Document:

exv10w6w1

Exhibit 10.6.1

December 30, 2008

Mr. Frank H. Grace, III

14200 Park Meadow Drive

Suite 200 South

Chantilly, VA 20151

Re: Amendment to Amended and Restated Employment Agreement dated March 1, 2007

(the “Employment Agreement”) with Alliance Bank

Dear Frank:

     By now, you may be aware that in 2004 in reaction to the Enron debacle, Congress adopted
sweeping new rules governing all forms of deferred compensation provided by employers to their
employees. These new rules — Section 409A of the Internal Revenue Code — have been evolving for
several years and are complex, and the deadline for compliance is December 31, 2008. They
have significant implications for many types of deferred compensation and benefit plans and
programs, as well as employment agreements.

     We believe that some of the payments provided under your Employment Agreement are subject to
Section 409A. As such, we recommend that your Employment Agreement be amended to avoid potentially
adverse tax consequences to you. (If Section 409A is not complied with, you may be subject to
accelerated income tax on a portion of your unpaid benefits under the Agreement plus a 20%
additional penalty and interest charge.) The proposed amendments are set forth on Schedule
A. We ask that you please countersign this letter on or before December 31, 2008 (and return a
signed copy to us for our files) to reflect our mutual agreement that your Employment Agreement
shall be, and is by virtue of this letter, amended as set forth in Schedule A.

     If you do not execute and return the amendment to us, we will assume that you have determined
that the proposed changes are not necessary to comply with Section 409A. (None of Alliance Bank or
its respective affiliates or representatives is liable for any adverse tax consequences resulting
from any failure to comply with Section 409A.)

     Please feel free to call me if you have any questions.

	 	 	 	 	 
	 	Sincerely,

Alliance Bank Corporation

 	 
	 	By:  	/s/ Thomas A. Young, Jr.
 	 
	 	Its:  	President and Chief Executive Officer 	 
	 	 	 	 
	 

Seen and Agreed:

I have received the attached letter and agree to the changes to my Employment Agreement that are
described therein.

	 	 	 	 	 
	Date: December 30, 2008     

	 	/s/ Frank H. Grace, III
	 	 
	 

	 	 	 	 
	 

	 	Frank H. Grace, III	 	 

 

 

SCHEDULE A

409A Amendments

(All capitalized terms have the meaning set forth in the Employment Agreement unless otherwise
defined herein.)

	1.	 	Section 4(a) shall be amended by adding the following to the end:
	 
	 	 	The annual base salary shall be paid in accordance with the Bank’s normal payroll
practices, but not less frequently than monthly.
	 
	2.	 	Section 6 shall be amended by adding the following to the end:
	 
	 	 	Any bonus due to Employee shall be paid to Employee no later than 2-1/2 months after the
end of the Bank’s taxable year or the calendar year, whichever is later, in which such
bonus is no longer subject to a substantial risk of forfeiture (as determined in accordance
with Internal Revenue Code (the “Code”) Section 409A and applicable guidance issued
thereunder (“Code Section 409A”)).
	 
	3.	 	Section 9(c) shall be amended by adding the following to the end:
	 
	 	 	Such amounts shall be paid within 60 days of Employee’s death.
	 
	4.	 	Section 9(i)(1) shall be amended by replacing it in its entirety with the following:
	 
	 	 	(i)(1) If Employee’s employment is terminated without Cause within one year after a Change
of Control shall have occurred or if he resigns for Good Reason within one year after a
Change of Control shall have occurred, then on or before Employee’s last day of employment
with the Bank, the Bank shall pay to Employee as compensation for services rendered to the
Bank and its Affiliates an amount (subject to any applicable payroll or other taxes
required to be withheld) equal to the excess, if any, of 150% of Employee’s “annualized
includable compensation for the base period”, as defined in Section 280G of the Code, over
the total amount payable to Employee under Section 9(d); provided that such amount shall be
paid by the Bank in equal installments over the twenty-four months succeeding the date of
termination. Payments of the above installments shall be made at the times Employee’s base
salary payments would have been made in accordance with Section 4(a).
	 
	5.	 	A new Section 22 shall be added to the end of the Employment Agreement as follows:
	 
	 	 	Section 22. Code Section 409A Compliance.

     (a) The intent of the parties is that payments and benefits under this Agreement
comply with Code Section 409A or comply with an exemption from
the application of Code Section 409A and, accordingly, all provisions of this Agreement
shall be construed in a manner consistent with the requirements for avoiding taxes or
penalties under Code Section 409A.

 

 

     (b) Neither Employee nor the Bank shall take any action to accelerate or delay the
payment of any monies and/or provision of any benefits in any matter which would not be in
compliance with Code Section 409A.

     (c) A termination of employment shall not be deemed to have occurred for purposes of
any provision of this Agreement providing for the form or timing of payment of any amounts
or benefits that are subject to Code Section 409A and that are paid upon or following a
termination of employment unless such termination is also a “separation from service”
(within the meaning of Code Section 409A) and, for purposes of any such provision of this
Agreement under which (and to the extent) deferred compensation subject to Code Section
409A is paid, references to a “termination” or “termination of employment” or like
references shall mean separation from service. If Employee is deemed on the date of
separation from service with the Bank to be a “specified employee”, within the meaning of
that term under Code Section 409A(a)(2)(B) and using the identification methodology
selected by the Bank from time to time, or if none, the default methodology, then with
regard to any payment or benefit that is required to be delayed in compliance with Code
Section 409A(a)(2)(B), such payment or benefit shall not be made or provided prior to the
earlier of (i) the expiration of the six-month period measured from the date of Employee’s
separation from service or (ii) the date of Employee’s death. In the case of benefits,
however, Employee may pay the cost of benefit coverage, and thereby obtain benefits, during
such six month delay period and then be reimbursed by the Bank thereafter when delayed
payments are made pursuant to the next sentence. On the first day of the seventh month
following the date of Employee’s separation from service or, if earlier, on the date of
Employee’s death, all payments delayed pursuant to this Section 22 (whether they would have
otherwise been payable in a single sum or in installments in the absence of such delay)
shall be paid or reimbursed to Employee in a lump sum, and any remaining payments and
benefits due under this Agreement shall be paid or provided in accordance with the normal
payment dates specified for them herein.

     (d) With regard to any provision herein that provides for reimbursement of expenses or
in-kind benefits that are subject to Code Section 409A, except as permitted by Code Section
409A, (i) the right to reimbursement or in-kind benefits is not subject to liquidation or
exchange for another benefit, and (ii) the amount of expenses eligible for reimbursement,
or in-kind benefits, provided during any taxable year shall not affect the expenses
eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year,
provided that the foregoing clause (ii) shall not be violated with regard to expenses
reimbursed under any arrangement covered by Code Section 105(b) solely because such
expenses are subject to a limit related to the period the arrangement is in effect. All
reimbursements shall be reimbursed in accordance
with the Bank’s reimbursement policies but in no event later than the calendar year
following the calendar year in which the related expense is incurred.

 

 

     (e) If under this Agreement, an amount is to be paid in two or more installments, for
purposes of Code Section 409A, each installment shall be treated as a separate payment.

     (f) When, if ever, a payment under this Agreement specifies a payment period with
reference to a number of days (e.g., “payment shall be made within ten (10) days following
the date of termination”), the actual date of payment within the specified period shall be
within the sole discretion of the Bank.

     (g) Notwithstanding any of the provisions of this Agreement, the Bank shall not be
liable to Employee if any payment or benefit which is to be provided pursuant to this
Agreement and which is considered deferred compensation subject to Code Section 409A
otherwise fails to comply with, or be exempt from, the requirements of Code Section 409.exv10w7

Exhibit 10.7: Base Salaries of Named Executive Officers

     Effective January 2, 2009, the following are the base salaries (on an annual basis) of the
named executive officers (as defined in Item 402(a)(3) of Regulation S-K) of Alliance Bankshares
Corporation.

	 	 	 	 	 
	Thomas A. Young, Jr.
	 	$	291,500	 
	President & Chief Executive Officer
	 	 	 	 
	 
	 	 	 	 
	Paul M. Harbolick, Jr.
	 	$	190,800	 
	Executive Vice President & Chief Financial Officer
	 	 	 	 
	 
	 	 	 	 
	Frank H. Grace, III
	 	$	195,517	 
	Executive Vice President
	 	 	 	 
	 
	 	 	 	 
	Craig W. Sacknoff
	 	$	172,963	 
	Executive Vice President
	 	 	 	 
	 
	 	 	 	 
	John B. McKenney, III
	 	$	139,120	 
	Senior Vice President & Chief Credit Officer
	 	 	 	 
	 
	 	 	 	 
	Thomas Patrick Danaher
	 	$	192,975	 
	President, Alliance Insurance Agency, Inc.

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