDMENT TO THE BANK OF THE JAMES SALARYCONTINUATION AGREEMENT

Contract Categories: Human Resources - Salary Continuation Agreements
EX-10.3 4 d239503dex103.htm EX-10.3 EX-10.3

Exhibit 10.3

FIRST AMENDMENT TO THE

BANK OF THE JAMES

SALARY CONTINUATION AGREEMENT

THIS AMENDMENT (the “Amendment”) is adopted October 1st, 2016, by and between Bank of the James (the “Bank”), and Harry P. Umberger (the “Executive”).

The Bank and the Executive executed a Salary Continuation Agreement August 6, 2009 (the “Agreement”), which provides deferred compensation benefits to the Executive under certain circumstances. The Bank and the Executive now wish to amend the Agreement to freeze the benefits provided pursuant to the Agreement. The parties agree and acknowledge that this Amendment (i) shall be interpreted in accordance with Internal Revenue Code Section 409A and (ii) freezes the amount of benefits provided under the Agreement, but does not change the payment schedule thereunder.

NOW, THEREFORE, the Bank and the Executive adopt the following amendments to the Agreement:

Section 1.1 of the Agreement shall be deleted in its entirety and replaced with the following.

 

  1.1 “Accrued Benefit” means the dollar value of the liability that should be accrued by the Company, under Generally Accepted Accounting Principles, for the Company’s obligation to the Executive under this Agreement, calculated by applying Accounting Standards Codification 710-10 and the Discount Rate. The Accrued Benefit as of the date of this Amendment is $188,340.22. Interest shall be credited monthly on the unpaid portion of the Accrued Benefit at an annual rate equal to 6% until benefits under this Agreement are fully paid.

Section 1.14 of the Agreement shall be deleted in its entirety.

Section 2.1.1 of the Agreement shall be deleted in its entirety and replaced with the following.

 

  2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is Forty-Four Thousand Eighty-Five Dollars ($44,085).

Section 2.2.1 of the Agreement shall be deleted in its entirety and replaced with the following.

 

  2.2.1 Amount of Benefit. The annual benefit under this Section 2.2 is the amount necessary to fully amortize the Accrued Benefit over the period described in Section 2.2.2, crediting interest monthly on the unpaid portion of the Accrued Benefit at an annual rate equal to 6%.

Section 2.3.1 of the Agreement shall be deleted in its entirety and replaced with the following.

 

  2.3.1 Amount of Benefit. The annual benefit under this Section 2.3 is the amount necessary to fully amortize the Accrued Benefit over the period described in Section 2.3.2, crediting interest monthly on the unpaid portion of Accrued Benefit at an annual rate equal to 6%.

Section 2.4.1 of the Agreement shall be deleted in its entirety and replaced with the following.

 

  2.4.1 Amount of Benefit. The annual benefit under this Section 2.4 is the amount necessary to fully amortize the Accrued Benefit over the period described in Section 2.4.2, crediting interest monthly on the unpaid portion of Accrued Benefit at an annual rate equal to 6%.

Section 3.1.1 of the Agreement shall be deleted in its entirety and replaced with the following.

 

  3.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is Forty-Four Thousand Eighty-Five Dollars ($44,085).

The following Section 2.8 shall be inserted in to the Agreement immediately following Section 2.7:

2.8 Excise Tax Limitation. Notwithstanding any provision of this Agreement to the contrary, if any benefit payment hereunder would be treated as an “excess parachute payment” under Code Section 280G, the Bank shall reduce such benefit payment to the extent necessary to avoid treating such benefit payment as an excess parachute payment. The Executive shall be entitled to only the reduced benefit and shall forfeit any amount over and above the reduced amount.

Section 8.3 of the Agreement shall be deleted in its entirety and replaced with the following

 

8.3 Plan Terminations Under Code Section 409A. Notwithstanding anything to the contrary in Section 8.2, if the Bank terminates this Agreement in the following circumstances:

 

  (a) Within thirty (30) days before or twelve (12) months after a Change in Control, provided that all distributions are made no later than twelve (12) months following the termination of this Agreement and further provided that all the Bank’s arrangements which are substantially similar to this Agreement are terminated so the Executive and all participants in the similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of such termination;

  (b) Upon the Bank’s dissolution or with the approval of a bankruptcy court provided that the amounts deferred under this Agreement are included in the Executive’s gross income in the latest of (i) the calendar year in which this Agreement terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or

 

  (c) Upon the Bank’s termination of this and all other arrangements that would be aggregated with this Agreement pursuant to Treasury Regulations Section 1.409A-1(c) if the Executive participated in such arrangements (“Similar Arrangements”), provided that (i) the termination and liquidation does not occur proximate to a downturn in the financial health of the Bank, (ii) all termination distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and (iii) the Bank does not adopt any new arrangement that would be a Similar Arrangement for a minimum of three (3) years following the date the Bank takes all necessary action to irrevocably terminate and liquidate the Agreement;

the Bank may distribute the Accrued Benefit, determined as of the date of the termination of this Agreement, to the Executive subject to the above terms.

The Schedule A originally attached to the Agreement shall be deleted in its entirety.

IN WITNESS WHEREOF, the Executive and a duly authorized representative of the Bank have executed this Amendment as indicated below:

 

Executive    Bank
   By:   
   Its:    President & CEO

Salary Continuation Agreement - Frozen Plan

Projected Benefits (Not Part of Agreement)

Harry P. Umberger

 

Birth Date: xx/xx/1965

Plan Anniversary Date: Dec. 31

Normal Retirement Date:

10/25/2030, Age 65

Normal Retirement Payment:

Monthly for 15 Years

      Early Termination
Amount Payable Monthly
for 15 Years at Separation
of Service		      Disability
Amount Payable Monthly
for 15 Years at Normal
Retirement Age		      Change in Control
Amount Payable Monthly
for 15 Years at Separation
of Service		      Death
Amount Payable Monthly
for 15 Years Upon Death		  

Values As Of

    Age      Annual Benefit 1      Annual Benefit 1      Annual Benefit 1      Annual Benefit 1  

10/1/2016

      50         18,977         44,085         18,977         44,085   

12/31/2016

      51         19,263         44,085         19,263         44,085   

12/31/2017

      52         20,451         44,085         20,451         44,085   

12/31/2018

      53         21,713         44,085         21,713         44,085   

12/31/2019

      54         23,052         44,085         23,052         44,085   

12/31/2020

      55         24,474         44,085         24,474         44,085   

12/31/2021

      56         25,983         44,085         25,983         44,085   

12/31/2022

      57         27,586         44,085         27,586         44,085   

12/31/2023

      58         29,287         44,085         29,287         44,085   

12/31/2024

      59         31,093         44,085         31,093         44,085   

12/31/2025

      60         33,011         44,085         33,011         44,085   

12/31/2026

      61         35,047         44,085         35,047         44,085   

12/31/2027

      62         37,209         44,085         37,209         44,085   

12/31/2028

      63         39,504         44,085         39,504         44,085   

12/31/2029

      64         41,940         44,085         41,940         44,085   

10/25/2030

      65         44,085         44,085         44,085         44,085   

The first line represents the plan values as of October 1, 2016.

 

1  The annual benefit amount will be distributed in 12 equal monthly payments for a total of 180 monthly payments.

Salary Continuation Agreement - Frozen Plan

Projected Benefits (Not Part of Agreement)

IF THERE IS A CONFLICT BETWEEN THIS SCHEDULE AND THE AGREEMENT, THE TERMS AND PROVISIONS OF THE AGREEMENT SHALL PREVAIL. IF A TRIGGERING EVENT OCCURS, REFER TO THE AGREEMENT TO DETERMINE THE ACTUAL BENEFIT AMOUNT BASED ON THE DATE OF THE EVENT.

 

Harry P. Umberger          By   
Date 10-18-16          Title    President & CEO
         Date    October 18, 2016