BANK OF THE JAMES FINANCIAL GROUP INC (Form: 8-K, Received: 08/12/2009 15:19:41)

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): August 6, 2009

BANK OF THE JAMES FINANCIAL GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter)

Virginia

000-50548

20-0500300

(State or other jurisdiction of

incorporation or organization)

(Commission File Number)

(I.R.S. Employer

Identification No.)


828 Main Street, Lynchburg, VA		24504
(Address of principal executive offices)		(Zip Code)

(434) 846-2000

(Registrant’s telephone number, including area code)

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:

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

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

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

¨	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

(e) Compensatory Arrangement of Certain Officers

On August 6, 2009, Bank of the James (the “Bank”), a wholly-owned subsidiary of Bank of the James Financial Group, Inc. (the “Company”) entered into Salary Continuation Agreements with each of Robert R. Chapman III, President of the Bank; J. Todd Scruggs, Executive Vice President and Chief Financial Officer; and Harry P. Umberger, Executive Vice President and Senior Credit Officer.

The Salary Continuation Agreements provide each of the participating employees with supplemental benefits upon retirement, termination of employment, death, disability or a change of control of the Bank, in certain prescribed circumstances.

Robert R. Chapman III . Mr. Chapman’s Salary Continuation Agreement provides for a lump sum payment of $1,662,382 (the “Benefit Level”) payable within 90 days following the date on which he attains age 65 or the date of his death if he is employed by the Bank at the time of his death. If Mr. Chapman’s employment terminates other than for cause, death, disability, or change of control prior to his reaching age 65, Mr. Chapman shall be paid a lump sum equal to the vested portion of the Account Value (as defined in the Salary Continuation Agreement) as of the plan year preceding such termination date. This amount is payable within 90 days following the date on which his employment terminates. If Mr. Chapman becomes disabled prior to his reaching age 65, he shall receive a lump sum payment equal to 100% of the Account Value as of the end of the plan year preceding his disability, with interest credited on such amount at an annual rate of 6% until Mr. Chapman reaches age 65. This amount shall be paid within 90 days following the date on which Mr. Chapman reaches age 65. If Mr. Chapman’s employment with the Bank terminates within 24 months following a Change of Control (as defined in the Salary Continuation Agreement), Mr. Chapman shall be paid a lump sum equal to the vested portion of the Benefit Level. This payment shall be made within 90 days of the date on which Mr. Chapman’s employment terminates.

Reference is made to the Salary Continuation Agreement, included as Exhibit 10.7 to this Form 8-K, for the other terms and conditions of Mr. Chapman’s agreement, including benefits payable upon early termination, disability, or change of control.

J. Todd Scruggs . Mr. Scruggs’ Salary Continuation Agreement provides for annual payments of $119,500 payable in equal monthly installments for 15 years beginning within 90 days following the date on which he attains age 65 or the date of his death if he is employed by the Bank at the time of his death. If Mr. Scruggs’ employment terminates other than for cause, death, disability, or change of control prior to his reaching age 65, Mr. Scruggs shall be paid a lump sum equal to the vested portion of the Account Value (as defined in the Salary Continuation Agreement) as of the plan year preceding such termination date. This amount is payable within 90 days following the date on which his employment terminates. If Mr. Scruggs becomes disabled prior to his reaching age 65, he shall receive a lump sum payment equal to 100% of the Account Value as of the end of the plan year preceding his disability, with interest credited on such amount at an annual rate of 6% until Mr. Scruggs reaches age 65. This amount shall be paid within 90 days following the date on which Mr. Scruggs reaches age 65. If Mr. Scruggs’ employment with the Bank terminates within 24 months following a Change of Control (as defined in the Salary Continuation Agreement), Mr. Scruggs shall be paid a lump sum equal to the vested portion of the Benefit Level (as defined in the Salary Continuation Agreement). This payment shall be made within 90 days from the date on which Mr. Scruggs’ employment terminates.

Reference is made to the Salary Continuation Agreement, included as Exhibit 10.8 to this Form 8-K, for the other terms and conditions of Mr. Scruggs’ agreement, including benefits payable upon early termination, disability, or change of control.

Mr. Umberger . Mr. Umberger’s Salary Continuation Agreement provides for annual payments of $90,300 payable in equal monthly installments for 15 years beginning within 90 days following the date on which he attains age 65 or the date of his death if he is employed by the Bank at the time of his death. If Mr. Umberger’s employment terminates other than for cause, death, disability, or change of control prior to his reaching age 65, Mr. Umberger shall receive an amount equal to the vested portion of the Account Value (as defined in the Salary Continuation Agreement) as of the plan year preceding such termination date in equal monthly installments for 15 years. These payments shall begin within 90 days following the date on which his employment terminates. If Mr. Umberger becomes disabled prior to his reaching age 65, he shall receive an amount equal to 100% of the Account Value as of the end of the plan year preceding his disability, with interest credited on such amount at an annual rate of 6% until Mr. Umberger reaches age 65 in equal monthly installments for 15 years. These payments shall begin within 90 days following the date on which Mr. Umberger reaches age 65. If Mr. Umberger’s employment with the Bank terminates within 24 months following a Change of Control (as defined in the Salary Continuation Agreement), Mr. Umberger shall receive an amount equal to the vested portion of the Account Value in equal monthly installments for 15 years. These payments shall begin within 90 days from the date on which Mr. Umberger’s employment terminates.

Reference is made to the Salary Continuation Agreement, included as Exhibit 10.9 to this Form 8-K, for the other terms and conditions of Mr. Umberger’s agreement, including benefits payable upon early termination, disability, or change of control.

Item 5.03 - Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

At the Annual Meeting of Shareholders held on May 19, 2009, the shareholders of the Company approved amendments to the Company’s Articles of Incorporation. Specifically, the shareholders approved amendments to (i) amend Articles III and VII of the Articles of Incorporation to authorize the issuance of up to 1,000,000 shares of preferred stock; and (ii) amend Article V of the Articles of Incorporation to authorize the Company to set the size of its board of directors in its bylaws.

The board of directors of the Company previously approved the amendments and submitted the amendments to the shareholders for approval. The amendments were set forth and described in the Proxy Statement delivered to shareholders in connection with the Company’s 2009 Annual Meeting of Shareholders.

The Company filed Amended and Restated Articles of Incorporation with the Virginia State Corporation Commission, which filing was effective on June 17, 2009. In addition to the amendments approved by the shareholders, the Amended and Restated Articles of Incorporation include several changes that did not require shareholder approval but nevertheless were set forth in the Proxy Statement.

The Amended and Restated Articles of Incorporation are attached hereto as Exhibit 3(i) and are incorporated in this Item 5.03 by reference.

Item 9.01 - Financial Statements and Exhibits.

(a) Financial statements of businesses acquired - not applicable

(b) Pro forma financial information - not applicable


Exhibit No.		Exhibit Description
3(i)		Amended and Restated Articles of Incorporation

10.7		Salary Continuation Agreement dated as of August 6, 2009 by and between the Bank and Robert R. Chapman III

10.8		Salary Continuation Agreement dated as of August 6, 2009 by and between the Bank and J. Todd Scruggs

10.9		Salary Continuation Agreement dated as of August 6, 2009 by and between the Bank and Harry P. Umberger

SIGNATURE

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Date: August 12, 2009	BANK OF THE JAMES FINANCIAL GROUP, INC.

	By	/s/ J. Todd Scruggs J. Todd Scruggs Secretary-Treasurer

EXHIBIT INDEX


Exhibit No.		Exhibit Description
3(i)		Amended and Restated Articles of Incorporation

10.7		Salary Continuation Agreement dated as of August 6, 2009 by and between the Bank and Robert R. Chapman III

10.8		Salary Continuation Agreement dated as of August 6, 2009 by and between the Bank and J. Todd Scruggs

10.9		Salary Continuation Agreement dated as of August 6, 2009 by and between the Bank and Harry P. Umberger

Exhibit 3(i)

AMENDED AND RESTATED

ARTICLES OF INCORPORATION

BANK OF THE JAMES FINANCIAL GROUP, INC.

ARTICLE I

NAME

The name of the Corporation is:

BANK OF THE JAMES FINANCIAL GROUP, INC.

ARTICLE II

PURPOSES

The purpose for which the Corporation is organized is to act as a bank holding company, or subject to regulatory consent, as a financial holding company, and to transact any and all lawful business not required to be specifically stated in the Articles of Incorporation, for which corporations may be formed under the Virginia Stock Corporation Act.

ARTICLE III

AUTHORIZED STOCK

The Corporation shall have authority to issue ten million (10,000,000) shares of Common Stock, par value $2.14 per share and one million (1,000,000) shares of Preferred Stock, par value $2.14 per share.

1. Dividends . Subject to the provisions of law and the rights of holders of shares at the time outstanding of all classes of stock having prior rights as to dividends, the holders of Common Stock at the time outstanding shall be entitled to receive such dividends at such times and in such amounts as the Board of Directors may deem advisable.

2. Liquidation . In the event of any liquidation, dissolution or winding up (whether voluntary or involuntary) of the Corporation, after payment or provision for the payment of all the liabilities and obligations of the Corporation and all preferential amounts to which the holders of shares at the time outstanding of all classes of stock having prior rights thereto shall be entitled, the remaining net assets of the Corporation shall be distributed ratably among the holders of the shares at the time outstanding of Common Stock.

3. Voting . Except to the extent to which the Board of Directors shall have specified voting power with respect to any other class of stock and except as otherwise provided by law, the exclusive voting power shall be vested in the Common Stock, the holder thereof being entitled to one vote for each share of Common Stock at all meetings of the shareholders of the Corporation. No cumulative voting shall be allowed.

4. Designation of Preferred Stock . The Board of Directors, without shareholder action, may, by adoption of an amendment of the Articles of Incorporation divide the Preferred Stock into and issue the same in series and, to the fullest extent permitted by law, fix and determine the terms, including the preferences, rights and limitations of the shares of any series so established, and provide for the issuance thereof.

Prior to the issuance of shares of a series of Preferred Stock, the Board of Directors shall establish such series by adopting an amendment of the Articles of Incorporation setting forth the designation and number of shares of the series and the terms, including the preferences, rights and limitations thereof, and the Corporation shall file with the State Corporation Commission of Virginia articles of amendment as required by law, and the Commission shall have issued a certificate of amendment with respect to such articles of amendment.

ARTICLE IV

NO PREEMPTIVE RIGHTS

No holder of any outstanding shares of stock of the Corporation shall have any preemptive rights with respect to any subscriptions, warrants, rights or options to purchase any shares of stock of the Corporation, or any obligations convertible into any shares of stock of the Corporation or into subscriptions, warrants, rights or options to purchase any shares of stock in the Corporation.

ARTICLE V

ELECTION, NUMBER AND TERMS OF DIRECTORS

The management, control and government of the Corporation shall be vested in the Board of Directors. Except as otherwise fixed by any articles of amendment hereafter adopted by the Board of Directors pursuant to Section 4 of Article III relating to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, the number of the directors of the Corporation shall be fixed from time to time by or pursuant to the Bylaws of the Corporation. The directors, other than those who may be elected by the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, shall be divided with respect to the time for which they severally hold office, into three (3) classes, Group I, Group II, and Group III, as nearly equal in number as possible, Group I to be originally elected for a term expiring at the annual meeting of shareholders held in 2004, and Group II to be originally elected for a term expiring at the annual meeting of shareholders to be held in 2005, and Group III to be originally elected for a term expiring at the annual meeting of shareholders held in 2006, with each class member to hold office until his successor is elected and qualified. At each annual meeting of the shareholders of the Corporation beginning at the 2004 meeting, the successors of the class of directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of shareholders held in the third year following the year of their election.

ARTICLE VI

INDEMNIFICATION AND ELIMINATION OF LIABILITY

1. Indemnification of Directors and Officers . Except as provided in Section 2 of this Article, the Corporation shall indemnify every individual made a party to a proceeding because he is or was a director or officer against liability incurred in the proceeding if: (i) he conducted himself in good faith; and (ii) he believed, in the case of conduct in his official capacity with the Corporation, that his conduct was in its best interests, and in all other cases, that his conduct was at least not opposed to its best interests (or in the case of conduct with respect to an employee benefit plan, that his conduct was for the purpose he believed to be in the interests of the participants of and beneficiaries of the plan); and (iii) he had no reasonable cause to believe, in the case of any criminal proceeding, that his conduct was unlawful.

2. Indemnification Not Permitted . The Corporation shall not indemnify any individual against his willful misconduct or a knowing violation of the criminal law or against any liability incurred by him in any proceeding charging improper personal benefit to him, whether or not by or in the right of the Corporation or involving action in his official capacity, in which he was adjudged liable by a court of competent jurisdiction on the basis that personal benefit was improperly received by him.

3. Effect of Judgment or Conviction . The termination of a proceeding by judgment, order, settlement or conviction is not, of itself, determinative that an individual did not meet the standard of conduct of this Article or that the conduct of such individual constituted willful misconduct or a knowing violation of the criminal law.

4. Determination and Authorization . Unless ordered by a court of competent jurisdiction, any indemnification under Section 1 of this Article shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the individual is permissible in the circumstances because: (i) he met the standard of conduct set forth in Section 1 of this Article and, with respect to a proceeding by or in the right of the Corporation in which such individual was adjudged liable to the Corporation, he is fairly and reasonably entitled to indemnification in view of all of the relevant circumstances even though he was adjudged liable; and (ii) the conduct of such individual did not constitute willful misconduct or a knowing violation of the criminal law.

Such determination shall be made: (i) by the board of directors by a majority vote of a quorum consisting of directors not at the time parties to the proceeding; or (ii) if such a quorum cannot be obtained, by a majority vote of a committee duly designated by the board of directors (in which designation directors who are parties may participate), consisting solely of two or more directors not at the time parties to the proceeding; or (iii) by special legal counsel selected by the board of directors or its committee in the manner heretofore provided or, if such quorum of the board of directors cannot be obtained and such a committee cannot be designated, selected by a majority vote of the board of directors (in which selection directors who are parties may participate); or (iv) by the shareholders, but shares owned by or voted under the control of individuals who are at the time parties to the proceeding may not be voted on the determination.

Authorization of indemnification, evaluation as to reasonableness of expenses and determination and authorization of advancements for expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those selecting such counsel.

5. Advance for Expenses . The Corporation may pay for or reimburse the reasonable expenses incurred by any individual who is a party to a proceeding in the advance of final disposition of the proceeding if (i) he furnished the Corporation a written statement of his good faith belief that he has met the standard of conduct described in Section 1 of this Article and a written undertaking, executed personally or on his behalf to repay the advance if it is ultimately determined that indemnification of such individual in the specific case is not permissible; and (ii) a determination is made that the facts then known to those making the determination would not preclude indemnification under this Article. An undertaking furnished to the Corporation in accordance with the provisions of this Section shall be an unlimited general obligation of the individual furnishing the same but need not be secured and may be accepted by the Corporation without reference to financial ability to make repayment.

6. Indemnification of Employees and Agents . The Corporation may, but shall not be required to, indemnify and advance expenses to employees and agents of the Corporation to the same extent as provided in this Article with respect to directors and officers.

7. Elimination of Liability of Directors and Officers . Except as provided in Section 8 of this Article, in any proceeding brought by or in the right of the Corporation or brought by or on behalf of shareholders of the Corporation, a director or officer of the Corporation shall not be liable in any monetary amount for damages arising out of or resulting from a single transaction, occurrence or course of conduct.

8. Liability of Directors and Officers Not Eliminated . The liability of a director or officer shall not be eliminated in accordance with the provisions of Section 7 of this Article if the director or officer engaged in willful misconduct or a knowing violation of the criminal law or of any federal or state securities law, including without limitation, any claim of unlawful insider trading or manipulation of the market for any security.

9. Definitions . In this Article:

“Director” and “officer” mean an individual who is or was a director or officer of the Corporation, as the case may be, or who, while a director or officer of the Corporation is or was serving at the Corporation’s request as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. A director or officer shall be considered to be serving an employee benefit plan at the Corporation’s request if his duties to the Corporation also impose duties on, or otherwise involved services by, him to the plan or to participants in or beneficiaries of the plan.

“Individual” includes, unless the context requires otherwise, the estate, heirs, executors, personal representatives and administrators of an individual.

“Corporation” means the Corporation and any domestic or foreign predecessor entity of the Corporation in a merger or other transaction in which the predecessor’s existence ceased upon consummation of the transaction.

“Expenses” includes but is not limited to counsel fees.

“Liability” means the obligations to pay a judgment, settlement, penalty, fine, including any excise tax assessed with respect to any employee benefit plan, or reasonable expenses incurred with respect to a proceeding.

“Official capacity” means (i) when used with respect to a director, the office of director in the Corporation; (ii) when used with respect to an officer, the office in the Corporation held by him; or (iii) when used with respect to an employee or agent, the employment or agency relationship undertaken by him on behalf of the Corporation. “Official capacity” does not include service for any other foreign or domestic corporation or other partnership, joint venture, trust, employee benefit plan or other enterprise.

“Party” includes an individual who was, is or is threatened to be made a named defendant or respondent in a proceeding.

“Proceeding” means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal.

10. Provisions Not Exclusive . As authorized by the Virginia Stock Corporation Act, the provisions of this Article are in addition to and not in limitation to the specific powers of a corporation to indemnify directors and officers set forth therein. If any provision of this Article shall be adjudicated invalid and unenforceable by a court of competent jurisdiction, such adjudication shall not be deemed to invalidate or otherwise affect any other provision hereof or any power of indemnity which the Corporation may have under the Virginia Stock Corporation Act or other laws of the Commonwealth of Virginia.

ARTICLE VII

SHAREHOLDER APPROVAL OF CERTAIN TRANSACTIONS

An amendment of the Corporation’s Articles of Incorporation, except for amendments authorized in Section 4 of Article III, a plan of merger or share exchange, a transaction involving the sale of all or substantially all of the Corporation’s assets other than in the regular course of business and a plan of dissolution shall be approved by the vote of a majority of all the votes entitled to be cast on such transaction by each voting group entitled to vote on the transaction at a meeting at which a quorum of the voting group is present, provided that the transaction has been approved and recommended by at least two-thirds of the Directors in office at the time of such approval and recommendation. If the transaction is not so approved and recommended by at least two-thirds of the Directors in office, then the transaction shall be approved by the vote of eighty percent (80%) or more of all the votes entitled to be cast on such transactions by each voting group entitled to vote on the transaction.

Exhibit 10.7

BANK OF THE JAMES

Salary Continuation Agreement

BANK OF THE JAMES

SALARY CONTINUATION AGREEMENT

This SALARY CONTINUATION AGREEMENT (this “Agreement”) is adopted this 6 ^th day of August, 2009, by and between BANK OF THE JAMES , a state-chartered commercial bank located in Lynchburg, Virginia (the “Bank”), and ROBERT R. CHAPMAN III (the “Executive”).

The purpose of this Agreement is to provide specified benefits to the Executive, a member of a select group of management or highly compensated employees who contribute materially to the continued growth, development and future business success of the Bank. This Agreement shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended from time to time.

Article 1

Definitions

Whenever used in this Agreement, the following words and phrases shall have the meanings specified:

1.1

“ Account Value ” means the amount shown on Schedule A under the heading Account Value. The parties expressly acknowledge that the Account Value may be different than the liability that should be accrued by the Bank, under Generally Accepted Accounting Principles (“GAAP”), for the Bank’s obligation to the Executive under this Agreement.

1.2	“ Beneficiary ” means each designated person or entity, or the estate of the deceased Executive, entitled to any benefits upon the death of the Executive pursuant to Article 4.

1.3	“ Beneficiary Designation Form ” means the form established from time to time by the Plan Administrator that the Executive completes, signs and returns to the Plan Administrator to designate one or more Beneficiaries.

1.4	“ Board ” means the Board of Directors of the Bank as from time to time constituted.

1.5	“ Change in Control ” means a change in the ownership or effective control of the Bank, or in the ownership of a substantial portion of the assets of the Bank, as such change is defined in Code Section 409A and regulations thereunder.

1.6	“ Code ” means the Internal Revenue Code of 1986, as amended, and all regulations and guidance thereunder, including such regulations and guidance as may be promulgated after the Effective Date.

1.7

“ Disability ” means the Executive: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees or directors of the Bank. Medical determination of Disability may be made by either the Social Security Administration or by the provider of disability insurance covering employees or directors of the Bank provided that the definition of “disability” applied under such insurance program complies with the requirements of the preceding sentence. Upon the request of the Plan Administrator, the Executive must submit proof to the Plan Administrator of the Social Security Administration’s or the provider’s determination.

1.8	“ Early Termination ” means the Executive’s Separation from Service before attainment of Normal Retirement Age except when such Separation from Service occurs within twenty-four (24) months following a Change in Control or due to death, Termination for Cause or Disability.

1.9	“ Effective Date ” means July 1, 2009.

1.10	“ Normal Retirement Age ” means the Executive’s age sixty-five (65).

1.11	“ Normal Retirement Date ” means the later of the Executive’s Normal Retirement Age or Separation from Service.

1.12	“ Plan Administrator ” means the Board or such committee or person as the Board shall appoint.

1.13	“ Plan Year ” means each twelve (12) month period commencing on January 1 and ending on December 31 of each year. The initial Plan Year shall commence on the Effective Date of this Agreement and end on the following December 31.

1.14	“ Schedule A ” means the schedule attached to this Agreement and made a part hereof. Schedule A shall be updated upon a change in any of the benefits under Articles 2 or 3.

1.15

“ Separation from Service ” means termination of the Executive’s employment with the Bank for reasons other than death or Disability. Whether a Separation from Service has occurred is determined in accordance with the requirements of Code Section 409A based on whether the facts and circumstances indicate that the Bank and Executive reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Executive would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than

twenty percent (20%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding thirty-six (36) month period (or the full period of services to the Bank if the Executive has been providing services to the Bank less than thirty-six (36) months).

1.16

“ Specified Employee ” means an employee who at the time of Separation from Service is a key employee of the Bank, if any stock of the Bank is publicly traded on an established securities market or otherwise. For purposes of this Agreement, an employee is a key employee if the employee meets the requirements of Code Section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with the regulations thereunder and disregarding section 416(i)(5)) at any time during the twelve (12) month period ending on December 31 (the “identification period”). If the employee is a key employee during an identification period, the employee is treated as a key employee for purposes of this Agreement during the twelve (12) month period that begins on the first day of April following the close of the identification period.

1.17	“ Termination for Cause ” means Separation from Service for:

(a)

Gross negligence or gross neglect of duties to the Bank;

(b)

Conviction of a felony or of a gross misdemeanor involving moral turpitude in connection with the Executive’s employment with the Bank; or

(c)

Fraud, disloyalty, dishonesty or willful violation of any law or significant Bank policy committed in connection with the Executive’s employment and resulting in a material adverse effect on the Bank.

Article 2

Distributions During Lifetime

2.1	Normal Retirement Benefit . Upon Separation from Service after attaining Normal Retirement Age, the Bank shall distribute to the Executive the benefit described in this Section 2.1 in lieu of any other benefit under this Article.

2.1.1

Amount of Benefit . The benefit under this Section 2.1 is One Million Six Hundred Sixty Two Thousand Three Hundred Eighty Two Dollars ($1,662,382).

2.1.2

Distribution of Benefit . The Bank shall distribute the benefit to the Executive in a lump sum within ninety (90) days following the Executive’s Normal Retirement Date.

2.2	Early Termination Benefit . If Early Termination occurs, the Bank shall distribute to the Executive the benefit described in this Section 2.2 in lieu of any other benefit under this Article.

2.2.1

Amount of Benefit . The benefit under this Section 2.2 is the vested Account Value as set forth on Schedule A determined as of the end of the Plan Year preceding Separation from Service. This benefit is determined by vesting the Executive in fifty percent (50%) of the Account Value at the end of the first Plan Year, and in an additional ten percent (10%) of said amount for each succeeding Plan Year thereafter until the Executive becomes one hundred percent (100%) vested in the Account Value.

2.2.2

Distribution of Benefit . The Bank shall distribute the benefit to the Executive in a lump sum within ninety (90) days following Separation from Service.

2.3	Disability Benefit . If the Executive experiences a Disability prior to Normal Retirement Age, the Bank shall distribute to the Executive the benefit described in this Section 2.3 in lieu of any other benefit under this Article.

2.3.1

Amount of Benefit . The benefit under this Section 2.3 is one hundred percent (100%) of the Account Value set forth on Schedule A determined as of the end of the Plan Year preceding such Disability. Interest shall be credited to the Account Value for each Plan Year from Disability until Normal Retirement Age at an annual rate equal to six percent (6%).

2.3.2

Distribution of Benefit . The Bank shall distribute the benefit to the Executive in a lump sum within ninety (90) days following Normal Retirement Age.

2.4	Change in Control Benefit . If a Change in Control occurs prior to Normal Retirement Age, followed within twenty-four (24) months by Separation from Service, the Bank shall distribute to the Executive the benefit described in this Section 2.4 in lieu of any other benefit under this Article.

2.4.1

Amount of Benefit . The benefit under this Section 2.4 is the amount set forth on Schedule A determined as of the end of the Plan Year preceding Separation from Service. The benefit is the Account Value needed to support the Normal Retirement Benefit described in Section 2.1.1 at Normal Retirement Age multiplied by a vesting percentage. The Executive is fifty percent (50%) vested at the end of the first Plan Year, and in an additional ten percent (10%) of said amount for each succeeding Plan Year thereafter until the Executive becomes one hundred percent (100%) vested in the benefit

2.4.2

Distribution of Benefit . The Bank shall distribute the benefit to the Executive in a lump sum within ninety (90) days following the Executive’s Separation from Service.

2.5

Restriction on Commencement of Distributions . Notwithstanding any provision of this Agreement to the contrary, if the Executive is considered a Specified Employee, the provisions of this Section 2.5 shall govern all distributions hereunder. If benefit distributions which would otherwise be made to the Executive due to Separation from

Service are limited because the Executive is a Specified Employee, then such distributions shall not be made during the first six (6) months following Separation from Service. Rather, any distribution which would otherwise be paid to the Executive during such period shall be accumulated and paid to the Executive in a lump sum on the first day of the seventh month following Separation from Service. All subsequent distributions shall be paid in the manner specified. The Bank shall pay an additional amount representing interest on the distributions which would have been made during such six (6) month period. Such amount shall be paid to the Executive on the first day of the seventh month following Separation from Service.

2.6

Distributions Upon Taxation of Amounts Deferred . If, pursuant to Code Section 409A, the Federal Insurance Contributions Act or other state, local or foreign tax, the Executive becomes subject to tax on the amounts deferred hereunder, then the Bank may make a limited distribution to the Executive in a manner that conforms to the requirements of Code section 409A. Any such distribution will decrease the Executive’s benefits distributable under this Agreement.

2.7	Change in Form or Timing of Distributions . For distribution of benefits under this Article 2, the Executive and the Bank may, subject to the terms of Section 8.1, amend this Agreement to delay the timing or change the form of distributions. Any such amendment:

(a)

may not accelerate the time or schedule of any distribution, except as provided in Code Section 409A;

(b)

must, for benefits distributable under Section 2.3, be made at least twelve (12) months prior to the first scheduled distribution;

(c)

must, for benefits distributable under Sections 2.1, 2.2 and 2.4, delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally scheduled to be made; and

(d)

must take effect not less than twelve (12) months after the amendment is made.

Article 3

Distribution at Death

3.1	Death During Active Service . If the Executive dies prior to Separation from Service, the Bank shall distribute to the Beneficiary the benefit described in this Section 3.1. This benefit shall be distributed in lieu of any benefit under Article 2.

3.1.1

Amount of Benefit . The benefit under this Section 3.1 is One Million Six Hundred Sixty Two Thousand Three Hundred and Eighty Two Dollars ($1,662,382).

3.1.2

Distribution of Benefit . The Bank shall distribute the benefit to the Beneficiary in a lump sum within ninety (90) days following the Executive’s death. The Beneficiary shall be required to provide to the Bank the Executive’s death certificate.

3.2

Death During Distribution of a Benefit . If the Executive dies after any benefit distributions have commenced under this Agreement but before receiving all such distributions, the Bank shall distribute to the Beneficiary the remaining benefits at the same time and in the same amounts they would have been distributed to the Executive had the Executive survived.

3.3

Death Before Benefit Distributions Commence . If the Executive is entitled to benefit distributions under this Agreement but dies prior to the date that commencement of said benefit distributions are scheduled to be made under this Agreement, the Bank shall distribute to the Beneficiary the same benefits to which the Executive was entitled prior to death, except that the benefit distributions shall be paid in the manner specified in Section 3.1.2 and shall commence within ninety (90) days following the Executive’s death.

Article 4

Beneficiaries

4.1

In General . The Executive shall have the right, at any time, to designate a Beneficiary to receive any benefit distributions under this Agreement upon the death of the Executive. The Beneficiary designated under this Agreement may be the same as or different from the beneficiary designated under any other plan of the Bank in which the Executive participates.

4.2

Designation . The Executive shall designate a Beneficiary by completing and signing the Beneficiary Designation Form and delivering it to the Plan Administrator or its designated agent. If the Executive names someone other than the Executive’s spouse as a Beneficiary, the Plan Administrator may, in its sole discretion, determine that spousal consent is required to be provided in a form designated by the Plan Administrator, executed by the Executive’s spouse and returned to the Plan Administrator. The Executive’s beneficiary designation shall be deemed automatically revoked if the Beneficiary predeceases the Executive or if the Executive names a spouse as Beneficiary and the marriage is subsequently dissolved. The Executive shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Plan Administrator’s rules and procedures. Upon the acceptance by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled. The Plan Administrator shall be entitled to rely on the last Beneficiary Designation Form filed by the Executive and accepted by the Plan Administrator prior to the Executive’s death.

4.3	Acknowledgment . No designation or change in designation of a Beneficiary shall be effective until received, accepted and acknowledged in writing by the Plan Administrator or its designated agent.

4.4

No Beneficiary Designation . If the Executive dies without a valid beneficiary designation, or if all designated Beneficiaries predecease the Executive, then the Executive’s spouse shall be the designated Beneficiary. If the Executive has no surviving spouse, any benefit shall be paid to the Executive’s estate.

4.5

Facility of Distribution . If the Plan Administrator determines in its discretion that a benefit is to be distributed to a minor, to a person declared incompetent or to a person incapable of handling the disposition of that person’s property, the Plan Administrator may direct distribution of such benefit to the guardian, legal representative or person having the care or custody of such minor, incompetent person or incapable person. The Plan Administrator may require proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Any distribution of a benefit shall be a distribution for the account of the Executive and the Beneficiary, as the case may be, and shall completely discharge any liability under this Agreement for such distribution amount.

Article 5

General Limitations

5.1	Termination for Cause . Notwithstanding any provision of this Agreement to the contrary, the Bank shall not distribute any benefit under this Agreement if the Executive’s employment with the Bank is terminated by the Bank or an applicable regulator due to a Termination for Cause.

5.2

Suicide or Misstatement . No benefit shall be distributed if the Executive commits suicide within two (2) years after the Effective Date, or if an insurance company which issued a life insurance policy covering the Executive and owned by the Bank denies coverage (i) for material misstatements of fact made by the Executive on an application for such life insurance, or (ii) for any other reason.

5.3

Removal . Notwithstanding any provision of this Agreement to the contrary, the Bank shall not distribute any benefit under this Agreement if the Executive is subject to a final removal or prohibition order issued by an appropriate federal banking agency pursuant to Section 8(e) of the Federal Deposit Insurance Act. Notwithstanding anything herein to the contrary, any payments made to the Executive pursuant to this Agreement, or otherwise, shall be subject to and conditioned upon compliance with 12 U.S.C. 1828 and FDIC Regulation 12 CFR Part 359, Golden Parachute Indemnification Payments and any other regulations or guidance promulgated thereunder.

Article 6

Administration of Agreement

6.1

Plan Administrator Duties . The Plan Administrator shall administer this Agreement according to its express terms and shall also have the discretion and authority to (i) make, amend, interpret and enforce all appropriate rules and regulations for the administration of this Agreement and (ii) decide or resolve any and all questions, including interpretations of this Agreement, as may arise in connection with this Agreement to the extent the exercise of such discretion and authority does not conflict with Code Section 409A.

6.2

Agents . In the administration of this Agreement, the Plan Administrator may employ agents and delegate to them such administrative duties as the Plan Administrator sees fit, including acting through a duly appointed representative, and may from time to time consult with counsel who may be counsel to the Bank.

6.3

Binding Effect of Decisions . Any decision or action of the Plan Administrator with respect to any question arising out of or in connection with the administration, interpretation or application of this Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in this Agreement.

6.4

Indemnity of Plan Administrator . The Bank shall indemnify and hold harmless the Plan Administrator against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Agreement, except in the case of willful misconduct by the Plan Administrator.

6.5

Bank Information . To enable the Plan Administrator to perform its functions, the Bank shall supply full and timely information to the Plan Administrator on all matters relating to the date and circumstances of the Executive’s death, Disability or Separation from Service, and such other pertinent information as the Plan Administrator may reasonably require.

6.6	Annual Statement . The Plan Administrator shall provide to the Executive, within one hundred twenty (120) days after the end of each Plan Year, a statement setting forth the benefits to be distributed under this Agreement.

Article 7

Claims And Review Procedures

7.1	Claims Procedure . An Executive or Beneficiary (“claimant”) who has not received benefits under this Agreement that he or she believes should be distributed shall make a claim for such benefits as follows:

7.1.1

Initiation – Written Claim . The claimant initiates a claim by submitting to the Plan Administrator a written claim for the benefits. If such a claim relates to the contents of a notice received by the claimant, the claim must be made within sixty (60) days after such notice was received by the claimant. All other claims must be made within one hundred eighty (180) days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the claimant.

7.1.2

Timing of Plan Administrator Response . The Plan Administrator shall respond to such claimant within ninety (90) days after receiving the claim. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional ninety (90) days by notifying the claimant in writing, prior to the end of the initial ninety (90) day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.

7.1.3

Notice of Decision . If the Plan Administrator denies part or all of the claim, the Plan Administrator shall notify the claimant in writing of such denial. The Plan Administrator shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

(a)

The specific reasons for the denial;

(b)

A reference to the specific provisions of this Agreement on which the denial is based;

(c)

A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed;

(d)

An explanation of this Agreement’s review procedures and the time limits applicable to such procedures; and

(e)

A statement of the claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

7.2	Review Procedure . If the Plan Administrator denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Plan Administrator of the denial as follows:

7.2.1

Initiation – Written Request . To initiate the review, the claimant, within sixty (60) days after receiving the Plan Administrator’s notice of denial, must file with the Plan Administrator a written request for review.

7.2.2

Additional Submissions – Information Access . The claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim. The Plan Administrator shall also provide the claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits.

7.2.3

Considerations on Review . In considering the review, the Plan Administrator shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

7.2.4

Timing of Plan Administrator Response . The Plan Administrator shall respond in writing to such claimant within sixty (60) days after receiving the request for review. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional sixty (60) days by notifying the claimant in writing, prior to the end of the initial sixty (60) day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.

7.2.5

Notice of Decision . The Plan Administrator shall notify the claimant in writing of its decision on review. The Plan Administrator shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth:

(a)

The specific reasons for the denial;

(b)

A reference to the specific provisions of this Agreement on which the denial is based;

(c)

A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits; and

(d)

A statement of the claimant’s right to bring a civil action under ERISA Section 502(a).

Article 8

Amendments and Termination

8.1

Amendments . This Agreement may be amended only by a written agreement signed by the Bank and the Executive. However, the Bank may unilaterally amend this Agreement to conform with written directives to the Bank from its auditors or banking regulators or to comply with legislative changes or tax law, including without limitation Code Section 409A.

8.2

Plan Termination Generally . This Agreement may be terminated only by a written agreement signed by the Bank and the Executive. The benefit shall be the Account Value as of the date this Agreement is terminated. Except as provided in Section 8.3, the termination of this Agreement shall not cause a distribution of benefits under this Agreement. Rather, upon such termination benefit distributions will be made at the earliest distribution event permitted under Article 2 or Article 3.

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 such 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 Account Value, determined as of the date of the termination of this Agreement, to the Executive in a lump sum subject to the above terms.

Article 9

Miscellaneous

9.1	Binding Effect . This Agreement shall bind the Executive and the Bank and their beneficiaries, survivors, executors, administrators and transferees.

9.2

No Guarantee of Employment . This Agreement is not a contract for employment. It does not give the Executive the right to remain as an employee of the Bank nor interfere with the Bank’s right to discharge the Executive. It does not require the Executive to remain an employee nor interfere with the Executive’s right to terminate employment at any time.

9.3	Non-Transferability . Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.

9.4

Tax Withholding and Reporting . The Bank shall withhold any taxes that are required to be withheld, including but not limited to taxes owed under Code Section 409A from the benefits provided under this Agreement. The Executive acknowledges that the Bank’s sole liability regarding taxes is to forward any amounts withheld to the appropriate taxing authorities. The Bank shall satisfy all applicable reporting requirements, including those under Code Section 409A.

9.5	Applicable Law . This Agreement and all rights hereunder shall be governed by the laws of the Commonwealth of Virginia, except to the extent preempted by the laws of the United States of America.

9.6

Unfunded Arrangement . The Executive and the Beneficiary are general unsecured creditors of the Bank for the distribution of benefits under this Agreement. The benefits represent the mere promise by the Bank to distribute such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by creditors. Any insurance on the Executive’s life or other informal funding asset is a general asset of the Bank to which the Executive and Beneficiary have no preferred or secured claim.

9.7

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

9.8	Entire Agreement . This Agreement constitutes the entire agreement between the Bank and the Executive as to the subject matter hereof. No rights are granted to the Executive by virtue of this Agreement other than those specifically set forth herein.

9.9	Interpretation . Wherever the fulfillment of the intent and purpose of this Agreement requires and the context will permit, the use of the masculine gender includes the feminine and use of the singular includes the plural.

9.10

Alternative Action . In the event it shall become impossible for the Bank or the Plan Administrator to perform any act required by this Agreement due to regulatory or other constraints, the Bank or Plan Administrator may perform such alternative act as most nearly carries out the intent and purpose of this Agreement and is in the best interests of the Bank, provided that such alternative act does not violate Code Section 409A.

9.11	Headings . Article and section headings are for convenient reference only and shall not control or affect the meaning or construction of any provision herein.

9.12	Validity . If any provision of this Agreement shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Agreement shall be construed and enforced as if such illegal or invalid provision had never been included herein.

9.13	Notice . Any notice or filing required or permitted to be given to the Bank or Plan Administrator under this Agreement shall be sufficient if in writing and hand-delivered or sent by registered or certified mail to the address below:


		Bank of the James
		828 Main St.
		Lynchburg, VA 24504

Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.

Any notice or filing required or permitted to be given to the Executive under this Agreement shall be sufficient if in writing and hand-delivered or sent by mail to the last known address of the Executive.

9.14

Deduction Limitation on Benefit Payments . If the Bank reasonably anticipates that the Bank’s deduction with respect to any distribution under this Agreement would be limited or eliminated by application of Code Section 162(m), then to the extent deemed necessary by the Bank to ensure that the entire amount of any distribution from this Agreement is deductible, the Bank may delay payment of any amount that would otherwise be distributed under this Agreement. The delayed amounts shall be distributed to the Executive (or the Beneficiary in the event of the Executive’s death) at the earliest date the Bank reasonably anticipates that the deduction of the payment of the amount will not be limited or eliminated by application of Code Section 162(m).

9.15	Compliance with Section 409A . This Agreement shall be interpreted and administered consistent with Code Section 409A.

IN WITNESS WHEREOF, the Executive and a duly authorized representative of the Bank have signed this Agreement.


EXECUTIVE:	BANK:

	BANK OF THE JAMES

/s/ Robert R. Chapman III	By:	/s/ J. Todd Scruggs
ROBERT R. CHAPMAN III	Title:	EVP-CFO

BANK OF THE JAMES

Salary Continuation Agreement

Beneficiary Designation Form

{ }	New Designation

{ }	Change in Designation

I, ROBERT R. CHAPMAN III , designate the following as Beneficiary under this Agreement:


Primary:

________________________________________________________________________________________		_____%

________________________________________________________________________________________		_____%

Contingent:

________________________________________________________________________________________		_____%

________________________________________________________________________________________		_____%

Notes:

•

Please PRINT CLEARLY or TYPE the names of the beneficiaries.

•

To name a trust as Beneficiary, please provide the name of the trustee(s) and the exact name and date of the trust agreement.

•

To name your estate as Beneficiary, please write “Estate of [your name] ”.

•

Be aware that none of the contingent beneficiaries will receive anything unless ALL of the primary beneficiaries predecease you.

I understand that I may change these beneficiary designations by delivering a new written designation to the Plan Administrator, which shall be effective only upon receipt and acknowledgment by the Plan Administrator prior to my death. I further understand that the designations will be automatically revoked if the Beneficiary predeceases me, or, if I have named my spouse as Beneficiary and our marriage is subsequently dissolved.

Name:

Signature: Date:

Received by the Plan Administrator this day of , 200


By:

Title:

Plan Year Reporting

Salary Continuation Plan

Schedule A

Robert Chapman


*Birth Date: 7/21/1962* *Plan Anniversary Date: 1/1/2010* *Normal Retirement: 7/21/2027, Age 65* *Normal Retirement Payment: Lump Sum*					Early Termination			Disability			Change in Control			Pre-retire. Death Benefit
					Lump Sum Benefit Amount Payable at Separation from Service			Lump Sum Benefit Amount Payable at Normal Retirement Age			Lump Sum Benefit Amount Payable at Separation from Service			Lump Sum Benefit
Values as of	Discount Rate		Benefit Level	Account Value	Vesting		Based On Account Value	Vesting		Based On Account Value	Vesting		Based On Benefit	Based On Benefit
Values as of	(1)		(2)	(3)	(4)		(5)	(6)		(7)	(8)		(9)	(10)
Jul 2009 ¹			1,662,382		0	%	0	100	%	0	0	%	0	1,662,382
Dec 2009	6.00	%	1,662,382	25,878	50	%	12,939	100	%	74,125	50	%	831,191	1,662,382
Dec 2010	6.00	%	1,662,382	80,015	60	%	48,009	100	%	215,883	60	%	997,429	1,662,382
Dec 2011	6.00	%	1,662,382	137,492	70	%	96,244	100	%	349,406	70	%	1,163,667	1,662,382
Dec 2012	6.00	%	1,662,382	198,514	80	%	158,811	100	%	475,172	80	%	1,329,906	1,662,382
Dec 2013	6.00	%	1,662,382	263,299	90	%	236,969	100	%	593,632	90	%	1,496,144	1,662,382

Dec 2014	6.00	%	1,662,382	332,080	100	%	332,080	100	%	705,210	100	%	1,662,382	1,662,382
Dec 2015	6.00	%	1,662,382	405,104	100	%	405,104	100	%	810,305	100	%	1,662,382	1,662,382
Dec 2016	6.00	%	1,662,382	482,631	100	%	482,631	100	%	909,296	100	%	1,662,382	1,662,382
Dec 2017	6.00	%	1,662,382	564,940	100	%	564,940	100	%	1,002,535	100	%	1,662,382	1,662,382
Dec 2018	6.00	%	1,662,382	652,326	100	%	652,326	100	%	1,090,358	100	%	1,662,382	1,662,382

Dec 2019	6.00	%	1,662,382	745,101	100	%	745,101	100	%	1,173,078	100	%	1,662,382	1,662,382
Dec 2020	6.00	%	1,662,382	843,599	100	%	843,599	100	%	1,250,993	100	%	1,662,382	1,662,382
Dec 2021	6.00	%	1,662,382	948,172	100	%	948,172	100	%	1,324,382	100	%	1,662,382	1,662,382
Dec 2022	6.00	%	1,662,382	1,059,195	100	%	1,059,195	100	%	1,393,507	100	%	1,662,382	1,662,382
Dec 2023	6.00	%	1,662,382	1,177,065	100	%	1,177,065	100	%	1,458,616	100	%	1,662,382	1,662,382

Dec 2024	6.00	%	1,662,382	1,302,205	100	%	1,302,205	100	%	1,519,943	100	%	1,662,382	1,662,382
Dec 2025	6.00	%	1,662,382	1,435,064	100	%	1,435,064	100	%	1,577,707	100	%	1,662,382	1,662,382
Dec 2026	6.00	%	1,662,382	1,576,117	100	%	1,576,117	100	%	1,632,116	100	%	1,662,382	1,662,382
Jul 2027	6.00	%	1,662,382	1,662,382	100	%	1,662,382	100	%	1,662,382	100	%	1,662,382	1,662,382

¹	The first line reflects just the initial values as of July 1, 2009.

*	IF THERE IS A CONFLICT IN ANY TERMS OR PROVISIONS BETWEEN THIS SCHEDULE A 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.

Salary Continuation Plan for Bank of the James - Lynchburg, VA

Exhibit 10.8

BANK OF THE JAMES

Salary Continuation Agreement

BANK OF THE JAMES

SALARY CONTINUATION AGREEMENT

Article 1

Definitions

Whenever used in this Agreement, the following words and phrases shall have the meanings specified:

1.1

1.2	“ Beneficiary ” means each designated person or entity, or the estate of the deceased Executive, entitled to any benefits upon the death of the Executive pursuant to Article 4.

1.3	“ Beneficiary Designation Form ” means the form established from time to time by the Plan Administrator that the Executive completes, signs and returns to the Plan Administrator to designate one or more Beneficiaries.

1.4	“ Board ” means the Board of Directors of the Bank as from time to time constituted.

1.5	“ Change in Control ” means a change in the ownership or effective control of the Bank, or in the ownership of a substantial portion of the assets of the Bank, as such change is defined in Code Section 409A and regulations thereunder.

1.6	“ Code ” means the Internal Revenue Code of 1986, as amended, and all regulations and guidance thereunder, including such regulations and guidance as may be promulgated after the Effective Date.

1.7

1.8	“ Early Termination ” means the Executive’s Separation from Service before attainment of Normal Retirement Age except when such Separation from Service occurs within twenty-four (24) months following a Change in Control or due to death, Termination for Cause or Disability.

1.9	“ Effective Date ” means July 1, 2009.

1.10	“ Normal Retirement Age ” means the Executive’s age sixty-five (65).

1.11	“ Normal Retirement Date ” means the later of the Executive’s Normal Retirement Age or Separation from Service.

1.12	“ Plan Administrator ” means the Board or such committee or person as the Board shall appoint.

1.13	“ Plan Year ” means each twelve (12) month period commencing on January 1 and ending on December 31 of each year. The initial Plan Year shall commence on the Effective Date of this Agreement and end on the following December 31.

1.14	“ Schedule A ” means the schedule attached to this Agreement and made a part hereof. Schedule A shall be updated upon a change in any of the benefits under Articles 2 or 3.

1.15

1.16

1.17	“ Termination for Cause ” means Separation from Service for:

(a)

Gross negligence or gross neglect of duties to the Bank;

(b)

Conviction of a felony or of a gross misdemeanor involving moral turpitude in connection with the Executive’s employment with the Bank; or

(c)

Article 2

Distributions During Lifetime

2.1	Normal Retirement Benefit . Upon Separation from Service after attaining Normal Retirement Age, the Bank shall distribute to the Executive the benefit described in this Section 2.1 in lieu of any other benefit under this Article.

2.1.1

Amount of Benefit . The annual benefit under this Section 2.1 is One Hundred Nineteen Thousand Five Hundred Dollars ($119,500).

2.1.2

Distribution of Benefit . The Bank shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing within ninety (90) days following the Executive’s Normal Retirement Date. The annual benefit shall be distributed to the Executive for fifteen (15) years.

2.2	Early Termination Benefit . If Early Termination occurs, the Bank shall distribute to the Executive the benefit described in this Section 2.2 in lieu of any other benefit under this Article.

2.2.1

2.2.2

Distribution of Benefit . The Bank shall distribute the benefit to the Executive in a lump sum within ninety (90) days following Separation from Service.

2.3	Disability Benefit . If the Executive experiences a Disability prior to Normal Retirement Age, the Bank shall distribute to the Executive the benefit described in this Section 2.3 in lieu of any other benefit under this Article.

2.3.1

2.3.2

Distribution of Benefit . The Bank shall distribute the benefit to the Executive in a lump sum within ninety (90) days following Normal Retirement Age.

2.4	Change in Control Benefit . If a Change in Control occurs prior to Normal Retirement Age, followed within twenty-four (24) months by Separation from Service, the Bank shall distribute to the Executive the benefit described in this Section 2.4 in lieu of any other benefit under this Article.

2.4.1

2.4.2

Distribution of Benefit . The Bank shall distribute the benefit to the Executive in a lump sum within ninety (90) days following the Executive’s Separation from Service.

2.5

2.6

2.7	Change in Form or Timing of Distributions . For distribution of benefits under this Article 2, the Executive and the Bank may, subject to the terms of Section 8.1, amend this Agreement to delay the timing or change the form of distributions. Any such amendment:

(a)

may not accelerate the time or schedule of any distribution, except as provided in Code Section 409A;

(b)

must, for benefits distributable under Section 2.3, be made at least twelve (12) months prior to the first scheduled distribution;

(c)

(d)

must take effect not less than twelve (12) months after the amendment is made.

Article 3

Distribution at Death

3.1	Death During Active Service . If the Executive dies prior to Separation from Service, the Bank shall distribute to the Beneficiary the benefit described in this Section 3.1. This benefit shall be distributed in lieu of any benefit under Article 2.

3.1.1

Amount of Benefit . The annual benefit under this Section 3.1 is One Hundred Nineteen Thousand Five Hundred Dollars ($119,500).

3.1.2

Distribution of Benefit . The Bank shall distribute the annual benefit to the Beneficiary in twelve (12) equal monthly installments commencing within ninety (90) days following the Executive’s death. The annual benefit shall be distributed to the Beneficiary for fifteen (15) years. The Beneficiary shall be required to provide to the Bank the Executive’s death certificate.

3.2

3.3

Article 4

Beneficiaries

4.1

4.2

4.3	Acknowledgment . No designation or change in designation of a Beneficiary shall be effective until received, accepted and acknowledged in writing by the Plan Administrator or its designated agent.

4.4

4.5

Article 5

General Limitations

5.1	Termination for Cause . Notwithstanding any provision of this Agreement to the contrary, the Bank shall not distribute any benefit under this Agreement if the Executive’s employment with the Bank is terminated by the Bank or an applicable regulator due to a Termination for Cause.

5.2

5.3

Article 6

Administration of Agreement

6.1

6.2

6.3

6.4

6.5

6.6	Annual Statement . The Plan Administrator shall provide to the Executive, within one hundred twenty (120) days after the end of each Plan Year, a statement setting forth the benefits to be distributed under this Agreement.

Article 7

Claims And Review Procedures

7.1	Claims Procedure . An Executive or Beneficiary (“claimant”) who has not received benefits under this Agreement that he or she believes should be distributed shall make a claim for such benefits as follows:

7.1.1

7.1.2

7.1.3

(a)

The specific reasons for the denial;

(b)

A reference to the specific provisions of this Agreement on which the denial is based;

(c)

A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed;

(d)

An explanation of this Agreement’s review procedures and the time limits applicable to such procedures; and

(e)

A statement of the claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

7.2	Review Procedure . If the Plan Administrator denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Plan Administrator of the denial as follows:

7.2.1

7.2.2

7.2.3

7.2.4

7.2.5

(a)

The specific reasons for the denial;

(b)

A reference to the specific provisions of this Agreement on which the denial is based;

(c)

(d)

A statement of the claimant’s right to bring a civil action under ERISA Section 502(a).

Article 8

Amendments and Termination

8.1

8.2

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)

(b)

(c)

the Bank may distribute the Account Value, determined as of the date of the termination of this Agreement, to the Executive in a lump sum subject to the above terms.

Article 9

Miscellaneous

9.1	Binding Effect . This Agreement shall bind the Executive and the Bank and their beneficiaries, survivors, executors, administrators and transferees.

9.2

9.3	Non-Transferability . Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.

9.4

9.5	Applicable Law . This Agreement and all rights hereunder shall be governed by the laws of the Commonwealth of Virginia, except to the extent preempted by the laws of the United States of America.

9.6

9.7

9.8	Entire Agreement . This Agreement constitutes the entire agreement between the Bank and the Executive as to the subject matter hereof. No rights are granted to the Executive by virtue of this Agreement other than those specifically set forth herein.

9.9	Interpretation . Wherever the fulfillment of the intent and purpose of this Agreement requires and the context will permit, the use of the masculine gender includes the feminine and use of the singular includes the plural.

9.10

9.11	Headings . Article and section headings are for convenient reference only and shall not control or affect the meaning or construction of any provision herein.

9.12	Validity . If any provision of this Agreement shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Agreement shall be construed and enforced as if such illegal or invalid provision had never been included herein.

9.13	Notice . Any notice or filing required or permitted to be given to the Bank or Plan Administrator under this Agreement shall be sufficient if in writing and hand-delivered or sent by registered or certified mail to the address below:


		Bank of the James
		828 Main St.
		Lynchburg, VA 24504

Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.

9.14

9.15	Compliance with Section 409A . This Agreement shall be interpreted and administered consistent with Code Section 409A.

IN WITNESS WHEREOF, the Executive and a duly authorized representative of the Bank have signed this Agreement.


EXECUTIVE:	BANK:

	BANK OF THE JAMES

/s/ J. Todd Scruggs	By:	/s/ Robert R. Chapman III
J. TODD SCRUGGS	Title:	CFO

BANK OF THE JAMES

Salary Continuation Agreement

Beneficiary Designation Form

{ }	New Designation

{ }	Change in Designation

I, J. TODD SCRUGGS , designate the following as Beneficiary under this Agreement:


Primary:

________________________________________________________________________________________		_____%

________________________________________________________________________________________		_____%

Contingent:

________________________________________________________________________________________		_____%

________________________________________________________________________________________		_____%

Notes:

•

Please PRINT CLEARLY or TYPE the names of the beneficiaries.

•

To name a trust as Beneficiary, please provide the name of the trustee(s) and the exact name and date of the trust agreement.

•

To name your estate as Beneficiary, please write “Estate of [your name] ”.

•

Be aware that none of the contingent beneficiaries will receive anything unless ALL of the primary beneficiaries predecease you.

Name:

Signature: Date:

Received by the Plan Administrator this day of , 200


By:

Title:

Plan Year Reporting

Salary Continuation Plan

Schedule A

Jeffery T. Scruggs


*Birth Date: 12/9/1967* *Plan Anniversary Date: 1/1/2010* *Normal Retirement: 12/9/2032, Age 65* *Normal Retirement Payment: Monthly for 15 years*					Early Termination			Disability			Change in Control			Pre-retire. Death Benefit
					Lump Sum Benefit Amount Payable at Separation from Service			Lump Sum Benefit Amount Payable at Normal Retirement Age			Lump Sum Benefit Amount Payable at Separation from Service			Annual ² Benefit
Values as of	Discount Rate		Benefit Level	Account Value	Vesting		Based On Account Value	Vesting		Based On Account Value	Vesting		Based On Benefit	Based On Benefit
Values as of	(1)		(2)	(3)	(4)		(5)	(6)		(7)	(8)		(9)	(10)
Jul 2009 ¹			119,500		0	%	0	100	%	0	0	%	0	119,500
Dec 2009	6.00	%	119,500	11,691	50	%	5,846	100	%	46,312	50	%	592,999	119,500
Dec 2010	6.00	%	119,500	36,150	60	%	21,690	100	%	134,880	60	%	711,599	119,500
Dec 2011	6.00	%	119,500	62,117	70	%	43,482	100	%	218,303	70	%	830,199	119,500
Dec 2012	6.00	%	119,500	89,686	80	%	71,749	100	%	296,880	80	%	948,798	119,500
Dec 2013	6.00	%	119,500	118,956	90	%	107,060	100	%	370,892	90	%	1,067,398	119,500

Dec 2014	6.00	%	119,500	150,030	100	%	150,030	100	%	440,603	100	%	1,185,998	119,500
Dec 2015	6.00	%	119,500	183,021	100	%	183,021	100	%	506,266	100	%	1,185,998	119,500
Dec 2016	6.00	%	119,500	218,047	100	%	218,047	100	%	568,113	100	%	1,185,998	119,500
Dec 2017	6.00	%	119,500	255,234	100	%	255,234	100	%	626,367	100	%	1,185,998	119,500
Dec 2018	6.00	%	119,500	294,714	100	%	294,714	100	%	681,238	100	%	1,185,998	119,500

Dec 2019	6.00	%	119,500	336,629	100	%	336,629	100	%	732,920	100	%	1,185,998	119,500
Dec 2020	6.00	%	119,500	381,129	100	%	381,129	100	%	781,600	100	%	1,185,998	119,500
Dec 2021	6.00	%	119,500	428,374	100	%	428,374	100	%	827,452	100	%	1,185,998	119,500
Dec 2022	6.00	%	119,500	478,532	100	%	478,532	100	%	870,640	100	%	1,185,998	119,500
Dec 2023	6.00	%	119,500	531,785	100	%	531,785	100	%	911,320	100	%	1,185,998	119,500

Dec 2024	6.00	%	119,500	588,322	100	%	588,322	100	%	949,636	100	%	1,185,998	119,500
Dec 2025	6.00	%	119,500	648,346	100	%	648,346	100	%	985,726	100	%	1,185,998	119,500
Dec 2026	6.00	%	119,500	712,072	100	%	712,072	100	%	1,019,719	100	%	1,185,998	119,500
Dec 2027	6.00	%	119,500	779,729	100	%	779,729	100	%	1,051,738	100	%	1,185,998	119,500
Dec 2028	6.00	%	119,500	851,559	100	%	851,559	100	%	1,081,896	100	%	1,185,998	119,500

Dec 2029	6.00	%	119,500	927,819	100	%	927,819	100	%	1,110,302	100	%	1,185,998	119,500
Dec 2030	6.00	%	119,500	1,008,782	100	%	1,008,782	100	%	1,137,059	100	%	1,185,998	119,500
Dec 2031	6.00	%	119,500	1,094,739	100	%	1,094,739	100	%	1,162,260	100	%	1,185,998	119,500
Dec 2032	6.00	%	119,500	1,185,998	100	%	1,185,998	100	%	1,185,998	100	%	1,185,998	119,500

¹	The first line reflects just the initial values as of July 1, 2009.

²	The annual benefit amount will be paid for 15 years.

*	IF THERE IS A CONFLICT IN ANY TERMS OR PROVISIONS BETWEEN THIS SCHEDULE A 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.

Salary Continuation Plan for Bank of the James - Lynchburg, VA

Exhibit 10.9

BANK OF THE JAMES

Salary Continuation Agreement

BANK OF THE JAMES

SALARY CONTINUATION AGREEMENT

Article 1

Definitions

Whenever used in this Agreement, the following words and phrases shall have the meanings specified:

1.1

1.2	“ Beneficiary ” means each designated person or entity, or the estate of the deceased Executive, entitled to any benefits upon the death of the Executive pursuant to Article 4.

1.3	“ Beneficiary Designation Form ” means the form established from time to time by the Plan Administrator that the Executive completes, signs and returns to the Plan Administrator to designate one or more Beneficiaries.

1.4	“ Board ” means the Board of Directors of the Bank as from time to time constituted.

1.5	“ Change in Control ” means a change in the ownership or effective control of the Bank, or in the ownership of a substantial portion of the assets of the Bank, as such change is defined in Code Section 409A and regulations thereunder.

1.6	“ Code ” means the Internal Revenue Code of 1986, as amended, and all regulations and guidance thereunder, including such regulations and guidance as may be promulgated after the Effective Date.

1.7

1.8	“ Early Termination ” means the Executive’s Separation from Service before attainment of Normal Retirement Age except when such Separation from Service occurs within twenty-four (24) months following a Change in Control or due to death, Termination for Cause or Disability.

1.9	“ Effective Date ” means July 1, 2009.

1.10	“ Normal Retirement Age ” means the Executive’s age sixty-five (65).

1.11	“ Normal Retirement Date ” means the later of the Executive’s Normal Retirement Age or Separation from Service.

1.12	“ Plan Administrator ” means the Board or such committee or person as the Board shall appoint.

1.13	“ Plan Year ” means each twelve (12) month period commencing on January 1 and ending on December 31 of each year. The initial Plan Year shall commence on the Effective Date of this Agreement and end on the following December 31.

1.14	“ Schedule A ” means the schedule attached to this Agreement and made a part hereof. Schedule A shall be updated upon a change in any of the benefits under Articles 2 or 3.

1.15

1.16

1.17	“ Termination for Cause ” means Separation from Service for:

(a)

Gross negligence or gross neglect of duties to the Bank;

(b)

Conviction of a felony or of a gross misdemeanor involving moral turpitude in connection with the Executive’s employment with the Bank; or

(c)

Article 2

Distributions During Lifetime

2.1	Normal Retirement Benefit . Upon Separation from Service after attaining Normal Retirement Age, the Bank shall distribute to the Executive the benefit described in this Section 2.1 in lieu of any other benefit under this Article.

2.1.1

Amount of Benefit . The annual benefit under this Section 2.1 is Ninety Thousand Three Hundred Dollars ($90,300).

2.1.2

2.2	Early Termination Benefit . If Early Termination occurs, the Bank shall distribute to the Executive the benefit described in this Section 2.2 in lieu of any other benefit under this Article.

2.2.1

Amount of Benefit . The annual benefit under this Section 2.2 is the vested Account Value as set forth on Schedule A determined as of the end of the Plan Year preceding Separation from Service. This benefit is determined by vesting the Executive in fifty percent (50%) of the Account Value at the end of the second Plan Year, and in an additional ten percent (10%) of said amount for each succeeding Plan Year thereafter until the Executive becomes one hundred percent (100%) vested in the Account Value.

2.2.2

Distribution of Benefit . The Bank shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing within ninety (90) days following Separation from Service. The annual benefit shall be distributed to the Executive for fifteen (15) years.

2.3	Disability Benefit . If the Executive experiences a Disability prior to Normal Retirement Age, the Bank shall distribute to the Executive the benefit described in this Section 2.3 in lieu of any other benefit under this Article.

2.3.1

Amount of Benefit . The annual benefit under this Section 2.3 is one hundred percent (100%) of the Account Value set forth on Schedule A determined as of the end of the Plan Year preceding such Disability. Interest shall be credited to the Account Value for each Plan Year from Disability until Normal Retirement Age at an annual rate equal to six percent (6%).

2.3.2

Distribution of Benefit . The Bank shall distribute the benefit to the Executive in twelve (12) equal monthly installments commencing within ninety (90) days following Normal Retirement Age. The annual benefit shall be distributed to the Executive for fifteen (15) years.

2.4	Change in Control Benefit . If a Change in Control occurs prior to Normal Retirement Age, followed within twenty-four (24) months by Separation from Service, the Bank shall distribute to the Executive the benefit described in this Section 2.4 in lieu of any other benefit under this Article.

2.4.1

Amount of Benefit . The annual benefit under this Section 2.4 is one hundred percent (100%) of the Account Value as set forth on Schedule A determined as of the end of the Plan Year preceding Separation from Service.

2.4.2

2.5

2.6

2.7	Change in Form or Timing of Distributions . For distribution of benefits under this Article 2, the Executive and the Bank may, subject to the terms of Section 8.1, amend this Agreement to delay the timing or change the form of distributions. Any such amendment:

(a)

may not accelerate the time or schedule of any distribution, except as provided in Code Section 409A;

(b)

must, for benefits distributable under Section 2.3, be made at least twelve (12) months prior to the first scheduled distribution;

(c)

(d)

must take effect not less than twelve (12) months after the amendment is made.

Article 3

Distribution at Death

3.1	Death During Active Service . If the Executive dies prior to Separation from Service, the Bank shall distribute to the Beneficiary the benefit described in this Section 3.1. This benefit shall be distributed in lieu of any benefit under Article 2.

3.1.1

Amount of Benefit . The annual benefit under this Section 3.1 is Ninety Thousand Three Hundred Dollars ($90,300).

3.1.2

3.2

3.3

Article 4

Beneficiaries

4.1

4.2

4.3	Acknowledgment . No designation or change in designation of a Beneficiary shall be effective until received, accepted and acknowledged in writing by the Plan Administrator or its designated agent.

4.4

4.5

Article 5

General Limitations

5.1	Termination for Cause . Notwithstanding any provision of this Agreement to the contrary, the Bank shall not distribute any benefit under this Agreement if the Executive’s employment with the Bank is terminated by the Bank or an applicable regulator due to a Termination for Cause.

5.2

5.3

Article 6

Administration of Agreement

6.1

6.2

6.3

6.4

6.5

6.6	Annual Statement . The Plan Administrator shall provide to the Executive, within one hundred twenty (120) days after the end of each Plan Year, a statement setting forth the benefits to be distributed under this Agreement.

Article 7

Claims And Review Procedures

7.1	Claims Procedure . An Executive or Beneficiary (“claimant”) who has not received benefits under this Agreement that he or she believes should be distributed shall make a claim for such benefits as follows:

7.1.1

7.1.2

7.1.3

(a)

The specific reasons for the denial;

(b)

A reference to the specific provisions of this Agreement on which the denial is based;

(c)

A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed;

(d)

An explanation of this Agreement’s review procedures and the time limits applicable to such procedures; and

(e)

A statement of the claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

7.2	Review Procedure . If the Plan Administrator denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Plan Administrator of the denial as follows:

7.2.1

7.2.2

7.2.3

7.2.4

7.2.5

(a)

The specific reasons for the denial;

(b)

A reference to the specific provisions of this Agreement on which the denial is based;

(c)

(d)

A statement of the claimant’s right to bring a civil action under ERISA Section 502(a).

Article 8

Amendments and Termination

8.1

8.2

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)

(b)

(c)

the Bank may distribute the Account Value, determined as of the date of the termination of this Agreement, to the Executive in a lump sum subject to the above terms.

Article 9

Miscellaneous

9.1	Binding Effect . This Agreement shall bind the Executive and the Bank and their beneficiaries, survivors, executors, administrators and transferees.

9.2

9.3	Non-Transferability . Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.

9.4

9.5	Applicable Law . This Agreement and all rights hereunder shall be governed by the laws of the Commonwealth of Virginia, except to the extent preempted by the laws of the United States of America.

9.6

9.7

9.8	Entire Agreement . This Agreement constitutes the entire agreement between the Bank and the Executive as to the subject matter hereof. No rights are granted to the Executive by virtue of this Agreement other than those specifically set forth herein.

9.9	Interpretation . Wherever the fulfillment of the intent and purpose of this Agreement requires and the context will permit, the use of the masculine gender includes the feminine and use of the singular includes the plural.

9.10

9.11	Headings . Article and section headings are for convenient reference only and shall not control or affect the meaning or construction of any provision herein.

9.12	Validity . If any provision of this Agreement shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Agreement shall be construed and enforced as if such illegal or invalid provision had never been included herein.

9.13	Notice . Any notice or filing required or permitted to be given to the Bank or Plan Administrator under this Agreement shall be sufficient if in writing and hand-delivered or sent by registered or certified mail to the address below:


		Bank of the James
		828 Main St.
		Lynchburg, VA 24504

Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.

9.14

9.15	Compliance with Section 409A . This Agreement shall be interpreted and administered consistent with Code Section 409A.

IN WITNESS WHEREOF, the Executive and a duly authorized representative of the Bank have signed this Agreement.


EXECUTIVE:	BANK:

	BANK OF THE JAMES

/S/ Harry P. Umberger	By:	/s/ J. Todd Scruggs
HARRY P. UMBERGER	Title:	EVP-CFO

BANK OF THE JAMES

Salary Continuation Agreement

Beneficiary Designation Form

{ }	New Designation

{ }	Change in Designation

I, HARRY P. UMBERGER , designate the following as Beneficiary under this Agreement:


Primary:

________________________________________________________________________________________		_____%

________________________________________________________________________________________		_____%

Contingent:

________________________________________________________________________________________		_____%

________________________________________________________________________________________		_____%

Notes:

•

Please PRINT CLEARLY or TYPE the names of the beneficiaries.

•

To name a trust as Beneficiary, please provide the name of the trustee(s) and the exact name and date of the trust agreement.

•

To name your estate as Beneficiary, please write “Estate of [your name] ”.

•

Be aware that none of the contingent beneficiaries will receive anything unless ALL of the primary beneficiaries predecease you.

Name:

Signature: Date:

Received by the Plan Administrator this day of , 200


By:

Title:

Plan Year Reporting

Salary Continuation Plan

Schedule A

Harry P. Umberger


*Birth Date: 10/25/1965* *Plan Anniversary Date: 1/1/2010* *Normal Retirement: 10/25/2030, Age 65* *Normal Retirement Payment: Monthly for 15 years*					Early Termination			Disability			Change in Control			Pre-retire. Death Benefit
					Annual Benefit ² Amount Payable at Separation from Service			Annual Benefit ² Amount Payable at Normal Retirement Age			Annual Benefit ² Amount Payable at Separation from Service			Annual ² Benefit
Values as of	Discount Rate		Benefit Level	Account Value	Vesting		Based On Account Value	Vesting		Based On Account Value	Vesting		Based On Account Value	Based On Benefit
Values as of	(1)		(2)	(3)	(4)		(5)	(6)		(7)	(8)		(9)	(10)
Jul 2009 ¹			90,300		0	%	0	100	%	0	100	%	0	90,300
Dec 2009	6.00	%	90,300	10,531	0	%	0	100	%	3,692	100	%	1,061	90,300
Dec 2010	6.00	%	90,300	32,562	50	%	1,640	100	%	10,753	100	%	3,281	90,300
Dec 2011	6.00	%	90,300	55,952	60	%	3,383	100	%	17,403	100	%	5,638	90,300
Dec 2012	6.00	%	90,300	80,785	70	%	5,698	100	%	23,667	100	%	8,140	90,300
Dec 2013	6.00	%	90,300	107,149	80	%	8,637	100	%	29,568	100	%	10,796	90,300

Dec 2014	6.00	%	90,300	135,139	90	%	12,255	100	%	35,125	100	%	13,616	90,300
Dec 2015	6.00	%	90,300	164,856	100	%	16,611	100	%	40,360	100	%	16,611	90,300
Dec 2016	6.00	%	90,300	196,406	100	%	19,790	100	%	45,290	100	%	19,790	90,300
Dec 2017	6.00	%	90,300	229,901	100	%	23,165	100	%	49,934	100	%	23,165	90,300
Dec 2018	6.00	%	90,300	265,462	100	%	26,748	100	%	54,308	100	%	26,748	90,300

Dec 2019	6.00	%	90,300	303,217	100	%	30,552	100	%	58,429	100	%	30,552	90,300
Dec 2020	6.00	%	90,300	343,301	100	%	34,591	100	%	62,309	100	%	34,591	90,300
Dec 2021	6.00	%	90,300	385,856	100	%	38,878	100	%	65,965	100	%	38,878	90,300
Dec 2022	6.00	%	90,300	431,037	100	%	43,431	100	%	69,408	100	%	43,431	90,300
Dec 2023	6.00	%	90,300	479,004	100	%	48,264	100	%	72,651	100	%	48,264	90,300

Dec 2024	6.00	%	90,300	529,929	100	%	53,395	100	%	75,705	100	%	53,395	90,300
Dec 2025	6.00	%	90,300	583,996	100	%	58,843	100	%	78,582	100	%	58,843	90,300
Dec 2026	6.00	%	90,300	641,397	100	%	64,627	100	%	81,292	100	%	64,627	90,300
Dec 2027	6.00	%	90,300	702,339	100	%	70,767	100	%	83,845	100	%	70,767	90,300
Dec 2028	6.00	%	90,300	767,039	100	%	77,286	100	%	86,249	100	%	77,286	90,300

Dec 2029	6.00	%	90,300	835,730	100	%	84,207	100	%	88,514	100	%	84,207	90,300
Oct 2030	6.00	%	90,300	896,198	100	%	90,300	100	%	90,300	100	%	90,300	90,300

¹	The first line reflects just the initial values as of July 1, 2009.

²	The annual benefit amount will be distributed in 12 equal monthly payments for a total of 180 monthly payments.

*	IF THERE IS A CONFLICT IN ANY TERMS OR PROVISIONS BETWEEN THIS SCHEDULE A 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.

Salary Continuation Plan for Bank of the James - Lynchburg, VA