Exhibit 10.3
DEFERRED COMPENSATION AGREEMENT
This Deferred Compensation Agreement is made and
entered into by and between Shore Bank, a Virginia banking
corporation, (the “Bank”), and Scott C. Harvard (the
“Executive”).
|
|
1.
|
Purpose and Effective Date .
|
(a)
Purpose . The purpose
of this Agreement is to provide the Executive, whose judgment,
abilities and experience will contribute to the financial success
of the Bank, with an incentive to continue in the employ of the
Bank. The Agreement is intended to be an unfunded deferred
compensation arrangement for purposes of the Employee Retirement
Income Security Act of 1974, as amended. The Bank has determined
that the benefits to be paid to the Executive under this Agreement
constitute reasonable compensation for the services rendered and to
be rendered by the Executive.
|
|
(b)
|
Effective Date . The
effective date of this Agreement is June 1, 2008.
|
(a)
Beneficiary . The
person, persons, or entity designated by the Executive to receive
his benefits under the Agreement in a writing filed with the Bank.
If the Executive fails to make a designation or if the person
designated does not survive the Executive (or, if an entity, is not
in existence at the time of the Executive’s death), the
Beneficiary shall be the Executive’s estate.
(b)
Code . The Internal Revenue Code of
1986, as amended.
(c)
Committee . The
Compensation Committee of Hampton Roads Bankshares, Inc.
(d)
Deferred Compensation Account
. The bookkeeping record established for purposes of
measuring the Executive’s benefit under this
Agreement.
(e)
Deferred Compensation Benefit
. The total amount payable to the Executive pursuant
to Sections 4 and 5 of this Agreement.
(f)
Disability . The
Executive is either 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 12
months; or 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 12
months, receiving income replacement benefits for a period of not
less than 3 months under an accident and health plan covering
employees of the Bank.
(g)
Employment Agreement .
The employment agreement dated January 8, 2008 between the
Executive, the Bank and Hampton Roads Bankshares, Inc. and
effective June 1, 2008 (“Employment
Agreement”).
(h)
Rabbi Trust . A grantor
trust within the meaning of Code Sections 671 through 679 that
shall be established by the Bank in accordance with Section 8 of
this Agreement to provide for the payment of all the Deferred
Compensation Benefit payable to the Executive under this
Agreement.
(i)
Unforeseeable Emergency . A severe financial hardship to the Executive resulting from a
sudden and unexpected illness or accident of the Executive, his
spouse, or his dependent (as defined in Code Section 152(a)); loss
of the Executive’s property due to casualty; or other similar
extraordinary and unforeseeable circumstance arising as a result of
events beyond the control of the Executive.
3.
Administration and Claims Procedure
. This Agreement is administered by the Committee.
Subject to the Agreement’s provisions, the Committee may
adopt rules and regulations necessary to carry out the
Agreement’s purposes. The Committee shall have complete
discretion to terminate the Executive’s participation and to
take all other actions permitted or required by the Agreement. If
for any reason a benefit due under this Agreement is not paid when
due, the individual entitled to such benefit may file a written
claim with the Committee. If the claim is denied or no response is
received within 90 days (in which case the claim will be deemed to
have been denied), the individual may appeal the denial to the
Committee within 60 days of the denial. In pursuing an appeal, an
individual may request that a responsible officer of the Bank
review the denial, may review pertinent documents, and may submit
issues and comments in writing. A decision on appeal will be made
within 60 days after the appeal is made, unless special
circumstances require the Bank to extend the period for another 60
days.
|
|
4.
|
Amount of the Deferred Compensation
Benefit .
|
(a)
Initial Deferred Compensation Benefit
. The Bank shall credit $400,000 to the
Executive’s Deferred Compensation Account. The amount
credited to the Executive’s Deferred Compensation Account
shall be subject to earnings and losses until the time it is paid
to the Executive pursuant to Section 5. The Bank shall permit the
Executive to direct the investment of his Deferred Compensation
Account pursuant to the investment options under the Hampton Roads
Bankshares, Inc. Executive Savings Plan; however, the amounts
credited to the Executive’s Account shall be retained by the
Bank until the entire amount has been distributed to the Executive
or his Beneficiary.
(b)
Additional Compensation Deferrals .
(1)
In general, additional compensation for services
performed by the Executive pursuant to Section 2(d) of the
Employment Agreement may be deferred at the Executive’s
election, provided the election to defer such co
