National Bankshares Inc 8-K, filed Aug 20, 2021
National Bankshares Inc (NKSH)
About this 8-K
National Bankshares Inc filed this 8-K on August 20, 2021, reporting on events of August 16, 2021.
Items reported
- Item 5.02: Director or officer change, or executive pay
- Item 9.01: Financial statements and exhibits
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(State or other jurisdiction of incorporation)
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(Commission File No.)
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(I.R.S. Employer Identification No.)
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Emerging growth company
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Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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ITEM 9.01.
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FINANCIAL STATEMENTS AND EXHIBITS
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(d)
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Exhibits
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/s/ F. BRAD DENARDO
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F. Brad Denardo
Chairman, President & CEO
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Exhibit 10.1
THE NATIONAL BANK OF BLACKSBURG
Salary Continuation Agreement
THE NATIONAL BANK OF BLACKSBURG
SALARY CONTINUATION AGREEMENT
THIS SALARY CONTINUATION AGREEMENT (the “Agreement”) is adopted this 8th day of February, 2006, by and between THE NATIONAL BANK OF BLACKSBURG, a nationally-chartered commercial bank located in Blacksburg, Virginia (the “Bank”) and DAVID K. SKEENS (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:
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1.1 |
“Beneficiary” means each designated person, or the estate of the deceased Executive, entitled to benefits, if any, upon the death of the Executive determined pursuant to Article 4. |
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1.2 |
“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. |
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1.3 |
“Board” means the Board of Directors of the Bank as from time to time constituted. |
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1.4 |
“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 Section 409A of the Code and regulations thereunder. |
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1.5 |
“Code” means the Internal Revenue Code of 1986, as amended. |
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1.6 |
“Disability” means 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 of the Bank. Medical determination of Disability may be made by either the Social Security Administration or by the provider of an accident or health plan covering employees of the Bank. 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. |
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1.7 |
“Early Termination” means Separation from Service before Normal Retirement Age except when such Separation from Service occurs: (i) following a Change in Control; or (ii) due to death, Disability, or Termination for Cause. |
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1.8 |
“Effective Date” means January 1, 2006. |
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1.9 |
“Normal Retirement Age” means the Executive attaining age sixty-five (65). |
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1.10 |
“Plan Administrator” means the plan administrator described in Article 6. |
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1.11 |
“Plan Year” means each twelve-month period commencing on January 1, 2006 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. |
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1.12 |
“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. |
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1.13 |
“Separation from Service” means the termination of the Executive’s employment with the Bank for reasons other than death or Disability. Whether a Separation from Service takes place is determined based on the facts and circumstances surrounding the termination of the Executive’s employment and whether the Bank and the Executive intended for the Executive to provide significant services for the Bank following such termination. A termination of employment will not be considered a Separation from Service if: |
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(a) |
the Executive continues to provide services as an employee of the Bank at an annual rate that is twenty percent (20%) or more of the services rendered, on average, during the immediately preceding three full calendar years of employment (or, if employed less than three years, such lesser period) and the annual remuneration for such services is twenty percent (20%) or more of the average annual remuneration earned during the final three full calendar years of employment (or, if less, such lesser period), or |
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(b) |
the Executive continues to provide services to the Bank in a capacity other than as an employee of the Bank at an annual rate that is fifty percent (50%) or more of the services rendered, on average, during the immediately preceding three full calendar years of employment (or if employed less than three years, such lesser period) and the annual remuneration for such services is fifty percent (50%) or more of the average annual remuneration earned during the final three full calendar years of employment (or if less, such lesser period). |
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1.14 |
“Specified Employee” means a key employee (as defined in Section 416(i) of the Code without regard to paragraph 5 thereof) of the Bank if any stock of the Bank is publicly traded on an established securities market or otherwise. |
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1.15 |
“Termination for Cause” means Separation from Service for: |
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(a) |
Gross negligence or gross neglect of duties to the Bank; or |
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(b) |
Conviction of a felony or of a gross misdemeanor involving moral turpitude in connection with the Executive’s employment with the Bank; or |
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(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
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2.1 |
Normal Retirement Benefit. Upon the Executive reaching Normal Retirement Age while in the active service of the Bank, the Bank shall distribute to the Executive the benefit described in this Section 2.1 in lieu of any other benefit under this Article. |
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2.1.1 |
Amount of Benefit. The annual benefit under this Section 2.1 is Thirty Thousand Eight Hundred Seven Dollars ($30,807). |
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2.1.2 |
Distribution of Benefit. The Bank shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following Normal Retirement Age. The annual benefit shall be distributed to the Executive for the greater of fifteen (15) years, or the Executive’s lifetime. |
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2.2 |
Early Termination Benefit. Upon Early Termination, the Bank shall distribute to the Executive the benefit described in this Section 2.2 in lieu of any other benefit under this Article. |
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2.2.1 |
Amount of Benefit. The annual benefit under this Section 2.2 is the Early Termination Benefit set forth on Schedule A for the Plan Year immediately preceding the date that Separation from Service occurs; provided, however, if the Executive Separates from Service on December 31st of a Plan Year, then the Bank shall distribute the Early Termination Benefit set forth on Schedule A for the Plan Year in which such Separation from Service occurs. |
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2.2.2 |
Distribution of Benefit. The Bank shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following Normal Retirement Age. The annual benefit shall be distributed to the Executive for the greater of fifteen (15) years, or the Executive’s lifetime. |
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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. |
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2.3.1 |
Amount of Benefit. The annual benefit under this Section 2.3 is the Disability Benefit set forth on Schedule A for the Plan Year immediately preceding the date that Separation from Service occurs; provided, however, if the Executive Separates from Service on December 31st of a Plan Year, then the Bank shall distribute the Disability Benefit set forth on Schedule A for the Plan Year in which such Separation from Service occurs. |
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2.3.2 |
Distribution of Benefit. The Bank shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following Normal Retirement Age. The annual benefit shall be distributed to the Executive for the greater of fifteen (15) years, or the Executive’s lifetime. |
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2.4 |
Change in Control Benefit. Upon a Change in Control followed 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. |
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2.4.1 |
Amount of Benefit. The annual benefit under this Section 2.4 is the Change in Control Benefit set forth on Schedule A for the Plan Year immediately preceding the date that Separation from Service occurs; provided, however, if the Executive Separates from Service on December 31st of a Plan Year, then the Bank shall distribute the Change in Control Benefit set forth on Schedule A for the Plan Year in which such Separation from Service occurs. |
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2.4.2 |
Distribution of Benefit. The Bank shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following Separation from Service. The annual benefit shall be distributed to the Executive for the greater of fifteen (15) years, or the Executive’s lifetime. |
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2.4.3 |
Excess Parachute Payment Gross-up. If any benefit payable under this Agreement would create an excise tax under the excess parachute rules of Section 280G of the Code, the Bank shall pay to the Executive an additional amount (the “Gross-up”) equal to: |
the Executive’s excise penalty tax amount
divided by the sum of
(one minus the sum of the penalty tax rate plus the Executive’s marginal income tax rate)
The Gross-up shall be paid in equal annual payments for the greater of fifteen (15) years or the Executive’s lifetime.
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2.5 |
Restriction on Timing of Distribution. Notwithstanding any provision of this Agreement to the contrary, if the Executive is considered a Specified Employee at Separation from Service under such procedures as established by the Bank in accordance with Section 409A of the Code, benefit distributions that are made upon Separation from Service may not commence earlier than six (6) months after the date of such Separation from Service. Therefore, in the event this Section 2.5 is applicable to the Executive, any distribution or series of distributions to be made due to a Separation from Service shall commence no earlier that the first day of the seventh month following the Separation from Service. |
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2.6 |
Distributions Upon Income Inclusion Under Section 409A of the Code. Upon the inclusion of any portion of the Account Value into the Executive’s income as a result of the failure of this non-qualified deferred compensation plan to comply with the requirements of Section 409A of the Code, to the extent such tax liability can be covered by the Executive’s vested Account Value, a distribution shall be made as soon as is administratively practicable following the discovery of the plan failure. |
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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 the Agreement to delay the timing or change the form of distributions. Any such amendment: |
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(a) |
may not accelerate the time or schedule of any distribution, except as provided in Section 409A of the Code and the regulations thereunder; |
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(b) |
must, for benefits distributable under Section 2.1, be made not less than twelve (12) months prior to the Executive’s Normal Retirement Age. |
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(c) |
must, for benefits distributable under Sections 2.1, 2.2, and 2.3 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 |
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(d) |
must take effect not less than twelve (12) months after the amendment is made. |
Article 3
Distribution at Death
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3.1 |
Death During Active Service. If the Executive dies while in the active service of the Bank, the Bank shall distribute to the Beneficiary the benefit described in this Section 3.1. This benefit shall be distributed in lieu of the benefits under Article 2. |
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3.1.1 |
Amount of Benefit. The annual benefit under this Section 3.1 is the Death Benefit set forth on Schedule A for the indicated date which is the same date or most recently precedes the date that the Executive’s death occurs. |
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3.1.2 |
Distribution of Benefit. The Bank shall distribute the annual benefit to the Beneficiary in twelve (12) equal monthly installments for fifteen (15) years commencing the first day of the month following receipt by the Bank of the Executive’s death certificate. |
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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 monthly installments at the same time and in the same amounts that would have been distributed to the Executive had the Executive survived; provided, however, for benefits payable under Section 2.1, if the Executive has received less than one hundred eighty (180) equal consecutive monthly installments, the Beneficiary shall continue to receive the same amounts and at the same time until the sum of the monthly installments to the Beneficiary and Executive equal one hundred eighty (180). |
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3.3 |
Death After Separation from Service But Before Benefit Distributions Commence. If the Executive is entitled to benefit distributions under this Agreement, but dies prior to the commencement of said benefit distributions, the Bank shall distribute to the Beneficiary the same benefits that the Executive was entitled to prior to death except that the benefit distributions shall commence within thirty (30) days following receipt by the Bank of the Executive’s death certificate for a total of on hundred eighty (180) equal consecutive monthly installments. |
Article 4
Beneficiaries
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4.1 |
Beneficiary. The Executives shall have the right, at any time, to designate a Beneficiary(ies) 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 designation under any other plan of the Bank in which the Executive participates. |
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4.2 |
Beneficiary Designation: Change. The Executives shall designate a Beneficiary by completing and signing the Beneficiary Designation Form, and delivering it to the Plan Administrator or its designated agent. 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 Executives 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, as in effect from time to time. 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. |
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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. |
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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, the benefits shall be made to the personal representative of the Executive's estate. |
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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 Executive’s Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Agreement for such distribution amount. |
Article 5
General Limitations
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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 due to a Termination for Cause. |
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5.2 |
Suicide or Misstatement. No benefits shall be distributed if the Executive commits suicide within two years after the Effective Date of this Agreement, 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. |
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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. |
Article 6
Administration of Agreement
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6.1 |
Plan Administrator Duties. This Agreement shall be administered by a Plan Administrator which shall consist of the Board, or such committee or person(s) as the Board shall appoint. 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 administra‐tion of this Agreement and (ii) decide or resolve any and all ques‐tions including interpretations of this Agreement, as may arise in connection with the Agreement to the extent the exercise of such discretion and authority does not conflict with Section 409A of the Code and regulations thereunder. |
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6.2 |
Agents. In the administration of this Agreement, the Plan Administrator may employ agents and delegate to them such administrative duties as it 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. |
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6.3 |
Binding Effect of Decisions. The decision or action of the Plan Administrator with respect to any question arising out of or in connection with the administration, interpretation and application of the Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Agreement. |
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6.4 |
Indemnity of Plan Administrator. The Bank shall indemnify and hold harmless the members of 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 or any of its members. |
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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 circum‐stances of the retirement, Disability, death, or Separation from Service of the Executive, and such other pertinent information as the Plan Administrator may reasonably require. |
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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
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7.1 |
Claims Procedure. An Executive or Beneficiary (“claimant”) who has not received benefits under the Agreement that he or she believes should be distributed shall make a claim for such benefits as follows: |
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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. |
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7.1.2 |
Timing of Plan Administrator Response. The Plan Administrator shall respond to such claimant within 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 90 days by notifying the claimant in writing, prior to the end of the initial 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. |
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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: |
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(a) |
The specific reasons for the denial; |
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(b) |
A reference to the specific provisions of the Agreement on which the denial is based; |
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(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; |
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(d) |
An explanation of the Agreement’s review procedures and the time limits applicable to such procedures; and |
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(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. |
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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: |
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7.2.1 |
Initiation – Written Request. To initiate the review, the claimant, within 60 days after receiving the Plan Administrator’s notice of denial, must file with the Plan Administrator a written request for review. |
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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. |
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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. |
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7.2.4 |
Timing of Plan Administrator Response. The Plan Administrator shall respond in writing to such claimant within 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 60 days by notifying the claimant in writing, prior to the end of the initial 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. |
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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: |
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(a) |
The specific reasons for the denial; |
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(b) |
A reference to the specific provisions of the Agreement on which the denial is based; |
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(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 |
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(d) |
A statement of the claimant’s right to bring a civil action under ERISA Section 502(a). |
Article 8
Amendments and Termination
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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 or tax law, including without limitation Section 409A of the Code and any and all regulations and guidance promulgated thereunder. |
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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 Early Termination benefit as set forth on Schedule A as of the date the 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. |
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8.3 |
Plan Terminations Under Section 409A. Notwithstanding anything to the contrary in Section 8.2, if the Bank terminates this Agreement in the following circumstances: |
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(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 the Agreement and further provided that all the Bank's arrangements which are substantially similar to the 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 the termination of the arrangements; |
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(b) |
Upon the Bank’s dissolution or with the approval of a bankruptcy court provided that the amounts deferred under the Agreement are included in the Executive's gross income in the latest of (i) the calendar year in which the 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 |
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(c) |
Upon the Bank’s termination of this and all other non-account balance plans (as referenced in Section 409A of the Code or the regulations thereunder), provided that all distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and the Bank does not adopt any new non-account balance plans for a minimum of five (5) years following the date of such termination; |
the Bank may distribute the actuarial equivalent of the present value of the Early Termination benefit, determined as of the date of the termination of the Agreement, to the Executive in a lump sum subject to the above terms.
Article 9
Miscellaneous
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9.1 |
Binding Effect. This Agreement shall bind the Executive and the Bank, and their beneficiaries, survivors, executors, administrators and transferees. |
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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 does it interfere with the Bank's right to discharge the Executive. It also does not require the Executive to remain an employee nor interfere with the Executive's right to terminate employment at any time. |
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9.3 |
Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner. |
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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 Section 409A of the Code and regulations thereunder, from the benefits provided under this Agreement. Executive acknowledges that the Bank’s sole liability regarding taxes is to forward any amounts withheld to the appropriate taxing authority(ies). Further, the Bank shall satisfy all applicable reporting requirements, including those under Section 409A of the Code and regulations thereunder. |
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9.5 |
Applicable Law. The 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. |
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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. |
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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 event, the term “Bank” as used in this Agreement shall be deemed to refer to the successor or survivor bank. |
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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. |
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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. |
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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, the Bank or Plan Administrator may in its discretion 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 acts do not violate Section 409A of the Code. |
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9.11 |
Headings. Article and section headings are for convenient reference only and shall not control or affect the meaning or construction of any of its provisions. |
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9.12 |
Validity. In case 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 and invalid provision has never been inserted herein. |
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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: |
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The National Bank of Blacksburg |
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c/o National Bankshares, Inc. |
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Attn: James G. Rakes |
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P.O. Box 90002 |
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Blacksburg, VA 24062-9002 |
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.
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9.14 |
Compliance with Section 409A. This Agreement shall at all times be administered and the provisions of this Agreement shall be interpreted consistent with the requirements of Section 409A of the Code and any and all regulations thereunder, including such regulations as may be promulgated after the Effective Date of this Agreement. |
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9.15 |
Rescissions. Any modification to the terms of this Agreement that would inadvertently result in an additional tax liability on the part of the Executive, shall have no effect to the extent the change in the terms of the plan is rescinded by the earlier of a date before the right is exercised (if the change grants a discretionary right) and the last day of the calendar year during which such change occurred. |
IN WITNESS WHEREOF, the Executive and a duly authorized representative of the Bank have signed this Agreement.
|
Executive: |
BANK:
The National Bank of Blacksburg |
|
|
|
|
|
|
|
|
/s/David K. Skeens |
By: |
/s/ James G. Rakes |
|
|
David K. Skeens |
|
James G. Rakes |
|
|
|
|
|
|
| Its: Chairman, President & CEO | |||
The National Bank of Blacksburg Salary
Continuation Plan - Schedule A
David K. Skeens
|
Birth Date: 10/12/1966 |
Early |
|
|
Pre-retirement |
|
|
Efffective Date: 1/1/2006 |
Termination |
Disability | Change of Control |
Death Benefit |
|
|
Normal Retirement 10/12/2031, Age 65: |
Annual Benefits Payable in Monthly Installments Commencing at Normal Retirement Date For Life |
Annual Benefits Payable in Monthly Installments Commencing at Normal Retirement Date For Life |
Annual Benefits Payable in Monthly Installments Commencing at Termination Date For Life |
Annual Benefits Payable in Monthly Installments Commencing at Death for 15 Years |
|
|
Period Ending: |
Age |
(1) |
(2) |
(3) |
(4) |
|
12/31/2005 |
39 |
$0 |
$0 |
$11,221 |
$30,807 |
|
12/31/2006 |
40 |
$0 |
$1,186 |
$11,670 |
$30,807 |
|
12/31/2007 |
41 |
$0 |
$2,373 |
$12,137 |
$30,807 |
|
12/31/2008 |
42 |
$0 |
$3,559 |
$12,622 |
$30,807 |
|
12/31/2009 |
43 |
$0 |
$4,745 |
$13,127 |
$30,807 |
|
12/31/2010 |
44 |
$0 |
$5,932 |
$13,652 |
$30,807 |
|
12/31/2011 |
45 |
$0 |
$7,118 |
$14,198 |
$30,807 |
|
12/31/2012 |
46 |
$0 |
$8,304 |
$14,766 |
$30,807 |
|
12/31/2013 |
47 |
$0 |
$9,491 |
$15,357 |
$30,807 |
|
12/31/2014 |
48 |
$0 |
$10,677 |
$15,971 |
$30,807 |
|
12/31/2015 |
49 |
$0 |
$11,864 |
$16,610 |
$30,807 |
|
12/31/2016 |
50 |
$13,050 |
$13,050 |
$17,275 |
$30,807 |
|
12/31/2017 |
51 |
$14,236 |
$14,236 |
$17,966 |
$30,807 |
|
12/31/2018 |
52 |
$15,423 |
$15,423 |
$18,684 |
$30,807 |
|
12/31/2019 |
53 |
$16,609 |
$16,609 |
$19,432 |
$30,807 |
|
12/31/2020 |
54 |
$17,795 |
$17,795 |
$20,209 |
$30,807 |
|
12/31/2021 |
55 |
$18,982 |
$18,982 |
$21,017 |
$30,807 |
|
12/31/2022 |
56 |
$20,168 |
$20,168 |
$21,858 |
$30,807 |
|
12/31/2023 |
57 |
$21,354 |
$21,354 |
$22,732 |
$30,807 |
|
12/31/2024 |
58 |
$22,541 |
$22,541 |
$23,641 |
$30,807 |
|
12/31/2025 |
59 |
$23,727 |
$23,727 |
$24,587 |
$30,807 |
|
12/31/2026 |
60 |
$24,913 |
$24,913 |
$25,571 |
$30,807 |
|
12/31/2027 |
61 |
$26,100 |
$26,100 |
$26,593 |
$30,807 |
|
12/31/2028 |
62 |
$27,286 |
$27,286 |
$27,657 |
$30,807 |
|
12/31/2029 |
63 |
$28,472 |
$28,472 |
$28,763 |
$30,807 |
|
12/31/2030 |
64 |
$29,659 |
$29,659 |
$29,914 |
$30,807 |
|
10/12/2031 |
65 |
$30,807 |
$30,807 |
$30,807 |
$30,807 |
FIRST AMENDMENT
TO THE
NATIONAL BANK OF BLACKSBURG
SALARY CONTINUATION AGREEMENT DATED FEBRUARY 8, 2006
FOR DAVID K. SKEENS
THIS FIRST AMENDMENT is adopted this 19th day of December, 2007, effective as of January 1, 2006, by and between THE NATIONAL BANK OF BLACKSBURG, a nationally-chartered commercial bank located in Blacksburg, Virginia (the "Bank"), and DAVID K. SKEENS (the "Executive").
The Bank and the Executive executed the Salary Continuation Agreement on February 8, 2006 effective as of January 1, 2006 (the "Agreement").
The undersigned hereby amend the Agreement for the purpose of bringing the Agreement into compliance with Section 409A of the Internal Revenue Code. Therefore, the following changes shall be made:
Sections 2.4 and 2.4.3 of the Agreement shall be deleted in its entirety and replaced by the following:
|
2.4 |
Change in Control Benefit. If a Change in Control occurs, followed within twenty-four (24) months by the Executive's 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. |
|
2.4.3 |
Excess Parachute Payment Gross-up. If any benefit payable under this Agreement would create an excise tax under the excess parachute rules of Section 280G of the Code, the Bank shall pay to the Executive an additional amount (the "Gross-up") equal to: |
the Executive's excise penalty tax amount divided by the sum of (one minus the sum of the penalty tax rate plus the Executive's marginal income tax rate)
The Gross-up shall be paid in the same manner and same time as the benefit which creates the gross-up.
Section 2.7 of the Agreement shall be deleted in its entirety and replaced by the following:
|
2.7 |
Change in Form or Timing of Distributions. |
|
All changes in the form or timing of distributions hereunder must comply with the following requirements. The changes: |
|
(a) may not accelerate the time or schedule of any distribution, except as provided in Code Section 409A and the regulations thereunder; |
|
(b) must, for benefits distributable under Sections 2.1, 2.2 and 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, 2.3 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 election is made. |
Section 8.3 of the Agreement shall be deleted in its entirety and replaced by the following:
|
8.3 |
Plan Terminations Under Section 409A. Notwithstanding anything to the contrary in Section 8.2, if this Agreement terminates 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 the Agreement and further provided that all the Bank's arrangements which are substantially similar to the 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 terminations; |
|
(b) Upon the Bank's dissolution or with the approval of a bankruptcy court, provided that the amounts deferred under the Agreement are included in the Executive's gross income in the latest of (i) the calendar year in which the 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 actuarial equivalent of the present value of the Early Termination benefit, determined as of the date of the termination of the Agreement, to the Executive in a lump sum subject to the above terms. |
IN WITNESS OF THE ABOVE, the Bank and the Executive hereby consent to this First Amendment.
|
Executive: |
The National Bank of Blacksburg: |
|
||
|
|
|
|
|
|
|
/s/ David K. Skeens |
By: |
/s/ James G. Rakes |
|
|
|
David K. Skeens |
|
James G. Rakes |
|
|
|
|
|
|
|
|
| Its: Chairman, President & CEO | ||||
SECOND AMENDMENT
TO
THE NATIONAL BANK OF BLACKSBURG
SALARY CONTINUATION AGREEMENT
DATED FEBRUARY 8, 2006
FOR DAVID K. SKEENS
THIS SECOND AMENDMENT is adopted this 17th day of December, 2008, effective as of January 1, 2006, by and between THE NATIONAL BANK OF BLACKSBURG, a nationally-chartered commercial bank located in Blacksburg, Virginia (the "Bank"), and DAVID
K. SKEENS (the "Executive").
The Bank and the Executive executed the Salary Continuation Agreement on February 8, 2006 effective as of January 1, 2006 (the "Agreement").
The undersigned hereby amend the Agreement for the purpose of bringing the Agreement into compliance with Section 409A of the Internal Revenue Code. Therefore, the following changes shall be made:
The following sentence is added at the end of Section 1.13 of the Agreement:
In determining whether a Separation from Service has occurred, the term "Bank" shall include its affiliates required to be treated as a service recipient along with the Bank for purposes of Section 409A of the Code.
\ Sections 2.3 and 2.3.1 of the Agreement shall be deleted in their entirety and replaced by the following:
|
2.3 |
Disability Benefit. If the Executive experiences a Disability prior to Normal Retirement Age while in the active service of the Bank, 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 the Disability Benefit set forth on Schedule A for the Plan Year immediately preceding the date that the Executive's cessation of service with the Bank occurs due to Disability; provided, however, if the Executive ceases service with the Bank due to Disability on December 31st of a Plan Year, then the Bank shall distribute the Disability Benefit set forth on Schedule A for the Plan Year in which such Separation from Service occurs. |
Section 2.4.3 of the Agreement shall be deleted in its entirety and replaced by the following:
|
2.4.3 |
Excess Parachute Payment If any benefit payable under this Agreement would create an excise tax under the excess parachute rules of Section 280G of the Code, the Bank shall comply with any applicable restrictions or limitations applicable to the Executive in the Executive's employment or other agreement, if any, with the Bank or any affiliate of the Bank addressing the same. |
THE NATIONAL BANK OF BLACKSBURG
Salary Continuation Agreement
Section 2.5 of the Agreement shall be deleted in its entirety and replaced by the following:
|
2.5 |
Restriction on Timing of Distribution. Notwithstanding any provision of this Agreement to the contrary, if the Executive is considered a Specified Employee at Separation from Service under such procedures as established by the Bank in accordance with Section 409A of the Code, benefit distributions that are made upon Separation from Service may not commence earlier than six (6) months after the date of such Separation from Service. Therefore, in the event this Section 2.5 is applicable to the Executive, any distribution or series of distributions to be made due to a Separation from Service shall commence no earlier than the first day of the seventh month following the Separation from Service. No catch-up payment, or interest representing the time value of money, shall be made or due as a result of the six (6) month delay in payment required by this Section 2.5 |
Section 8.3 of the Agreement shall be deleted in its entirety and replaced by the following:
|
8.3 |
Plan Terminations Under Section 409A. Notwithstanding anything to the contrary in Section 8.2, but subject to the applicable requirements of Section 409A of the Code, if this Agreement terminates 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 the Agreement and further provided that all the Bank's arrangements which are substantially similar to the Agreement are terminated with respect to the participants therein who experienced the Change in Control so the Executive and all such participants in the similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of such terminations; |
|
(b) |
Upon the Bank's dissolution or with the approval of a bankruptcy court, provided that the amounts deferred under the Agreement are included in the Executive's gross income in the latest of (i) the calendar year in which the 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 l.409A-l(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 NATIONAL BANK OF BLACKSBURG
Salary Continuation Agreement
the Bank may distribute the actuarial equivalent of the present value of the Early Termination benefit, determined as of the date of the termination of the Agreement, to the Executive in a lump sum subject to the above terms. Actuarial equivalence shall be determined on the basis of the applicable actuarial factors in the National Bankshares, Inc. Retirement Income Plan unless the Bank decides, in good faith, that other actuarial factors are more appropriate.
IN WITNESS OF THE ABOVE, the Bank and the Executive hereby consent to this Second Amendment.
|
Executive: |
The National Bank of Blacksburg: |
|
||
|
|
|
|
|
|
|
/s/ David K. Skeens |
By: |
/s/ James G. Rakes |
|
|
|
David K. Skeens |
|
James G. Rakes |
|
|
|
|
|
|
|
|
| Its: Chairman, President & CEO | ||||
THIRD AMENDMENT
TO THE
THE NATIONAL BANK OF BLACKSBURG
SALARY CONTINUATION AGREEMENT
FOR DAVID K. SKEENS
THIS THIRD AMENDMENT is adopted this 20th day of January, 2012, by and between The National Bank of Blacksburg, (the “Bank”) and David K. Skeens (the “Executive”).
The Bank and the Executive entered into a Salary Continuation Agreement dated February 8, 2006 and two subsequent amendments thereto (collectively, the “Agreement”). The Bank and the Executive now wish to increase the amount of the retirement benefit provided in the Agreement.
Now, therefore, the Bank and the Employee amend the Agreement as follows.
Section 2.2.1 of the Agreement shall be deleted in its entirety and replaced with the following.
2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is Sixty-Five Thousand Nine Hundred Forty Dollars ($65,940).
The Schedule A attached hereto shall replace the Schedule A originally incorporated into the Agreement.
IN WITNESS WHEREOF, the Executive and a duly authorized representative of the Bank have signed this Third Amendment.
|
Executive: |
The National Bank of Blacksburg: |
|
||
|
|
|
|
|
|
|
/s/ David K. Skeens |
By: |
/s/ James G. Rakes |
|
|
|
David K. Skeens |
|
James G. Rakes |
|
|
|
|
|
|
|
|
| Its: Chairman, President & CEO | ||||
The National Bank of Blacksburg
Salary Continuation Plan - Schedule A (revised as of January 1, 2012)
David K. Skeens
|
Birth Date: 10/12/1966 |
Early |
|
|
Pre-retirement |
|
|
Plan Effective Date: 1/1/2012 |
Termination | Disability | Change of Control |
Death Benefit |
|
|
Normal Retirement 10/12/2031, Age 65 |
Annual Benefits |
Annual Benefits |
Annual Benefits |
Annual Benefits |
|
|
Payable in Monthly |
Payable in Monthly |
Payable in Monthly |
Payable in Monthly |
||
|
Normal Retirement Benefit: $65,940 |
Installments for life, with |
Installments for life, with |
Installments for life, with |
Installments for 15 years; |
|
|
15 years certain; |
15 years certain; |
15 years certain; |
|||
|
Commencing at Normal Retirement Age |
Commencing at Normal Retirement Age |
Commencing at Separation of Service |
Commencing at Death |
||
|
Separation of Service |
|||||
| on or after: |
Vesting |
Dollars |
(2) |
(3) |
(4) |
|
January 1, 2012 |
0.00% |
$0 |
$7,079 |
30,291 |
65,940 |
|
December 31, 2012 |
0.00% |
$0 |
$10,047 |
31,503 |
65,940 |
|
December 31, 2013 |
0.00% |
$0 |
$13,015 |
32,763 |
65,940 |
|
December 31, 2014 |
0.00% |
$0 |
$15,983 |
34,073 |
65,940 |
|
December 31, 2015 |
0.00% |
$0 |
$18,950 |
35,436 |
65,940 |
|
December 31, 2016 |
100.00% |
$21,918 |
$21,918 |
36,854 |
65,940 |
|
December 31, 2017 |
100.00% |
$24,886 |
$24,886 |
38,328 |
65,940 |
|
December 31, 2018 |
100.00% |
$27,853 |
$27,853 |
39,861 |
65,940 |
|
December 31, 2019 |
100.00% |
$30,821 |
$30,821 |
41,456 |
65,940 |
|
December 31, 2020 |
100.00% |
$33,789 |
$33,789 |
43,114 |
65,940 |
|
December 31, 2021 |
100.00% |
$36,757 |
$36,757 |
44,838 |
65,940 |
|
December 31, 2022 |
100.00% |
$39,724 |
$39,724 |
46,632 |
65,940 |
|
December 31, 2023 |
100.00% |
$42,692 |
$42,692 |
48,497 |
65,940 |
|
December 31, 2024 |
100.00% |
$45,660 |
$45,660 |
50,437 |
65,940 |
|
December 31, 2025 |
100.00% |
$48,628 |
$48,628 |
52,455 |
65,940 |
|
December 31, 2026 |
100.00% |
$51,595 |
$51,595 |
54,553 |
65,940 |
|
December 31, 2027 |
100.00% |
$54,563 |
$54,563 |
56,735 |
65,940 |
|
December 31, 2028 |
100.00% |
$57,531 |
$57,531 |
59,004 |
65,940 |
|
December 31, 2029 |
100.00% |
$60,498 |
$60,498 |
61,364 |
65,940 |
|
December 31, 2030 |
100.00% |
$63,466 |
$63,466 |
63,819 |
65,940 |
|
October 12, 2031 (*) |
100.00% |
$65,940 |
$65,940 |
65,940 |
65,940 |
(*) Normal Retirement Age
FOURTH AMENDMENT
TO THE
THE NATIONAL BANK OF BLACKSBURG
SALARY CONTINUATION AGREEMENT
FOR DAVID K. SKEENS
THIS FOURTH AMENDMENT is adopted this 16th day of August, 2021, by and between The National Bank of Blacksburg (the “Bank”) and David K. Skeens (the “Executive”).
The Bank and the Executive entered into a Salary Continuation Agreement dated February 8, 2006 and three subsequent amendments thereto (collectively, the “Agreement”). The Bank and the Executive now wish to increase the amount of the retirement benefit provided in the Agreement and update the Agreement’s amendment and termination provisions.
Now, therefore, the Bank and the Executive amend the Agreement as follows.
Section 2.2.1 of the Agreement shall be deleted in its entirety and replaced with the following.
2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is Sixty-Eight Thousand Nine Hundred Forty Dollars ($68,940).
Article 8 of the Agreement shall be deleted in its entirety and replaced with the following.
ARTICLE 8
AMENDMENT AND TERMINATION
|
8.1 |
Agreement Amendment Generally. Except as provided in Section 8.2, this Agreement may be amended only by a written agreement signed by both the Bank and the Executive. |
|
8.2 |
Amendment to Insure Proper Characterization of Agreement. Notwithstanding anything in this Agreement to the contrary, the Agreement may be amended by the Bank at any time, if found necessary in the opinion of the Bank, (i) to ensure that the Agreement is characterized as plan of deferred compensation maintained for a select group of management or highly compensated employees as described under ERISA, (ii) to conform the Agreement to the requirements of any applicable law or (iii) to comply with the written instructions of the Bank’s auditors or banking regulators. |
|
8.3 |
Agreement Termination Generally. Except as provided in Section 8.4, this Agreement may be terminated only by a written agreement signed by the Company and the Executive. Such termination 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 3. |
|
8.4 |
Effect of Complete Termination. Notwithstanding anything to the contrary in Section 6.3, and subject to the requirements of Code Section 409A and Treasury Regulations §1.409A-3(j)(4)(ix), at certain times the Bank may completely terminate and liquidate the Agreement. In the event of a complete termination under subsection 8.4.1 or 8.4.3, the Bank shall pay the Executive the entire amount the Bank has accrued with respect to the benefits hereunder. In the event of a complete termination under subsection 8.4.2, the Employer shall pay the Executive the present value of the Change in Control benefit described in Section 2.4, calculated using the discount rate and mortality age assumptions utilized by the Employer for determining the accrued benefit under Generally Accepted Accounting Principles as of December 31st of the calendar year preceding the earlier of (i) the date of the Change of Control or (ii) the date of the complete termination. Such complete termination of the Agreement shall occur only under the following circumstances and conditions. |
|
8.4.1 |
Corporate Dissolution or Bankruptcy. The Bank may terminate and liquidate this Agreement within twelve (12) months of a corporate dissolution taxed under Code Section 331, or with the approval of a bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A), provided that all benefits paid under the Agreement are included in the Executive’s gross income in the latest of: (i) the calendar year which the termination occurs; (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 payment is administratively practicable. |
|
8.4.2 |
Change in Control. The Bank may terminate and liquidate this Agreement by taking irrevocable action to terminate and liquidate within the thirty (30) days preceding or the twelve (12) months following a Change in Control. This Agreement will then be treated as terminated only if all substantially similar arrangements sponsored by the Bank which are treated as deferred under a single plan under Treasury Regulations §1.409A-1(c)(2) are terminated and liquidated with respect to each participant who experienced the Change in Control so that the Executive and any participants in any such similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the date the Bank takes the irrevocable action to terminate the arrangements. |
|
8.4.3 |
Discretionary Termination. The Bank may terminate and liquidate this Agreement provided that: (i) the termination does not occur proximate to a downturn in the financial health of the Bank; (ii) all arrangements sponsored by the Bank and Affiliates that would be aggregated with any terminated arrangements under Treasury Regulations §1.409A-1(c) are terminated; (iii) no payments, other than payments that would be payable under the terms of this Agreement if the termination had not occurred, are made within twelve (12) months of the date the Bank takes the irrevocable action to terminate this Agreement; (iv) all payments are made within twenty-four (24) months following the date the Bank takes the irrevocable action to terminate and liquidate this Agreement; and (v) neither the Bank nor any of its Affiliates adopt a new arrangement that would be aggregated with any terminated arrangement under Treasury Regulations §1.409A-1(c) if the Executive participated in both arrangements, at any time within three (3) years following the date the Bank takes the irrevocable action to terminate this Agreement. |
The Schedule A attached hereto shall replace the Schedule A originally incorporated into the Agreement.
IN WITNESS WHEREOF, the Executive and a duly authorized representative of the Bank have signed this Fourth Amendment.
| EXECUTIVE |
|
BANK |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| /s/ David K. Skeens |
|
By: |
/s/ F. Brad Denardo |
|
| David K. Skeens |
|
|
F. Brad Denardo |
|
|
|
|
|
|
|
|
Title: Chairman, President & Chief Executive Officer |
||||
The National Bank of Blacksburg
Salary Continuation Plan - Schedule A (as amended effective August 1, 2021)
David K. Skeens
|
Birth Date: 10/12/1966 Plan Effective Date: 1/1/2006 |
Early Termination |
Disability |
Change of Control |
Pre-retirement Death Benefit |
|
|
Normal Retirement 10/12/2031, Age 65
Normal Retirement Benefit: $68,940 |
Annual Benefits Payable in Monthly Installments for life, with |
Annual Benefits Payable in Monthly I nstallments for life, with |
Annual Benefits Payable in Monthly Installments for life, with |
Annual Benefits Payable in Monthly Installments for 15 years; |
|
|
15 years certain; Commencing at Normal Retirement Age |
15 years certain; Commencing at Normal Retirement Age |
15 years certain; Commencing at Separation of Service |
Commencing at Death |
||
|
Separation of Service |
|||||
| on or after: |
Vesting |
Dollars |
(2) |
(3) |
(4) |
|
August 1, 2021 |
100.00% |
33,789 |
33,789 |
43,114 |
68,940 |
|
December 31, 2021 |
100.00% |
36,974 |
36,974 |
44,838 |
68,940 |
|
December 31, 2022 |
100.00% |
40,297 |
40,297 |
46,632 |
68,940 |
|
December 31, 2023 |
100.00% |
43,603 |
43,603 |
48,497 |
68,940 |
|
December 31, 2024 |
100.00% |
46,890 |
46,890 |
50,437 |
68,940 |
|
December 31, 2025 |
100.00% |
50,160 |
50,160 |
52,455 |
68,940 |
|
December 31, 2026 |
100.00% |
53,413 |
53,413 |
54,553 |
68,940 |
|
December 31, 2027 |
100.00% |
56,652 |
56,652 |
56,735 |
68,940 |
|
December 31, 2028 |
100.00% |
59,877 |
59,877 |
59,004 |
68,940 |
|
December 31, 2029 |
100.00% |
63,086 |
63,086 |
61,364 |
68,940 |
|
December 31, 2030 |
100.00% |
66,284 |
66,284 |
64,855 |
68,940 |
|
October 12, 2031 (*) |
100.00% |
68,940 |
68,940 |
68,940 |
68,940 |
(*) Normal Retirement Age
IF THERE IS A CONFLICT 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.
| David K, Skeens /s/ David K. Skeens | The National Bank of Blacksburg, by /s/ F. Brad Denardo |
| F. Brad Denardo | |
| Date: August 16, 2021 | Title: Chairman, President & Chief Executive Officer |
| Date: August 16, 2021 |
Exhibit 10.2
THE NATIONAL BANK OF BLACKSBURG
SALARY CONTINUATION AGREEMENT
This Salary Continuation Agreement (the “Agreement”) by and between The National Bank of Blacksburg, a nationally-chartered commercial bank located in Blacksburg, Virginia (hereinafter referred to as the “Employer”), and Paul Mylum (hereinafter referred to as the “Executive”), made as of the 24th day of May, 2013, formalizes the agreements and understanding between the Employer and the Executive.
WITNESSETH:
WHEREAS, the Executive is employed by the Employer;
WHEREAS, the Employer recognizes the valuable services the Executive has performed for the Employer and wishes to encourage the Executive’s continued employment and to provide the Executive with additional incentive to achieve corporate objectives;
WHEREAS, the Employer wishes to provide the terms and conditions upon which the Employer shall pay additional retirement benefits to the Executive;
WHEREAS, the Employer and the Executive intend this Agreement shall at all times be administered and interpreted in compliance with Code Section 409A; and
WHEREAS, the Employer intends this Agreement shall at all times be administered and interpreted in such a manner as to constitute an unfunded nonqualified deferred compensation arrangement, maintained primarily to provide supplemental retirement benefits for the Executive, a member of select group of management or highly compensated employee of the Employer.
NOW THEREFORE, in consideration of the premises and of the mutual promises herein contained, the Employer and the Executive agree as follows:
ARTICLE 1
DEFINITIONS
For the purpose of this Agreement, the following phrases or terms shall have the indicated meanings:
1.1 “Accrued Benefit” means the dollar value of the liability that should be accrued by the Employer, under Generally Accepted Accounting Principles, for the Employer’s obligation to the Executive under this Agreement, calculated by applying by applying Accounting Standards Codification 710-10 and an appropriate discount rate.
1.2 “Administrator” means the Board or its designee.
1.3 “Affiliate” means any business entity with whom the Employer would be considered a single employer under Section 414(b) and 414(c) of the Code. Such term shall be interpreted in a manner consistent with the definition of “service recipient” contained in Code Section 409A.
1.4 “Beneficiary” means the person or persons designated in writing by the Executive to receive benefits hereunder in the event of the Executive’s death.
1.5 “Board” means the Board of Directors of the Employer.
1.6 “Cause” means any of the following acts or circumstances: gross negligence or gross neglect of duties to the Employer; conviction of a felony or of a gross misdemeanor involving moral turpitude in connection with the Executive’s employment with the Employer; or fraud, disloyalty, dishonesty or willful violation of any law or significant Employer policy committed in connection with the Executive's employment and resulting in a material adverse effect on the Employer.
1.7 “Change in Control” means a change in the ownership or effective control of the Employer, or in the ownership of a substantial portion of the assets of the Employer, as such change is defined in Code Section 409A and regulations thereunder.
1.8 “Claimant” means a person who believes that he or she is being denied a benefit to which he or she is entitled hereunder.
1.9 “Code” means the Internal Revenue Code of 1986, as amended.
1.10 “Disability” means a condition of the Executive whereby the Executive either: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment that 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 three months under an accident and health plan covering employees of the Employer. The Administrator will determine whether the Executive has incurred a Disability based on its own good faith determination and may require the Executive to submit to reasonable physical and mental examinations for this purpose. The Executive will also be deemed to have incurred a Disability if determined to be totally disabled by the Social Security Administration or in accordance with a disability insurance program, provided that the definition of disability applied under such disability insurance program complies with the initial sentence of this Section.
1.11 “Early Termination” means Separation from Service before Normal Retirement Age except when such Separation from Service occurs within twenty-four (24) months following a Change in Control or due to termination for Cause.
1.12 “Effective Date” means February 1, 2013.
1.13 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
1.14 “Normal Retirement Age” means the date the Executive attains age sixty-five (65).
1.15 “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 and end on the following December 31.
1.16 “Schedule A” means the schedule attached hereto and made a part hereof. Schedule A shall be updated upon a change to any of the benefits described in Article 2 hereof.
1.17 “Separation from Service” means a termination of the Executive’s employment with the Employer and its Affiliates for reasons other than death or Disability. A Separation from Service may occur as of a specified date for purposes of the Agreement even if the Executive continues to provide some services for the Employer or its Affiliates after that date, provided that the facts and circumstances indicate that the Employer and the Executive reasonably anticipated at that date that either no further services would be performed after that 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 over the immediately preceding thirty-six (36) month period (or the full period during which the Executive performed services for the Employer, if that is less than thirty-six (36) months). A Separation from Service will not be deemed to have occurred while the Executive is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six (6) months or, if longer, the period for which a statute or contract provides the Executive with the right to reemployment with the Employer. If the Executive’s leave exceeds six (6) months but the Executive is not entitled to reemployment under a statute or contract, the Executive incurs a Separation of Service on the next day following the expiration of such six (6) month period. In determining whether a Separation of Service occurs the Administrator shall take into account, among other things, the definition of “service recipient” and “employer” set forth in Treasury regulation §1.409A-1(h)(3). The Administrator shall have full and final authority, to determine conclusively whether a Separation from Service occurs, and the date of such Separation from Service.
1.18 “Specified Employee” means an individual that satisfies the definition of a “key employee” of the Employer as such term is defined in Code §416(i) (without regard to Code §416(i)(5)), provided that the stock of the Employer is publicly traded on an established securities market or otherwise, as defined in Code §1.897-1(m). If the Executive is a key employee at any time during the twelve (12) months ending on December 31, the Executive is a Specified Employee for the twelve (12) month period commencing on the first day of the following April.
ARTICLE 2
PAYMENT OF BENEFITS
2.1 Normal Retirement Benefit. Upon the Executive reaching Normal Retirement Age prior to Separation from Service, the Employer shall pay the Executive an annual benefit in the amount of Forty-Eight Thousand Seven Hundred Seventy-Two Dollars ($48,772). The annual benefit will be paid in equal monthly installments commencing the month following Normal Retirement Age and continuing for the greater of the Executive’s lifetime or fifteen (15) years.
2.2 Early Termination Benefit. If Early Termination occurs, the Employer shall pay the Executive the Early Termination benefit shown on Schedule A corresponding to the Plan Year in which Separation from Service occurs. The annual benefit will be paid in equal monthly installments commencing the month following Normal Retirement Age and continuing for the greater of the Executive’s lifetime or fifteen (15) years.
2.3 Disability Benefit. In the event the Executive suffers a Disability prior to Normal Retirement Age the Employer shall pay the Executive the Disability benefit shown on Schedule A corresponding to the Plan Year in which Disability occurs. The annual benefit will be paid in equal monthly installments commencing the month following Normal Retirement Age and continuing for the greater of the Executive’s lifetime or fifteen (15) years.
2.4 Change in Control Benefit. If a Change in Control occurs, followed within twenty-four (24) months by Separation of Service prior to Normal Retirement Age, the Employer shall pay the Executive the Change in Control benefit shown on Schedule A corresponding to the Plan Year in which Separation from Service occurs. The annual benefit will be paid in equal monthly installments commencing the month following Separation of Service for fifteen (15) years.
2.5 Death Prior to Separation from Service and Normal Retirement Age. In the event the Executive dies prior to Separation from Service and Normal Retirement Age, the Employer shall pay the Beneficiary the death benefit shown on Schedule A corresponding to the Plan Year in which death occurs. The annual benefit will be paid in equal monthly installments commencing the fourth month following the Executive’s death and continuing for fifteen (15) years.
2.6 Death Subsequent to Commencement of Benefit Payments. In the event the Executive dies after any benefit distributions have commenced under this Agreement but before receiving fifteen (15) years of such distributions, the Beneficiary shall continue to receive the same amounts and at the same time until the sum of the monthly installments to the Beneficiary and Executive equals one hundred eighty (180). If the Executive has already received fifteen (15) or more years of distributions, then distributions hereunder shall cease.
2.7 Death Subsequent to Separation from Service or Disability but Prior to Benefit Commencement. In the event the Executive dies after Separation from Service or Disability but prior to commencement of benefit distributions hereunder, the Employer shall pay the Beneficiary the same amounts that the Executive was entitled to prior to death except that the benefit distributions shall commence the fourth month following the Executive’s death for a total of one hundred eighty (180) equal consecutive monthly installments.
2.8 Termination for Cause. If the Employer terminates the Executive’s employment for Cause, then the Executive shall not be entitled to any benefits under the terms of this Agreement.
2.9 Restriction on Commencement of Distributions. Notwithstanding any provision of this Agreement to the contrary, if the Executive is considered a Specified Employee at the time of Separation from Service, the provisions of this Section shall govern all distributions hereunder. Distributions which would otherwise be made to the Executive due to Separation from Service 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, or if earlier, upon the Executive’s death. All subsequent distributions shall be paid as they would have had this Section not applied.
2.10 Acceleration of Payments. Except as specifically permitted herein, no acceleration of the time or schedule of any payment may be made hereunder. Notwithstanding the foregoing, payments may be accelerated, in accordance with the provisions of Treasury Regulation §1.409A-3(j)(4) in the following circumstances: (i) as a result of certain domestic relations orders; (ii) in compliance with ethics agreements with the federal government; (iii) in compliance with the ethics laws or conflicts of interest laws; (iv) in limited cashouts (but not in excess of the limit under Code §402(g)(1)(B)); (v) to pay employment-related taxes; or (vi) to pay any taxes that may become due at any time that the Agreement fails to meet the requirements of Code Section 409A.
2.11 Delays in Payment by Employer. A payment may be delayed to a date after the designated payment date under any of the circumstances described below, and the provision will not fail to meet the requirements of establishing a permissible payment event. The delay in the payment will not constitute a subsequent deferral election, so long as the Employer treats all payments to similarly situated Participants on a reasonably consistent basis.
(a) Payments subject to Code Section 162(m). If the Employer reasonably anticipates that the Employer’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 Employer to ensure that the entire amount of any distribution from this Agreement is deductible, the Employer 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 Employer reasonably anticipates that the deduction of the payment of the amount will not be limited or eliminated by application of Code Section 162(m).
(b) Payments that would violate Federal securities laws or other applicable law. A payment may be delayed where the Employer reasonably anticipates that the making of the payment will violate Federal securities laws or other applicable law provided that the payment is made at the earliest date at which the Employer reasonably anticipates that the making of the payment will not cause such violation. The making of a payment that would cause inclusion in gross income or the application of any penalty provision of the Internal Revenue Code is not treated as a violation of law.
(c) Solvency. Notwithstanding the above, a payment may be delayed where the payment would jeopardize the ability of the Employer to continue as a going concern.
2.12 Treatment of Payment as Made on Designated Payment Date. Any payment under this Agreement made after the required payment date shall be deemed made on the required payment date provided that such payment is made by the latest of: (i) the end of the calendar year in which the payment is due; (ii) the 15th day of the third calendar month following the payment due date; (iii) if Employer cannot calculate the payment amount on account of administrative impracticality which is beyond the Executive’s control, the end of the first calendar year which payment calculation is practicable; and (iv) if Employer does not have sufficient funds to make the payment without jeopardizing the Employer’s solvency, in the first calendar year in which the Employer’s funds are sufficient to make the payment.
2.13 Facility of Payment. If a distribution is to be made to a minor, or to a person who is otherwise incompetent, then the Administrator may make such distribution: (i) to the legal guardian, or if none, to a parent of a minor payee with whom the payee maintains his or her residence; or (ii) to the conservator or administrator or, if none, to the person having custody of an incompetent payee. Any such distribution shall fully discharge the Employer and the Administrator from further liability on account thereof.
2.14 Excise Tax Limitation. Notwithstanding any provision of this Agreement to the contrary, if any benefit payment hereunder would be treated as an “excess parachute payment” under Code Section 280G, the Employer shall comply with any restrictions or limitations found in the any employment or other agreement between the Executive and the Employer or any of its Affiliates addressing the treatment of excess parachute payments.
2.15 Changes in Form of Timing of Benefit Payments. The Employer and the Executive may, subject to the terms hereof, amend this Agreement to delay the timing or change the form of payments. Any such amendment:
(a) must take effect not less than twelve (12) months after the amendment is made;
(b) must, for benefits distributable due solely to the arrival of a specified date, or on account of Separation from Service or Change in Control, delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally scheduled to be made;
(c) must, for benefits distributable due solely to the arrival of a specified date, be made not less than twelve (12) months before distribution is scheduled to begin; and
(d) may not accelerate the time or schedule of any distribution.
ARTICLE 3
BENEFICIARIES
3.1 Designation of Beneficiaries. The Executive may designate any person to receive any benefits payable under the Agreement upon the Executive’s death, and the designation may be changed from time to time by the Executive by filing a new designation. Each designation will revoke all prior designations by the Executive, shall be in the form prescribed by the Administrator, and shall be effective only when filed in writing with the Administrator during the Executive’s lifetime. If the Executive names someone other than the Executive’s spouse as a Beneficiary, the Administrator may, in its sole discretion, determine that spousal consent is required to be provided in a form designated by the Administrator, executed by the Executive’s spouse and returned to the 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.
3.2 Absence of Beneficiary Designation. In the absence of a valid Beneficiary designation, or if, at the time any benefit payment is due to a Beneficiary, there is no living Beneficiary validly named by the Executive, the Employer shall pay the benefit payment to the Executive’s spouse. If the spouse is not living then the Employer shall pay the benefit payment to the Executive’s living descendants per stirpes, and if there no living descendants, to the Executive’s estate. In determining the existence or identity of anyone entitled to a benefit payment, the Employer may rely conclusively upon information supplied by the Executive’s personal representative, executor, or administrator.
ARTICLE 4
ADMINISTRATION
4.1 Administrator Duties. The Administrator shall be responsible for the management, operation, and administration of the Agreement. When making a determination or calculation, the Administrator shall be entitled to rely on information furnished by the Employer, Executive or Beneficiary. No provision of this Agreement shall be construed as imposing on the Administrator any fiduciary duty under ERISA or other law, or any duty similar to any fiduciary duty under ERISA or other law.
4.2 Administrator Authority. The Administrator shall enforce this Agreement in accordance with its terms, shall be charged with the general administration of this Agreement, and shall have all powers necessary to accomplish its purposes.
4.3 Binding Effect of Decision. The decision or action of the 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, conclusive and binding upon all persons having any interest in this Agreement.
4.4 Compensation, Expenses and Indemnity. The Administrator shall serve without compensation for services rendered hereunder. The Administrator is authorized at the expense of the Employer to employ such legal counsel and/or recordkeeper as it may deem advisable to assist in the performance of its duties hereunder. Expense and fees in connection with the administration of this Agreement shall be paid by the Employer.
4.5 Employer Information. The Employer shall supply full and timely information to the Administrator on all matters relating to the Executive’s compensation, death, Disability or Separation from Service, and such other information as the Administrator reasonably requires.
4.6 Termination of Participation. If the Administrator determines in good faith that the Executive no longer qualifies as a member of a select group of management or highly compensated employees, as determined in accordance with ERISA, the Administrator shall have the right, in its sole discretion, to cease further benefit accruals hereunder.
4.7 Compliance with Code Section 409A. The Employer and the Executive intend that the Agreement comply with the provisions of Code Section 409A to prevent the inclusion in gross income of any amounts deferred hereunder in a taxable year prior to the year in which amounts are actually paid to the Executive or Beneficiary. This Agreement shall be construed, administered and governed in a manner that affects such intent, and the Administrator shall not take any action that would be inconsistent therewith.
ARTICLE 5
CLAIMS AND REVIEW PROCEDURES
5.1 Claims Procedure. A 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.
(a) Initiation – Written Claim. The Claimant initiates a claim by submitting to the 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.
(b) Timing of Administrator Response. The Administrator shall respond to such Claimant within ninety (90) days after receiving the claim. If the Administrator determines that special circumstances require additional time for processing the claim, the 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 Administrator expects to render its decision.
(c) Notice of Decision. If the Administrator denies part or all of the claim, the Administrator shall notify the Claimant in writing of such denial. The Administrator shall write the notification in a manner calculated to be understood by the Claimant. The notification shall set forth: (i) the specific reasons for the denial; (ii) a reference to the specific provisions of this Agreement on which the denial is based; (iii) a description of any additional information or material necessary for the Claimant to perfect the claim and an explanation of why it is needed; (iv) an explanation of this Agreement’s review procedures and the time limits applicable to such procedures; and (v) a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.
5.2 Review Procedure. If the Administrator denies part or all of the claim, the Claimant shall have the opportunity for a full and fair review by the Administrator of the denial as follows.
(a) Initiation – Written Request. To initiate the review, the Claimant, within sixty (60) days after receiving the Administrator’s notice of denial, must file with the Administrator a written request for review.
(b) 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 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.
(c) Considerations on Review. In considering the review, the 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.
(d) Timing of Administrator Response. The Administrator shall respond in writing to such Claimant within sixty (60) days after receiving the request for review. If the Administrator determines that special circumstances require additional time for processing the claim, the 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 Administrator expects to render its decision.
(e) Notice of Decision. The Administrator shall notify the Claimant in writing of its decision on review. The 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 6
AMENDMENT AND TERMINATION
6.1 Agreement Amendment Generally. Except as provided in Section 6.2, this Agreement may be amended only by a written agreement signed by both the Employer and the Executive.
6.2 Amendment to Insure Proper Characterization of Agreement. Notwithstanding anything in this Agreement to the contrary, the Agreement may be amended by the Employer at any time, if found necessary in the opinion of the Employer, i) to ensure that the Agreement is characterized as plan of deferred compensation maintained for a select group of management or highly compensated employees as described under ERISA, ii) to conform the Agreement to the requirements of any applicable law or iii) to comply with the written instructions of the Employer’s auditors or banking regulators.
6.3 Agreement Termination Generally. Except as provided in Section 6.4, this Agreement may be terminated only by a written agreement signed by the Employer and the Executive. Such termination 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.
6.4 Effect of Complete Termination. Notwithstanding anything to the contrary in Section 6.3, and subject to the requirements of Code Section 409A and Treasury Regulations §1.409A-3(j)(4)(ix), at certain times the Employer may completely terminate and liquidate the Agreement. In the event of such a complete termination, the Employer shall pay the Accrued Benefit balance to the Executive. Such complete termination of the Agreement shall occur only under the following circumstances and conditions.
(a) Corporate Dissolution or Bankruptcy. The Employer may terminate and liquidate this Agreement within twelve (12) months of a corporate dissolution taxed under Code Section 331, or with the approval of a bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A), provided that all benefits paid under the Agreement are included in the Executive’s gross income in the latest of: (i) the calendar year which the termination occurs; (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 payment is administratively practicable.
(b) Change in Control. The Employer may terminate and liquidate this Agreement by taking irrevocable action to terminate and liquidate within the thirty (30) days preceding or the twelve (12) months following a Change in Control. This Agreement will then be treated as terminated only if all substantially similar arrangements sponsored by the Employer which are treated as deferred under a single plan under Treasury Regulations §1.409A-1(c)(2) are terminated and liquidated with respect to each participant who experienced the Change in Control so that the Executive and any participants in any such similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the date the Employer takes the irrevocable action to terminate the arrangements.
(c) Discretionary Termination. The Employer may terminate and liquidate this Agreement provided that: (i) the termination does not occur proximate to a downturn in the financial health of the Employer; (ii) all arrangements sponsored by the Employer and Affiliates that would be aggregated with any terminated arrangements under Treasury Regulations §1.409A-1(c) are terminated; (iii) no payments, other than payments that would be payable under the terms of this Agreement if the termination had not occurred, are made within twelve (12) months of the date the Employer takes the irrevocable action to terminate this Agreement; (iv) all payments are made within twenty-four (24) months following the date the Employer takes the irrevocable action to terminate and liquidate this Agreement; and (v) neither the Employer nor any of its Affiliates adopt a new arrangement that would be aggregated with any terminated arrangement under Treasury Regulations §1.409A-1(c) if the Executive participated in both arrangements, at any time within three (3) years following the date the Employer takes the irrevocable action to terminate this Agreement.
ARTICLE 7
MISCELLANEOUS
7.1 No Effect on Employment Rights. This Agreement constitutes the entire agreement between the Employer 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. Nothing contained herein will confer upon the Executive the right to be retained in the service of the Employer nor limit the right of the Employer to discharge or otherwise deal with the Executive without regard to the existence hereof.
7.2 State Law. To the extent, not governed by ERISA, the provisions of this Agreement shall be construed and interpreted according to the internal law of the Commonwealth of Virginia without regard to its conflicts of laws principles.
7.3 Validity. In case 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 inserted herein.
7.4 Nonassignability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.
7.5 Unsecured General Creditor Status. Payment to the Executive or any Beneficiary hereunder shall be made from assets which shall continue, for all purposes, to be part of the general, unrestricted assets of the Employer and no person shall have any interest in any such asset by virtue of any provision of this Agreement. The Employer’s obligation hereunder shall be an unfunded and unsecured promise to pay money in the future. In the event that the Employer purchases an insurance policy insuring the life of the Executive to recover the cost of providing benefits hereunder, neither the Executive nor the Beneficiary shall have any rights whatsoever in said policy or the proceeds therefrom.
7.6 Life Insurance. If the Employer chooses to obtain insurance on the life of the Executive in connection with its obligations under this Agreement, the Executive hereby agrees to take such physical examinations and to truthfully and completely supply such information as may be required by the Employer or the insurance company designated by the Employer.
7.7 Unclaimed Benefits. The Executive shall keep the Employer informed of the Executive’s current address and the current address of the Beneficiary. If the location of the Executive is not made known to the Employer within three years after the date upon which any payment of any benefits may first be made, the Employer shall delay payment of the Executive’s benefit payment(s) until the location of the Executive is made known to the Employer; however, the Employer shall only be obligated to hold such benefit payment(s) for the Executive until the expiration of three (3) years. Upon expiration of the three (3) year period, the Employer may discharge its obligation by payment to the Beneficiary. If the location of the Beneficiary is not made known to the Employer by the end of an additional two (2) month period following expiration of the three (3) year period, the Employer may discharge its obligation by payment to the Executive’s estate. If there is no estate in existence at such time or if such fact cannot be determined by the Employer, the Executive and Beneficiary shall thereupon forfeit all rights to any benefits provided under this Agreement.
7.8 Suicide or Misstatement. No benefit shall be distributed hereunder 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 Employer denies coverage (i) for material misstatements of fact made by the Executive on an application for life insurance, or (ii) for any other reason.
7.9 Removal. Notwithstanding anything in this Agreement to the contrary, the Employer shall not distribute any benefit under this Agreement if the Executive is subject to a final removal or prohibition order issued pursuant to Section 8(e) of the Federal Deposit Insurance Act. Furthermore, any payments made to the Executive pursuant to this Agreement shall, if required, comply with 12 U.S.C. 1828, FDIC Regulation 12 CFR Part 359 and any other regulations or guidance promulgated thereunder.
7.10 Notice. Any notice, consent or demand required or permitted to be given to the Employer or Administrator under this Agreement shall be sufficient if in writing and hand-delivered or sent by registered or certified mail to the Employer’s principal business office. Any notice or filing required or permitted to be given to the Executive or Beneficiary under this Agreement shall be sufficient if in writing and hand-delivered or sent by mail to the last known address of the Executive or Beneficiary, as appropriate. Any 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 or on the receipt for registration or certification.
7.11 Headings and Interpretation. Headings and sub-headings in this Agreement are inserted for reference and convenience only and shall not be deemed part of this Agreement. 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.
7.12 Alternative Action. In the event it becomes impossible for the Employer or the Administrator to perform any act required by this Agreement due to regulatory or other constraints, the Employer or 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 Employer, provided that such alternative act does not violate Code Section 409A.
7.13 Coordination with Other Benefits. The benefits provided for the Executive or the Beneficiary under this Agreement are in addition to any other benefits available to the Executive under any other plan or program for employees of the Employer. This Agreement shall supplement and shall not supersede, modify, or amend any other such plan or program except as may otherwise be expressly provided herein.
7.14 Inurement. This Agreement shall be binding upon and shall inure to the benefit of the Employer, its successor and assigns, and the Executive, the Executive’s successors, heirs, executors, administrators, and the Beneficiary.
7.15 Tax Withholding. The Employer may make such provisions and take such action as it deems necessary or appropriate for the withholding of any taxes which the Employer is required by any law or regulation to withhold in connection with any benefits under the Agreement. The Executive shall be responsible for the payment of all individual tax liabilities relating to any benefits paid hereunder.
7.16 Aggregation of Agreement. If the Employer offers other non-account balance deferred compensation plans, this Agreement and those plans shall be treated as a single plan to the extent required under Code Section 409A.
IN WITNESS WHEREOF, the Executive and a representative of the Employer have executed this Agreement document as indicated below:
|
Executive: |
Employer: |
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/s/ Paul Mylum |
By: |
/s/ James G. Rakes |
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Paul Mylum |
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James G. Rakes |
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| Its: Chairman, President & CEO | |||
The National Bank of Blacksburg Salary Continuation
Plan - Schedule A
Paul Mylum
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Birth Date: 6/22/1966 Plan Effective Date: 2/1/2013 |
Early Termination |
Disability |
Change of Control |
Pre-retirement Death Benefit |
|
|
Normal Retirement 6/22/2031, Age 65
Normal Retirement Benefit: $48,772 |
Annual Benefits Payable in Monthly Installments for life, with 15 years certain; Commencing at Normal Retirement Age |
Annual Benefits Payable in Monthly Installments for life, with 15 years certain; Commencing at Normal Retirement Age |
Annual Benefits Payable in Monthly Installments for 15 years; Commencing at Separation of Service |
Annual Benefits Payable in Monthly Installments for 15 years;
Commencing at Death |
|
|
Separation of Service |
|||||
| on or after: |
Vesting |
Dollars |
(2) |
(3) |
(4) |
|
January 1, 2013 |
0.00% |
$0 |
$1,372 |
23,608 |
48,772 |
|
December 31, 2013 |
0.00% |
$0 |
$5,341 |
24,552 |
48,772 |
|
December 31, 2014 |
0.00% |
$0 |
$9,099 |
25,534 |
48,772 |
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December 31, 2015 |
0.00% |
$0 |
$12,655 |
26,556 |
48,772 |
|
December 31, 2016 |
100.00% |
$16,022 |
$16,022 |
27,618 |
48,772 |
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December 31, 2017 |
100.00% |
$19,209 |
$19,209 |
28,723 |
48,772 |
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December 31, 2018 |
100.00% |
$22,226 |
$22,226 |
29,872 |
48,772 |
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December 31, 2019 |
100.00% |
$25,081 |
$25,081 |
31,066 |
48,772 |
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December 31, 2020 |
100.00% |
$27,784 |
$27,784 |
32,309 |
48,772 |
|
December 31, 2021 |
100.00% |
$30,343 |
$30,343 |
33,601 |
48,772 |
|
December 31, 2022 |
100.00% |
$32,766 |
$32,766 |
34,945 |
48,772 |
|
December 31, 2023 |
100.00% |
$35,058 |
$35,058 |
36,343 |
48,772 |
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December 31, 2024 |
100.00% |
$37,229 |
$37,229 |
37,797 |
48,772 |
|
December 31, 2025 |
100.00% |
$39,283 |
$39,283 |
39,309 |
48,772 |
|
December 31, 2026 |
100.00% |
$41,228 |
$41,228 |
40,881 |
48,772 |
|
December 31, 2027 |
100.00% |
$43,069 |
$43,069 |
42,517 |
48,772 |
|
December 31, 2028 |
100.00% |
$44,812 |
$44,812 |
44,217 |
48,772 |
|
December 31, 2029 |
100.00% |
$46,462 |
$46,462 |
45,986 |
48,772 |
|
December 31, 2030 |
100.00% |
$48,023 |
$48,023 |
47,825 |
48,772 |
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June 22, 2031 (*) |
100.00% |
$48,772 |
$48,772 |
48,772 |
48,772 |
(*) Normal Retirement Age
FIRST AMENDMENT
TO THE
THE NATIONAL BANK OF BLACKSBURG
SALARY CONTINUATION AGREEMENT
FOR PAUL MYLUM
THIS AMENDMENT (the “Amendment”) is adopted this 16th day of August 2021, by and between The National Bank of Blacksburg (the “Employer”) and Paul Mylum (the “Executive”).
The Employer and the Executive entered into a Salary Continuation Agreement dated May 24, 2013 (the “Agreement”). The Employer and the Executive now wish to increase the amount of the retirement benefit provided in the Agreement and update the Agreement’s amendment and termination provisions.
Now, therefore, the Employer and the Executive amend the Agreement as follows.
Section 2.1 of the Agreement shall be deleted in its entirety and replaced with the following.
2.1 Normal Retirement Benefit. Upon the Executive reaching Normal Retirement Age prior to Separation from Service, the Employer shall pay the Executive an annual benefit in the amount of Seventy Thousand Dollars ($70,000). The annual benefit will be paid in equal monthly installments commencing the month following Normal Retirement Age and continuing for the greater of the Executive’s lifetime or fifteen (15) years.
Article 6 of the Agreement shall be deleted in its entirety and replaced with the following.
ARTICLE 6
AMENDMENT AND TERMINATION
6.1 Agreement Amendment Generally. Except as provided in Section 6.2, this Agreement may be amended only by a written agreement signed by both the Employer and the Executive.
6.2 Amendment to Insure Proper Characterization of Agreement. Notwithstanding anything in this Agreement to the contrary, the Agreement may be amended by the Employer at any time, if found necessary in the opinion of the Employer, i) to ensure that the Agreement is characterized as plan of deferred compensation maintained for a select group of management or highly compensated employees as described under ERISA, ii) to conform the Agreement to the requirements of any applicable law or iii) to comply with the written instructions of the Employer’s auditors or banking regulators.
6.3 Agreement Termination Generally. Except as provided in Section 6.4, this Agreement may be terminated only by a written agreement signed by the Company and the Executive. Such termination 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.
6.4 Effect of Complete Termination. Notwithstanding anything to the contrary in Section 6.3, and subject to the requirements of Code Section 409A and Treasury Regulations §1.409A-3(j)(4)(ix), at certain times the Employer may completely terminate and liquidate the Agreement. In the event of a complete termination under subsection (a) or (c) below, the Employer shall pay the Executive the Accrued Benefit. In the event of a complete termination under subsection (b) below, the Employer shall pay the Executive the present value of the Change in Control benefit described in Section 2.4, calculated using the discount rate assumption utilized by the Employer for determining the Accrued Benefit as of December 31st of the calendar year preceding the earlier of (i) the date of the Change of Control or (ii) the date of the complete termination. Such complete termination of the Agreement shall occur only under the following circumstances and conditions.
(a) Corporate Dissolution or Bankruptcy. The Employer may terminate and liquidate this Agreement within twelve (12) months of a corporate dissolution taxed under Code Section 331, or with the approval of a bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A), provided that all benefits paid under the Agreement are included in the Executive’s gross income in the latest of: (i) the calendar year which the termination occurs; (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 payment is administratively practicable.
(b) Change in Control. The Employer may terminate and liquidate this Agreement by taking irrevocable action to terminate and liquidate within the thirty (30) days preceding or the twelve (12) months following a Change in Control. This Agreement will then be treated as terminated only if all substantially similar arrangements sponsored by the Employer which are treated as deferred under a single plan under Treasury Regulations §1.409A-1(c)(2) are terminated and liquidated with respect to each participant who experienced the Change in Control so that the Executive and any participants in any such similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the date the Employer takes the irrevocable action to terminate the arrangements.
(c) Discretionary Termination. The Employer may terminate and liquidate this Agreement provided that: (i) the termination does not occur proximate to a downturn in the financial health of the Employer; (ii) all arrangements sponsored by the Employer and Affiliates that would be aggregated with any terminated arrangements under Treasury Regulations §1.409A-1(c) are terminated; (iii) no payments, other than payments that would be payable under the terms of this Agreement if the termination had not occurred, are made within twelve (12) months of the date the Employer takes the irrevocable action to terminate this Agreement; (iv) all payments are made within twenty-four (24) months following the date the Employer takes the irrevocable action to terminate and liquidate this Agreement; and (v) neither the Employer nor any of its Affiliates adopt a new arrangement that would be aggregated with any terminated arrangement under Treasury Regulations §1.409A-1(c) if the Executive participated in both arrangements, at any time within three (3) years following the date the Employer takes the irrevocable action to terminate this Agreement.
The Schedule A attached hereto shall replace the Schedule A originally incorporated into the Agreement.
IN WITNESS WHEREOF, the Executive and a duly authorized representative of the Employer have signed this Amendment.
| EXECUTIVE |
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EMPLOYER |
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| /s/ Paul Mylum |
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By: |
/s/ F. Brad Denardo |
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| Paul Mylum |
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F. Brad Denardo |
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Title: Chairman, President & Chief Executive Officer |
||||
The National Bank of Blacksburg
Salary Continuation Plan - Schedule A (as amended effective August 1, 2021)
Paul Mylum
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Birth Date: 6/22/1966 Plan Effective Date: 5/1/2013 |
Early Termination |
Disability |
Change of Control |
Pre-retirement Death Benefit |
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Normal Retirement 6/22/2031, Age 65
Normal Retirement Benefit: $70,000 |
Annual Benefits Payable in Monthly Installments for life, with |
Annual Benefits Payable in Monthly Installments for life, with |
Annual Benefits Payable in Monthly Installments for |
Annual Benefits Payable in Monthly Installments for 15 years; |
|
|
15 years certain; Commencing at Normal Retirement Age |
15 years certain; Commencing at Normal Retirement Age |
15 years; Commencing at Separation of Service |
Commencing at Death |
||
|
Separation of Service |
|||||
| on or after: |
Vesting |
Dollars |
(2) |
(3) |
(4) |
|
August 1, 2021 |
100.00% |
27,784 |
27,784 |
51,631 |
70,000 |
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December 31, 2021 |
100.00% |
31,917 |
31,917 |
53,696 |
70,000 |
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December 31, 2022 |
100.00% |
36,923 |
36,923 |
55,844 |
70,000 |
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December 31, 2023 |
100.00% |
41,660 |
41,660 |
58,078 |
70,000 |
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December 31, 2024 |
100.00% |
46,146 |
46,146 |
60,401 |
70,000 |
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December 31, 2025 |
100.00% |
50,391 |
50,391 |
62,817 |
70,000 |
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December 31, 2026 |
100.00% |
54,410 |
54,410 |
65,330 |
70,000 |
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December 31, 2027 |
100.00% |
58,215 |
58,215 |
67,943 |
70,000 |
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December 31, 2028 |
100.00% |
61,816 |
61,816 |
70,660 |
70,000 |
|
December 31, 2029 |
100.00% |
65,226 |
65,226 |
73,487 |
70,000 |
|
December 31, 2030 |
100.00% |
68,452 |
68,452 |
76,426 |
70,000 |
|
June 22, 2031 (*) |
100.00% |
70,000 |
70,000 |
77,955 |
70,000 |
(*) Normal Retirement Age
IF THERE IS A CONFLICT 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.
| Paul Mylum /s/ Paul Mylum | The National Bank of Blacksburg, by /s/ F. Brad Denardo |
| F. Brad Denardo | |
| Date: August 16, 2021 | Title: Chairman, President & Chief Executive Officer |
| Date: August 16, 2021 |
Exhibit 10.3
NATIONAL BANKSHARES, INC.
SALARY CONTINUATION AGREEMENT
THIS SALARY CONTINUATION AGREEMENT (the “Agreement”) is adopted this 8th day of February, 2006, by and between NATIONAL BANKSHARES, INC., a Virginia corporation located in Blacksburg, Virginia (the “Corporation”) and LARA E. RAMSEY (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 Corporation. 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:
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1.1 |
“Beneficiary” means each designated person, or the estate of the deceased Executive, entitled to benefits, if any, upon the death of the Executive determined pursuant to Article 4. |
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1.2 |
“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. |
|
1.3 |
“Board” means the Board of Directors of the Corporation as from time to time constituted. |
|
1.4 |
“Change in Control” means a change in the ownership or effective control of the Corporation, or in the ownership of a substantial portion of the assets of the Corporation, as such change is defined in Section 409A of the Code and regulations thereunder. |
|
1.5 |
“Code” means the Internal Revenue Code of 1986, as amended. |
|
1.6 |
“Disability” means 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 of the Corporation. Medical determination of Disability may be made by either the Social Security Administration or by the provider of an accident or health plan covering employees of the Corporation. 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. |
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1.7 |
“Early Termination” means Separation from Service before Normal Retirement Age except when such Separation from Service occurs: (i) following a Change in Control; or (ii) due to death, Disability, or Termination for Cause. |
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1.8 |
“Effective Date” means January 1, 2006. |
|
1.9 |
“Normal Retirement Age” means the Executive attaining age sixty-five (65). |
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1.10 |
“Plan Administrator” means the plan administrator described in Article 6. |
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1.11 |
“Plan Year” means each twelve-month period commencing on January 1, 2006 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. |
|
1.12 |
“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. |
|
1.13 |
“Separation from Service” means the termination of the Executive’s employment with the Corporation for reasons other than death or Disability. Whether a Separation from Service takes place is determined based on the facts and circumstances surrounding the termination of the Executive’s employment and whether the Corporation and the Executive intended for the Executive to provide significant services for the Corporation following such termination. A termination of employment will not be considered a Separation from Service if: |
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(a) |
the Executive continues to provide services as an employee of the Corporation at an annual rate that is twenty percent (20%) or more of the services rendered, on average, during the immediately preceding three full calendar years of employment (or, if employed less than three years, such lesser period) and the annual remuneration for such services is twenty percent (20%) or more of the average annual remuneration earned during the final three full calendar years of employment (or, if less, such lesser period), or |
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(b) |
the Executive continues to provide services to the Corporation in a capacity other than as an employee of the Corporation at an annual rate that is fifty percent (50%) or more of the services rendered, on average, during the immediately preceding three full calendar years of employment (or if employed less than three years, such lesser period) and the annual remuneration for such services is fifty percent (50%) or more of the average annual remuneration earned during the final three full calendar years of employment (or if less, such lesser period). |
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1.14 |
“Specified Employee” means a key employee (as defined in Section 416(i) of the Code without regard to paragraph 5 thereof) of the Corporation if any stock of the Corporation is publicly traded on an established securities market or otherwise. |
|
1.15 |
“Termination for Cause” means Separation from Service for: |
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(a) |
Gross negligence or gross neglect of duties to the Corporation; or |
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(b) |
Conviction of a felony or of a gross misdemeanor involving moral turpitude in connection with the Executive’s employment with the Corporation; or |
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(c) |
Fraud, disloyalty, dishonesty or willful violation of any law or significant Corporation policy committed in connection with the Executive’s employment and resulting in a material adverse effect on the Corporation. |
Article 2
Distributions During Lifetime
|
2.1 |
Normal Retirement Benefit. Upon the Executive reaching Normal Retirement Age while in the active service of the Corporation, the Corporation 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 Thirty-Three Thousand Three Hundred Twenty Dollars ($33,320). |
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2.1.2 |
Distribution of Benefit. The Corporation shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following Normal Retirement Age. The annual benefit shall be distributed to the Executive for the greater of fifteen (15) years, or the Executive’s lifetime. |
|
2.2 |
Early Termination Benefit. Upon Early Termination, the Corporation 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 Early Termination Benefit set forth on Schedule A for the Plan Year immediately preceding the date that Separation from Service occurs; provided, however, if the Executive Separates from Service on December 31st of a Plan Year, then the Corporation shall distribute the Early Termination Benefit set forth on Schedule A for the Plan Year in which such Separation from Service occurs. |
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2.2.2 |
Distribution of Benefit. The Corporation shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following Normal Retirement Age. The annual benefit shall be distributed to the Executive for the greater of fifteen (15) years, or the Executive’s lifetime. |
|
2.3 |
Disability Benefit. If the Executive experiences a Disability prior to Normal Retirement Age, the Corporation shall distribute to the Executive the benefit described in this Section 2.3 in lieu of any other benefit under this Article. |
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2.3.1 |
Amount of Benefit. The annual benefit under this Section 2.3 is the Disability Benefit set forth on Schedule A for the Plan Year immediately preceding the date that Separation from Service occurs; provided, however, if the Executive Separates from Service on December 31st of a Plan Year, then the Corporation shall distribute the Disability Benefit set forth on Schedule A for the Plan Year in which such Separation from Service occurs. |
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2.3.2 |
Distribution of Benefit. The Corporation shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following Normal Retirement Age. The annual benefit shall be distributed to the Executive for the greater of fifteen (15) years, or the Executive’s lifetime. |
|
2.4 |
Change in Control Benefit. Upon a Change in Control followed by Separation from Service, the Corporation shall distribute to the Executive the benefit described in this Section 2.4 in lieu of any other benefit under this Article. |
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2.4.1 |
Amount of Benefit. The annual benefit under this Section 2.4 is the Change in Control Benefit set forth on Schedule A for the Plan Year immediately preceding the date that Separation from Service occurs; provided, however, if the Executive Separates from Service on December 31st of a Plan Year, then the Corporation shall distribute the Change in Control Benefit set forth on Schedule A for the Plan Year in which such Separation from Service occurs. |
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2.4.2 |
Distribution of Benefit. The Corporation shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following Separation from Service. The annual benefit shall be distributed to the Executive for the greater of fifteen (15) years, or the Executive’s lifetime. |
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2.4.3 |
Excess Parachute Payment Gross-up. If any benefit payable under this Agreement would create an excise tax under the excess parachute rules of Section 280G of the Code, the Corporation shall pay to the Executive an additional amount (the “Gross-up”) equal to: |
the Executive’s excise penalty tax amount
divided by the sum of
(one minus the sum of the penalty tax rate plus the Executive’s marginal income tax rate)
The Gross-up shall be paid in equal annual payments for the greater of fifteen (15) years or the Executive’s lifetime.
|
2.5 |
Restriction on Timing of Distribution. Notwithstanding any provision of this Agreement to the contrary, if the Executive is considered a Specified Employee at Separation from Service under such procedures as established by the Corporation in accordance with Section 409A of the Code, benefit distributions that are made upon Separation from Service may not commence earlier than six (6) months after the date of such Separation from Service. Therefore, in the event this Section 2.5 is applicable to the Executive, any distribution or series of distributions to be made due to a Separation from Service shall commence no earlier that the first day of the seventh month following the Separation from Service. |
|
2.6 |
Distributions Upon Income Inclusion Under Section 409A of the Code. Upon the inclusion of any portion of the Account Value into the Executive’s income as a result of the failure of this non-qualified deferred compensation plan to comply with the requirements of Section 409A of the Code, to the extent such tax liability can be covered by the Executive’s vested Account Value, a distribution shall be made as soon as is administratively practicable following the discovery of the plan failure. |
|
2.7 |
Change in Form or Timing of Distributions. For distribution of benefits under this Article 2, the Executive and the Corporation may, subject to the terms of Section 8.1, amend the 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 Section 409A of the Code and the regulations thereunder; |
|
(b) |
must, for benefits distributable under Section 2.1, be made not less than twelve (12) months prior to the Executive’s Normal Retirement Age. |
|
(c) |
must, for benefits distributable under Sections 2.1, 2.2, and 2.3 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 while in the active service of the Corporation, the Corporation shall distribute to the Beneficiary the benefit described in this Section 3.1. This benefit shall be distributed in lieu of the benefits under Article 2. |
|
3.1.1 |
Amount of Benefit. The annual benefit under this Section 3.1 is the Death Benefit set forth on Schedule A for the indicated date which is the same date or most recently precedes the date that the Executive’s death occurs. |
|
3.1.2 |
Distribution of Benefit. The Corporation shall distribute the annual benefit to the Beneficiary in twelve (12) equal monthly installments for fifteen (15) years commencing the first day of the month following receipt by the Corporation of 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 Corporation shall distribute to the Beneficiary the remaining monthly installments at the same time and in the same amounts that would have been distributed to the Executive had the Executive survived; provided, however, for benefits payable under Section 2.1, if the Executive has received less than one hundred eighty (180) equal consecutive monthly installments, the Beneficiary shall continue to receive the same amounts and at the same time until the sum of the monthly installments to the Beneficiary and Executive equal one hundred eighty (180). |
|
3.3 |
Death After Separation from Service But Before Benefit Distributions Commence. If the Executive is entitled to benefit distributions under this Agreement, but dies prior to the commencement of said benefit distributions, the Corporation shall distribute to the Beneficiary the same benefits that the Executive was entitled to prior to death except that the benefit distributions shall commence within thirty (30) days following receipt by the Corporation of the Executive’s death certificate for a total of on hundred eighty (180) equal consecutive monthly installments. |
Article 4
Beneficiaries
|
4.1 |
Beneficiary. The Executives shall have the right, at any time, to designate a Beneficiary(ies) 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 designation under any other plan of the Corporation in which the Executive participates. |
|
4.2 |
Beneficiary Designation: Change. The Executives shall designate a Beneficiary by completing and signing the Beneficiary Designation Form, and delivering it to the Plan Administrator or its designated agent. 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 Executives 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, as in effect from time to time. 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, the benefits shall be made to the personal representative of 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 Executive’s Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Agreement for such distribution amount. |
Article 5
General Limitations
|
5.1 |
Termination for Cause. Notwithstanding any provision of this Agreement to the contrary, the Corporation shall not distribute any benefit under this Agreement if the Executive’s employment with the Corporation is terminated due to a Termination for Cause. |
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5.2 |
Suicide or Misstatement. No benefits shall be distributed if the Executive commits suicide within two years after the Effective Date of this Agreement, or if an insurance company which issued a life insurance policy covering the Executive and owned by the Corporation 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. |
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5.3 |
Removal. Notwithstanding any provision of this Agreement to the contrary, the Corporation 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. |
Article 6
Administration of Agreement
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6.1 |
Plan Administrator Duties. This Agreement shall be administered by a Plan Administrator which shall consist of the Board, or such committee or person(s) as the Board shall appoint. 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 administra‐tion of this Agreement and (ii) decide or resolve any and all ques‐tions including interpretations of this Agreement, as may arise in connection with the Agreement to the extent the exercise of such discretion and authority does not conflict with Section 409A of the Code and regulations thereunder. |
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6.2 |
Agents. In the administration of this Agreement, the Plan Administrator may employ agents and delegate to them such administrative duties as it sees fit, (including acting through a duly appointed representative), and may from time to time consult with counsel who may be counsel to the Corporation. |
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6.3 |
Binding Effect of Decisions. The decision or action of the Plan Administrator with respect to any question arising out of or in connection with the administration, interpretation and application of the Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Agreement. |
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6.4 |
Indemnity of Plan Administrator. The Corporation shall indemnify and hold harmless the members of 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 or any of its members. |
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6.5 |
Corporation Information. To enable the Plan Administrator to perform its functions, the Corporation shall supply full and timely information to the Plan Administrator on all matters relating to the date and circum‐stances of the retirement, Disability, death, or Separation from Service of the Executive, and such other pertinent information as the Plan Administrator may reasonably require. |
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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
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7.1 |
Claims Procedure. An Executive or Beneficiary (“claimant”) who has not received benefits under the Agreement that he or she believes should be distributed shall make a claim for such benefits as follows: |
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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. |
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7.1.2 |
Timing of Plan Administrator Response. The Plan Administrator shall respond to such claimant within 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 90 days by notifying the claimant in writing, prior to the end of the initial 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. |
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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: |
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(a) |
The specific reasons for the denial; |
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(b) |
A reference to the specific provisions of the Agreement on which the denial is based; |
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(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; |
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(d) |
An explanation of the Agreement’s review procedures and the time limits applicable to such procedures; and |
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(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. |
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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: |
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7.2.1 |
Initiation – Written Request. To initiate the review, the claimant, within 60 days after receiving the Plan Administrator’s notice of denial, must file with the Plan Administrator a written request for review. |
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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. |
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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. |
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7.2.4 |
Timing of Plan Administrator Response. The Plan Administrator shall respond in writing to such claimant within 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 60 days by notifying the claimant in writing, prior to the end of the initial 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. |
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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: |
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(a) |
The specific reasons for the denial; |
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(b) |
A reference to the specific provisions of the Agreement on which the denial is based; |
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(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 |
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(d) |
A statement of the claimant’s right to bring a civil action under ERISA Section 502(a). |
Article 8
Amendments and Termination
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8.1 |
Amendments. This Agreement may be amended only by a written agreement signed by the Corporation and the Executive. However, the Corporation may unilaterally amend this Agreement to conform with written directives to the Corporation from its auditors or banking regulators or to comply with legislative or tax law, including without limitation Section 409A of the Code and any and all regulations and guidance promulgated thereunder. |
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8.2 |
Plan Termination Generally. This Agreement may be terminated only by a written agreement signed by the Corporation and the Executive. The benefit shall be the Early Termination benefit as set forth on Schedule A as of the date the 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. |
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8.3 |
Plan Terminations Under Section 409A. Notwithstanding anything to the contrary in Section 8.2, if the Corporation terminates this Agreement in the following circumstances: |
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(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 the Agreement and further provided that all the Corporation's arrangements which are substantially similar to the 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 the termination of the arrangements; |
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(b) |
Upon the Corporation’s dissolution or with the approval of a bankruptcy court provided that the amounts deferred under the Agreement are included in the Executive's gross income in the latest of (i) the calendar year in which the 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 |
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(c) |
Upon the Corporation’s termination of this and all other non-account balance plans (as referenced in Section 409A of the Code or the regulations thereunder), provided that all distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and the Corporation does not adopt any new non-account balance plans for a minimum of five (5) years following the date of such termination; |
the Corporation may distribute the actuarial equivalent of the present value of the Early Termination benefit, determined as of the date of the termination of the Agreement, to the Executive in a lump sum subject to the above terms.
Article 9
Miscellaneous
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9.1 |
Binding Effect. This Agreement shall bind the Executive and the Corporation, and their beneficiaries, survivors, executors, administrators and transferees. |
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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 Corporation, nor does it interfere with the Corporation's right to discharge the Executive. It also does not require the Executive to remain an employee nor interfere with the Executive's right to terminate employment at any time. |
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9.3 |
Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner. |
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9.4 |
Tax Withholding and Reporting. The Corporation shall withhold any taxes that are required to be withheld, including but not limited to taxes owed under Section 409A of the Code and regulations thereunder, from the benefits provided under this Agreement. Executive acknowledges that the Corporation’s sole liability regarding taxes is to forward any amounts withheld to the appropriate taxing authority(ies). Further, the Corporation shall satisfy all applicable reporting requirements, including those under Section 409A of the Code and regulations thereunder. |
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9.5 |
Applicable Law. The 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. |
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9.6 |
Unfunded Arrangement. The Executive and the Beneficiary are general unsecured creditors of the Corporation for the distribution of benefits under this Agreement. The benefits represent the mere promise by the Corporation 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 Corporation to which the Executive and Beneficiary have no preferred or secured claim. |
|
9.7 |
Reorganization. The Corporation shall not merge or consolidate into or with another corporation, or reorganize, or sell substantially all of its assets to another corporation, firm, or person unless such succeeding or continuing corporation, firm, or person agrees to assume and discharge the obligations of the Corporation under this Agreement. Upon the occurrence of such event, the term “Corporation” as used in this Agreement shall be deemed to refer to the successor or survivor corporation. |
|
9.8 |
Entire Agreement. This Agreement constitutes the entire agreement between the Corporation 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 Corporation or the Plan Administrator to perform any act required by this Agreement, the Corporation or Plan Administrator may in its discretion perform such alternative act as most nearly carries out the intent and purpose of this Agreement and is in the best interests of the Corporation, provided that such alternative acts do not violate Section 409A of the Code. |
|
9.11 |
Headings. Article and section headings are for convenient reference only and shall not control or affect the meaning or construction of any of its provisions. |
|
9.12 |
Validity. In case 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 and invalid provision has never been inserted herein. |
|
9.13 |
Notice. Any notice or filing required or permitted to be given to the Corporation 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: |
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National Bankshares, Inc. |
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Attn: James G. Rakes |
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P.O. Box 90002 |
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Blacksburg, VA 24062-9002 |
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.
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9.14 |
Compliance with Section 409A. This Agreement shall at all times be administered and the provisions of this Agreement shall be interpreted consistent with the requirements of Section 409A of the Code and any and all regulations thereunder, including such regulations as may be promulgated after the Effective Date of this Agreement. |
|
9.15 |
Rescissions. Any modification to the terms of this Agreement that would inadvertently result in an additional tax liability on the part of the Executive, shall have no effect to the extent the change in the terms of the plan is rescinded by the earlier of a date before the right is exercised (if the change grants a discretionary right) and the last day of the calendar year during which such change occurred. |
IN WITNESS WHEREOF, the Executive and a duly authorized representative of the Corporation have signed this Agreement.
| Executive: |
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CORPORATION:
National Bankshares, Inc. |
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| /s/ Lara E. Ramsey |
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By: |
/s/ James G. Rakes |
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| Lara E. Ramsey |
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James G. Rakes |
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| Its: Chairman, President & CEO | ||||
National Bankshares, Inc.
Salary Continuation Plan - Schedule A
Lara E. Ramsey
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Birth Date: 6/30/1968 Efffective Date: 1/1/2006 |
Early Termination |
Disability |
Change of Control |
Pre-retirement Death Benefit |
|
|
Normal Retirement 6/30/2033, Age 65: |
Annual Benefits Payable in Monthly Installments Commencing at Normal Retirement Date For Life |
Annual Benefits Payable in Monthly Installments Commencing at Normal Retirement Date For Life |
Annual Benefits Payable in Monthly Installments Commencing at Termination Date For Life |
Annual Benefits Payable in Monthly Installments Commencing at Death for 15 Years |
|
|
Period Ending: |
Age |
(1) |
(2) |
(3) |
(4) |
|
12/31/2005 |
37 |
$0 |
$0 |
$11,369 |
$33,320 |
|
12/31/2006 |
38 |
$0 |
$1,205 |
$11,823 |
$33,320 |
|
12/31/2007 |
39 |
$0 |
$2,411 |
$12,296 |
$33,320 |
|
12/31/2008 |
40 |
$0 |
$3,616 |
$12,788 |
$33,320 |
|
12/31/2009 |
41 |
$0 |
$4,821 |
$13,300 |
$33,320 |
|
12/31/2010 |
42 |
$0 |
$6,027 |
$13,832 |
$33,320 |
|
12/31/2011 |
43 |
$0 |
$7,232 |
$14,385 |
$33,320 |
|
12/31/2012 |
44 |
$0 |
$8,438 |
$14,960 |
$33,320 |
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12/31/2013 |
45 |
$0 |
$9,643 |
$15,559 |
$33,320 |
|
12/31/2014 |
46 |
$0 |
$10,848 |
$16,181 |
$33,320 |
|
12/31/2015 |
47 |
$0 |
$12,054 |
$16,828 |
$33,320 |
|
12/30/2016 |
48 |
$0 |
$13,259 |
$17,501 |
$33,320 |
|
12/31/2017 |
49 |
$0 |
$14,464 |
$18,202 |
$33,320 |
|
12/31/2018 |
50 |
$15,670 |
$15,670 |
$18,930 |
$33,320 |
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12/31/2019 |
51 |
$16,875 |
$16,875 |
$19,687 |
$33,320 |
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12/31/2020 |
52 |
$18,080 |
$18,080 |
$20,474 |
$33,320 |
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12/31/2021 |
53 |
$19,286 |
$19,286 |
$21,293 |
$33,320 |
|
12/31/2022 |
54 |
$20,491 |
$20,491 |
$22,145 |
$33,320 |
|
12/31/2023 |
55 |
$21,696 |
$21,696 |
$23,031 |
$33,320 |
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12/31/2024 |
56 |
$22,902 |
$22,902 |
$23,952 |
$33,320 |
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12/31/2025 |
57 |
$24,107 |
$24,107 |
$24,910 |
$33,320 |
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12/31/2026 |
58 |
$25,313 |
$25,313 |
$25,906 |
$33,320 |
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12/31/2027 |
59 |
$26,518 |
$26,518 |
$26,943 |
$33,320 |
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12/31/2028 |
60 |
$27,723 |
$27,723 |
$28,020 |
$33,320 |
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12/31/2029 |
61 |
$28,929 |
$28,929 |
$29,141 |
$33,320 |
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12/31/2030 |
62 |
$30,134 |
$30,134 |
$30,307 |
$33,320 |
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12/31/2031 |
63 |
$31,339 |
$31,339 |
$31,519 |
$33,320 |
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12/31/2032 |
64 |
$32,545 |
$32,545 |
$32,780 |
$33,320 |
|
6/30/2033 |
65 |
$33,320 |
$33,320 |
$33,320 |
$33,320 |
FIRST AMENDMENT
TO THE
NATIONAL BANK OF BLACKSBURG
SALARY CONTINUATION AGREEMENT DATED FEBRUARY 8, 2006
FOR LARA E. RAMSEY
THIS FIRST AMENDMENT is adopted this 19th day of December, 2007, effective as of January 1, 2006, by and between NATIONAL BANKSHARES, INC., a Virginia corporation headquartered in Blacksburg, Virginia (the "Corporation"), and LARA E. RAMSEY (the "Executive").
The Corporation and the Executive executed the Salary Continuation Agreement on February 8, 2006 effective as of January 1, 2006 (the "Agreement").
The undersigned hereby amend the Agreement for the purpose of bringing the Agreement into compliance with Section 409A of the Internal Revenue Code. Therefore, the following changes shall be made:
Sections 2.4 and 2.4.3 of the Agreement shall be deleted in its entirety and replaced by the following:
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2.4 |
Change in Control Benefit. If a Change in Control occurs, followed within twenty-four (24) months by the Executive's 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. |
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2.4.3 |
Excess Parachute Payment Gross-up. If any benefit payable under this Agreement would create an excise tax under the excess parachute rules of Section 280G of the Code, the Bank shall pay to the Executive an additional amount (the "Gross-up") equal to: |
the Executive's excise penalty tax amount divided by the sum of (one minus the sum of the penalty tax rate plus the Executive's marginal income tax rate)
The Gross-up shall be paid in the same manner and same time as the benefit which creates the gross-up.
Section 2.7 of the Agreement shall be deleted in its entirety and replaced by the following:
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2.7 |
Change in Form or Timing of Distributions. |
All changes in the form or timing of distributions hereunder must comply with the following requirements. The changes:
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(a) may not accelerate the time or schedule of any distribution, except as provided in Code Section 409A and the regulations thereunder; |
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(b) must, for benefits distributable under Sections 2.1, 2.2 and 2.3, be made at least twelve (12) months prior to the first scheduled distribution; |
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(c) must, for benefits distributable under Sections 2.1, 2.2, 2.3 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 |
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(d) must take effect not less than twelve (12) months after the election is made. |
Section 8.3 of the Agreement shall be deleted in its entirety and replaced by the following:
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8.3 |
Plan Terminations Under Section 409A. Notwithstanding anything to the contrary in Section 8.2, if this Agreement terminates in the following circumstances: |
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(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 the Agreement and further provided that all the Bank's arrangements which are substantially similar to the 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 terminations; |
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(b) Upon the Bank's dissolution or with the approval of a bankruptcy court, provided that the amounts deferred under the Agreement are included in the Executive's gross income in the latest of (i) the calendar year in which the 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 |
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(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; |
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the Bank may distribute the actuarial equivalent of the present value of the Early Termination benefit, determined as of the date of the termination of the Agreement, to the Executive in a lump sum subject to the above terms. |
IN WITNESS OF THE ABOVE, the Corporation and the Executive hereby consent to this First Amendment.
| Executive: |
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National Bankshares, Inc.: |
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| /s/Lara E. Ramsey |
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By: |
/s/ James G. Rakes |
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| Lara E. Ramsey |
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James G. Rakes |
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| Its: Chairman, President & CEO | ||||
SECOND AMENDMENT
TO
NATIONAL BANKSHARES, INC.
SALARY CONTINUATION AGREEMENT
DATED FEBRUARY 8, 2006
FOR LARA E. RAMSEY
THIS SECOND AMENDMENT is adopted this 17th day of December, 2008, effective as of January 1, 2006, by and between NATIONAL BANKSHARES, INC., a Virginia corporation headquartered in Blacksburg, Virginia (the "Company"), and LARA E. RAMSEY (the "Executive").
The Company and the Executive executed the Salary Continuation Agreement on February 8, 2006 effective as of January 1, 2006 (the "Agreement").
The undersigned hereby amend the Agreement for the purpose of bringing the Agreement into compliance with Section 409A of the Internal Revenue Code. Therefore, the following changes shall be made:
The following sentence is added at the end of Section 1.13 of the Agreement:
In determining whether a Separation from Service has occurred, the term "Company" shall include its affiliates required to be treated as a service recipient along with the Company for purposes of Section 409A of the Code.
Sections 2.3 and 2.3.1 of the Agreement shall be deleted in their entirety and replaced by the following:
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2.3 |
Disability Benefit. If the Executive experiences a Disability prior to Normal Retirement Age while in the active service of the Company, the Company shall distribute to the Executive the benefit described in this Section 2.3 in lieu of any other benefit under this Article. |
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2.3.1 |
Amount of Benefit. The annual benefit under this Section 2.3 is the Disability Benefit set forth on Schedule A for the Plan Year immediately preceding the date that the Executive's cessation of service with the Company occurs due to Disability; provided, however, if the Executive ceases service with the Company due to Disability on December 31st of a Plan Year, then the Company shall distribute the Disability Benefit set forth on Schedule A for the Plan Year in which such Separation from Service occurs. |
Section 2.4.3 of the Agreement shall be deleted in its entirety and replaced by the following:
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2.4.3 |
Excess Parachute Payment If any benefit payable under this Agreement would create an excise tax under the excess parachute rules of Section 280G of the Code, the Company shall comply with any applicable restrictions or limitations applicable to the Executive in the Executive's employment or other agreement, if any, with the Company or any affiliate of the Company addressing the same. |
Section 2.5 of the Agreement shall be deleted in its entirety and replaced by the following:
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2.5 |
Restriction on Timing of Distribution. Notwithstanding any provision of this Agreement to the contrary, if the Executive is considered a Specified Employee at Separation from Service under such procedures as established by the Company in accordance with Section 409A of the Code, benefit distributions that are made upon Separation from Service may not commence earlier than six (6) months after the date of such Separation from Service. Therefore, in the event this Section 2.5 is applicable to the Executive, any distribution or series of distributions to be made due to a Separation from Service shall commence no earlier than the first day of the seventh month following the Separation from Service. No catch-up payment, or interest representing the time value of money, shall be made or due as a result of the six (6) month delay in payment required by this Section 2.5. |
Section 8.3 of the Agreement shall be deleted in its entirety and replaced by the following:
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8.3 |
Plan Terminations Under Section 409A. Notwithstanding anything to the contrary in Section 8.2, but subject to the applicable requirements of Section 409A of the Code, if this Agreement terminates in the following circumstances:· |
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(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 the Agreement and further provided that all the Company's arrangements which are substantially similar to the Agreement are terminated with respect to the participants therein who experienced the Change in Control so the Executive and all such participants in the similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of such terminations; |
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(b) |
Upon the Company's dissolution or with the approval of a bankruptcy court, provided that the amounts deferred under the Agreement are included in the Executive's gross income in the latest of (i) the calendar year in which the 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 |
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(c) |
Upon the Company's termination of this and all other arrangements that would be aggregated with this Agreement pursuant · to Treasury Regulations Section l.409A-l(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 Company, (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 Company does not adopt any new arrangement that would be a Similar Arrangement for a minimum of three (3) years following the date the Company takes all necessary action to irrevocably terminate and liquidate the Agreement; |
the Company may distribute the actuarial equivalent of the present value of the Early Termination benefit, determined as of the date of the termination of the Agreement, to the Executive in a lump sum subject to the above terms. Actuarial equivalence shall be determined on the basis of the applicable actuarial factors in the National Bankshares, Inc. Retirement Income Plan unless the Company decides, in good faith, that other actuarial factors are more appropriate.
IN WITNESS OF THE ABOVE, the Company and the Executive hereby consent to this Second Amendment.
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Executive: |
National Bankshares, Inc. |
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/s/Lara E. Ramsey |
By: |
/s/ James G. Rakes |
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Lara E. Ramsey |
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James G. Rakes |
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| Title: Chairman, President & CEO | ||||
THIRD AMENDMENT
TO THE
NATIONAL BANKSHARES, INC.
SALARY CONTINUATION AGREEMENT
FOR LARA E. RAMSEY
THIS THIRD AMENDMENT is adopted this 22nd day of June, 2016, by and between National Bankshares, Inc. (the "Corporation") and Lara E. Ramsey (the "Executive").
The Corporation and the Executive entered into a Salary Continuation Agreement dated February 8, 2006 and two subsequent amendments thereto (collectively, the "Agreement"). The Corporation and the Executive now wish to increase the amount of the retirement benefit provided in the Agreement.
Now, therefore, the Corporation and the Executive amend the Agreement as follows.
Section 2.2.1 of the Agreement shall be deleted in its entirety and replaced with the following.
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2.1.1 |
Amount of Benefit. The annual benefit under this Section 2.1 is Forty-Two Thousand Dollars ($42,000). |
The Schedule A attached hereto shall replace the Schedule A originally incorporated into the Agreement
IN WITNESS WHEREOF, the Executive and a duly authorized representative of the Corporation have signed this Third Amendment.
| Executive: |
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National Bankshares, Inc. |
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| /s/Lara E. Ramsey |
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By: |
/s/ James G. Rakes |
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| Lara E. Ramsey |
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James G. Rakes |
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| Title: Chairman, President & CEO | ||||
National Bankshares, Inc.
Salary Continuation Agreement - Schedule A
Lara E. Ramsey
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July I, 2016 |
$0 |
$0 |
23,997 |
42,000 |
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December 31, 2016 |
$0 |
$13,555 |
24,957 |
42,000 |
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December31,2017 |
$0 |
$15,268 |
25,955 |
42,000 |
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December 31, 2018 |
$16,983 |
$16,983 |
26,993 |
42,000 |
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December 31, 2019 |
$18,696 |
$18,696 |
28,073 |
42,000 |
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December 31, 2020 |
$20,409 |
$20,409 |
29,196 |
42,000 |
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December 31, 2021 |
$22,123 |
$22,123 |
30,364 |
42,000 |
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December 31, 2022 |
$23,836 |
$23,836 |
31,578 |
42,000 |
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December 31, 2023 |
$25,549 |
$25,549 |
32,841 |
42,000 |
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December 31, 2024 |
$27,263 |
$27,263 |
34,155 |
42,000 |
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December 31, 2025 |
$28,976 |
$28,976 |
35,521 |
42,000 |
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December 31, 2026 |
$30,690 |
$30,690 |
36,942 |
42,000 |
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December 31, 2027 |
$32,403 |
$32,403 |
38,420 |
42,000 |
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December 31, 2028 |
$34,117 |
$34,117 |
39,957 |
42,000 |
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December 31, 2029 |
$35,831 |
$35,831 |
41,555 |
42,000 |
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December 31, 2030 |
$37,544 |
$37,544 |
43,217 |
42,000 |
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December 3L 2031 |
$39,257 |
$39,257 |
44,946 |
42,000 |
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December 3L. 2032 |
$40,971 |
$40,971 |
46,744 |
42,000 |
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June 30, 2033 (') |
$42,000 |
$42,000 |
48,613 |
42,000 |
(*) Normal Retirement Age
IF THERE IS A CONFLICT 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.
FOURTH AMENDMENT
TO THE
NATIONAL BANCSHARES, INC.
SALARY CONTINUATION AGREEMENT
FOR LARA E. RAMSEY
THIS FOURTH AMENDMENT is adopted this 16th day of August, 2021, by and between National Bancshares, Inc. (the “Corporation”) and Lara E. Ramsey (the “Executive”).
The Corporation and the Executive entered into a Salary Continuation Agreement dated February 8, 2006 and three subsequent amendments thereto (collectively, the “Agreement”). The Corporation and the Executive now wish to increase the amount of the retirement benefit provided in the Agreement and update the Agreement’s amendment and termination provisions.
Now, therefore, the Corporation and the Executive amend the Agreement as follows.
Section 2.2.1 of the Agreement shall be deleted in its entirety and replaced with the following.
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2.1.1 |
Amount of Benefit. The annual benefit under this Section 2.1 is Forty-Five Thousand Dollars ($45,000). |
Article 8 of the Agreement shall be deleted in its entirety and replaced with the following.
ARTICLE 8
AMENDMENT AND TERMINATION
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8.1 |
Agreement Amendment Generally. Except as provided in Section 8.2, this Agreement may be amended only by a written agreement signed by both the Corporation and the Executive. |
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8.2 |
Amendment to Insure Proper Characterization of Agreement. Notwithstanding anything in this Agreement to the contrary, the Agreement may be amended by the Corporation at any time, if found necessary in the opinion of the Corporation, (i) to ensure that the Agreement is characterized as plan of deferred compensation maintained for a select group of management or highly compensated employees as described under ERISA, (ii) to conform the Agreement to the requirements of any applicable law or (iii) to comply with the written instructions of the Corporation’s auditors or banking regulators. |
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8.3 |
Agreement Termination Generally. Except as provided in Section 8.4, this Agreement may be terminated only by a written agreement signed by the Company and the Executive. Such termination 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 3. |
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8.4 |
Effect of Complete Termination. Notwithstanding anything to the contrary in Section 6.3, and subject to the requirements of Code Section 409A and Treasury Regulations §1.409A-3(j)(4)(ix), at certain times the Corporation may completely terminate and liquidate the Agreement. In the event of a complete termination under subsection 8.4.1 or 8.4.3, the Corporation shall pay the Executive the entire amount the Corporation has accrued with respect to the benefits hereunder. In the event of a complete termination under subsection 8.4.2, the Employer shall pay the Executive the present value of the Change in Control benefit described in Section 2.4, calculated using the discount rate and mortality age assumptions utilized by the Employer for determining the accrued benefit under Generally Accepted Accounting Principles as of December 31st of the calendar year preceding the earlier of (i) the date of the Change of Control or (ii) the date of the complete termination. Such complete termination of the Agreement shall occur only under the following circumstances and conditions. |
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8.4.1 |
Corporate Dissolution or Bankruptcy. The Corporation may terminate and liquidate this Agreement within twelve (12) months of a corporate dissolution taxed under Code Section 331, or with the approval of a bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A), provided that all benefits paid under the Agreement are included in the Executive’s gross income in the latest of: (i) the calendar year which the termination occurs; (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 payment is administratively practicable. |
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8.4.2 |
Change in Control. The Corporation may terminate and liquidate this Agreement by taking irrevocable action to terminate and liquidate within the thirty (30) days preceding or the twelve (12) months following a Change in Control. This Agreement will then be treated as terminated only if all substantially similar arrangements sponsored by the Corporation which are treated as deferred under a single plan under Treasury Regulations §1.409A-1(c)(2) are terminated and liquidated with respect to each participant who experienced the Change in Control so that the Executive and any participants in any such similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the date the Corporation takes the irrevocable action to terminate the arrangements. |
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8.4.3 |
Discretionary Termination. The Corporation may terminate and liquidate this Agreement provided that: (i) the termination does not occur proximate to a downturn in the financial health of the Corporation; (ii) all arrangements sponsored by the Corporation and Affiliates that would be aggregated with any terminated arrangements under Treasury Regulations §1.409A-1(c) are terminated; (iii) no payments, other than payments that would be payable under the terms of this Agreement if the termination had not occurred, are made within twelve (12) months of the date the Corporation takes the irrevocable action to terminate this Agreement; (iv) all payments are made within twenty-four (24) months following the date the Corporation takes the irrevocable action to terminate and liquidate this Agreement; and (v) neither the Corporation nor any of its Affiliates adopt a new arrangement that would be aggregated with any terminated arrangement under Treasury Regulations §1.409A-1(c) if the Executive participated in both arrangements, at any time within three (3) years following the date the Corporation takes the irrevocable action to terminate this Agreement. |
The Schedule A attached hereto shall replace the Schedule A originally incorporated into the Agreement.
IN WITNESS WHEREOF, the Executive and a duly authorized representative of the Corporation have signed this Fourth Amendment.
| EXECUTIVE |
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CORPORATION |
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| /s/ Lara E. Ramsey |
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By: |
/s/ F. Brad Denardo |
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| Lara E. Ramsey |
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F. Brad Denardo |
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Title: Chairman, President & Chief Executive Officer |
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National Bankshares, Inc.
Salary Continuation Agreement - Schedule A (as amended effective August 1, 2021)
Lara E. Ramsey
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Birth Date: 6/30/1968 Plan Initial Effective Date: 1/1/2006 |
Early Termination |
Disability |
Change of Control |
Pre-retirement Death Benefit |
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Normal Retirement Date (Age 65): 6/30/2033
Normal Retirement Benefit: $45,000 |
Annual Benefits Payable in Monthly Installments for greater of lifetime or 15 years; Commencing at Normal Retirement Age |
Annual Benefits Payable in Monthly Installments for greater of lifetime or 15 years; Commencing at Normal Retirement Age |
Annual Benefits Payable in Monthly Installments for greater of lifetime or 15 years; Commencing at Separation of Service |
Annual Benefits Payable in Monthly Installments for 15 years; Commencing at Death |
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Separation of |
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Service on or after: |
Annual Benefit |
Annual Benefit |
Annual Benefit |
Annual Benefit |
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August 1, 2021 |
$20,409 |
$20,409 |
$26,223 |
45,000 |
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December 31, 2021 |
$22,318 |
$22,318 |
$27,272 |
45,000 |
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December 31, 2022 |
$24,351 |
$24,351 |
$27,817 |
45,000 |
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December 31, 2023 |
$26,367 |
$26,367 |
$28,930 |
45,000 |
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December 31, 2024 |
$28,368 |
$28,368 |
$30,087 |
45,000 |
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December 31, 2025 |
$30,352 |
$30,352 |
$31,291 |
45,000 |
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December 31, 2026 |
$32,323 |
$32,323 |
$32,542 |
45,000 |
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December 31, 2027 |
$34,280 |
$34,280 |
$33,844 |
45,000 |
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December 31, 2028 |
$36,224 |
$36,224 |
$35,198 |
45,000 |
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December 31, 2029 |
$38,156 |
$38,156 |
$36,606 |
45,000 |
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December 31, 2030 |
$40,075 |
$40,075 |
$38,521 |
45,000 |
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December 31, 2031 |
$41,983 |
$41,983 |
$40,935 |
45,000 |
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December 31, 2032 |
$43,882 |
$43,882 |
$43,575 |
45,000 |
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June 30, 2033 (*) |
$45,000 |
$45,000 |
$45,000 |
45,000 |
(*) Normal Retirement Age
IF THERE IS A CONFLICT 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.
| Lara E. Ramsey /s/ Lara E. Ramsey | The National Bank of Blacksburg, by /s/ F. Brad Denardo |
| F. Brad Denardo | |
| Date: August 16, 2021 | Title: Chairman, President & Chief Executive Officer |
| Date: August 16, 2021 |