Exhibit 10.3
MIDDLEBURG NATIONAL BANK
DEFERRED COMPENSATION AGREEMENT
This Deferred Compensation Agreement (the "Agreement") is made and
entered into as of December 1, 1993 by and between Middleburg National Bank (the
"Bank") and Xxxxxx X. Xxxxxx (the "Employee").
Recitals
The Employee currently serves as the president and chief executive
officer of the Bank. To induce him to continue to serve in this capacity, the
Bank offers to provide the Employee the opportunity to defer a portion of his
compensation pursuant to the terms of this Agreement, effective December 1,
1993.
NOW, THEREFORE, IT IS AGREED by the parties hereto, as follows:
1. Deferral of Compensation.
The Employee hereby agrees to defer each calendar year $10,000
of the amount to be earned by the Employee for services rendered to the Bank
during the participation period beginning on December 1, 1993 (the "Commencement
Date") and ending on December 31, 1999 (such interval being the "Participation
Period"). Such amount will be deferred by reducing the salary or bonus received
by the Employee during the Participation Period. A separate account (the
"Account") shall be established for the Employee.
2. Deferred Compensation Payments.
If the Employee satisfies the deferral requirements of Section
1 hereof for the full Participation Period, the Bank will pay to the Employee as
deferred compensation ("Deferred Compensation") the amount of $32,707 per year
for fifteen (15) consecutive years payable in 180 consecutive equal or nearly
equal monthly installments. Payment of the Deferred Compensation provided
hereunder shall begin not later than 30 days after the date the Employee attains
age 65 (Distribution Date).
3. Termination of Employment.
If the Employee terminates his employment with the Bank prior
to the expiration of the Participation Period for any reason other than death,
the Bank will pay to the Employee the amount of compensation actually deferred
by the Employee with interest computed on the amount deferred at the rate of 5
percent per annum, simple interest, from the Commencement Date through the date
the Employee terminates his employment with the Bank. The amount shall be paid
in one lump sum payment to the Employee within 30 days after the date the
Employee terminates his employment, and the Bank shall have no further
obligations hereunder.
4. Payments in the Event of Death.
(a) If the Employee dies while still employed by the Bank but
prior to the expiration of the Participation Period, the Bank will pay to the
Employee's Designated Beneficiary as provided under subsection 4(c) hereof the
Deferred Compensation provided
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under Section 2 hereof. Payments of the Deferred Compensation shall commence
within 30 days after the date of the Employee's death.
(b) If the Employee dies on or after the expiration of the
Participation Period but prior to the receipt of all or any part of the Deferred
Compensation due hereunder, the Bank shall, within 30 days after the Employee's
death, pay or continue to pay, as the case may be, to the Designated Beneficiary
the balance of the Deferred Compensation to which the Employee would have
otherwise been entitled hereunder had the Employee survived.
(c) The Employee may, from time to time, designate any person
or persons (who may be designated contingently or successively) (the "Designated
Beneficiary") to whom payments are to be made if the Employee dies before
receiving payment of all amounts due hereunder, by signing a form approved by
the Bank. A beneficiary designation form will be effective only after the signed
form is filed with the Bank's Personnel Department while the Employee is alive
and will cancel all beneficiary designation forms signed and filed earlier with
that Department. If the Employee fails to designate a Designated Beneficiary as
provided above, or if all Designated Beneficiaries of the Employee die before
the Employee or before the complete payment of all amounts due hereunder, the
Bank will pay the unpaid amounts to the legal representative or representatives
of the estate of the last to die of the Employee and the Designated Beneficiary
(or Beneficiaries).
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5. Unfunded Arrangement.
The Bank's obligation to make payments to any person under
this Agreement is purely contractual. The parties do not intend that the amounts
payable hereunder be held by the Bank in trust or as a segregated fund for the
Employee, the Designated Beneficiary, or other person entitled to payments
hereunder. The benefits provided under this Agreement shall be payable solely
from the general assets of the Bank, and neither the Employee nor any other
person entitled to payments hereunder shall have any interest in any assets of
the Bank by virtue of this Agreement. The Bank's obligation under this Agreement
shall be merely that of an unfunded and unsecured promise of the Bank to pay
money in the future. To the extent that this Agreement should be deemed to be a
"pension plan", the parties intend that it be unfunded for federal income tax
purposes, as well as for Title I of ERISA.
6. Assignment or Alienation.
The right of the Employee or any other person to the payment
of deferred income or any other benefits under this Agreement shall not be
assigned, sold, transferred, pledged or encumbered, except as provided herein or
by will or by the laws of descent and distribution, and shall not be subject to
attachment or garnishment by creditors.
7. Interpretation of Agreement.
The Board of Directors shall have full power and authority to
administer this Agreement, including the power to
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interpret all provisions of this Agreement, to promulgate forms to be used with
regard to the Agreement, the power to promulgate rules of administration, the
power to settle any dispute as to rights to benefits arising from this
Agreement, and the power to make decisions or to take such actions as the Board,
in its sole discretion, deems necessary or advisable to aid in the proper
maintenance of this Agreement.
8. Termination or Amendment of Agreement
A Employee may terminate this Agreement by written request
acknowledged by the Board or may amend his election with respect to the portion
or percentage of his compensation to be deferred by executing an amended
Agreement. Such a termination or amendment shall become effective for the year
following the year in which the request is made. In no event shall any such
termination or amendment affect amounts previously deferred under the Agreement.
Except as may be otherwise provided under this Agreement, in
the event a Employee terminates his election to defer prior to the end of the
Participation Period, he shall not be entitled to receive any distribution from
his Account until the Distribution Date. At that time he shall be entitled to
receive the amount of compensation actually deferred, with interest computed on
the amount deferred at the rate of 5 percent per annum, simple interest, from
the Commencement Date through the Distribution Date.
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Should the Board of Directors (exclusive of the Employee), however, in
its sole discretion, determine that due to a change in federal or state law (i)
the combined United States Federal and Virginia maximum marginal income tax rate
of the Bank has been increased or decreased from the maximum rate in effect on
the date of this Agreement or (ii) if the Bank's cost of providing benefits
otherwise payable to the Employee hereunder has materially increased or
decreased due to tax law changes, then, upon the recommendation of the Board of
Directors (exclusive of the Employee), the Bank may adjust the interest rates
otherwise utilized in the determination of benefit payments due hereunder for
intervals subsequent to the date thereof to reflect such increase or decrease,
as the case may be; or may otherwise modify or terminate the Agreement. No
payments, however, to the Employee shall be reduced when the Bank's cost of
providing payments has not been materially affected by such tax law changes, and
all adjustments shall be prospective, not retrospective.
9. Continued Employment Not Guaranteed.
Nothing contained in this Agreement or any action taken
hereunder shall be construed as a contract of employment or as giving the
Employee any right to be retained as an employee of the Bank.
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10. Taxes.
The Bank reserves the right to withhold all applicable
federal, state and local taxes on any monies paid to the Employee under this
Agreement.
11. Notice.
For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by the United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the last page of this Agreement.
12. Binding Effect.
This Agreement shall be binding upon and inure to the benefit
of the Employee and the Employee's heirs and legal representatives and the Bank
and its successors and assigns. The Bank will not consolidate with or merge into
another entity, or sell all or substantially all of its assets to another
entity, unless such other entity shall have the financial ability to discharge
obligations under this Agreement and in fact assumes this Agreement and upon
such assumption the Employee and the successor shall become obligated to perform
all of the terms and conditions herein contained.
13. Counterparts.
This Agreement may be executed in two or more counterparts,
any one of which shall be deemed an original without
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reference to the others.
14. Interpretation.
Where appropriate in this Agreement, words used in the
singular shall include the plural and words used in the masculine shall include
the feminine.
15. Governing Law.
The provisions of this Agreement and the rights of the parties
hereunder shall be interpreted and construed in accordance with the laws of the
Commonwealth of Virginia.
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed
by a duly authorized agent or representative and the Employee has hereunto
affixed his signature, all as of the day and year first written above.
MIDDLEBURG NATIONAL BANK
By /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Chairman of the Board
/s/ Xxxxxx X. Xxxxxx
--------------------------------
Xxxxxx X. Xxxxxx
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DESIGNATION OF BENEFICIARY
Pursuant to the terms of the Employee's Deferred Compensation Agreement
dated as of December 1, 1993 between Middleburg National Bank and me, I hereby
designate the following beneficiary(ies) to receive any payments which may be
due under such Agreement after my death:
Primary Beneficiary
Xxxxxxx X. Xxxxxx
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000
Secondary Beneficiaries
Crestar Bank Trust Department
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, XX 00000
This designation hereby revokes any prior designation which may have
been in effect.
Date: 12/9/93
/s/ Xxxxxx X. Xxxxxx
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Employee
Acknowledged by /s/ Xxxx X. Xxxxxxxx
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(Witness)
Administrative Assistant
(Title)
