NATIONAL BANKSHARES, INC.
SALARY CONTINUATION AGREEMENT
Prepared 01-30-06
c 2006 Xxxxx Consulting
This document is provided to assist your legal counsel in documenting your
specific arrangement. The laws of the various states may differ considerably,
and this specimen is for general information only. It is not a form to be
signed, nor is it to be construed as legal advice. Failure to accurately
document your arrangement could result in significant losses, whether from
claims of those participating in the arrangement, from the heirs and
beneficiaries of participants, or from regulatory agencies such as the Internal
Revenue Service, the Department of Labor, or corporation examiners. License is
hereby granted to your legal counsel to use these materials in documenting
solely your arrangement.
In general, if your corporation is subject to SEC regulation, implementation of
this or any other executive or director compensation program may trigger rules
requiring certain disclosures on Form 8-K within four days of implementing the
program. Consult with your SEC attorney, if applicable, to determine your
responsibilities under the disclosure rules.
IMPORTANT NOTICE ON CODE SECTION 409A COMPLIANCE
Consult with your legal and tax advisors to determine the impact of the new
Internal Revenue Code Section 409A to your particular situation. The Treasury
Department on September 29th, 2005 issued proposed regulations implementing the
requirements of Section 409A which apply to nonqualified deferred compensation
arrangements. The effective date for the proposed regulations is January 1,
2007; however, they can be fully relied upon by plan sponsors until the
regulations become final.
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 XXXXXXX X.X.
XXXXXXX (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:
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.
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
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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.
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.
1.8 "Effective Date" means January 1, 2006.
1.9 "Normal Retirement Age" means the Executive attaining age sixty-five (65).
1.10 "Plan Administrator" means the plan administrator described in Article 6.
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:
(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
(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:
(a) Gross negligence or gross neglect of duties to the Corporation; or (b)
Conviction of a felony or of a gross misdemeanor involving moral turpitude in
connection with the Executive's employment with the Corporation; or (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
Twenty-Eight Thousand Five Hundred Thirteen Dollars ($28,513).
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.
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
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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.
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.
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.
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.
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.
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)
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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
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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
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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.
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.
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
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)
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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 administration of this Agreement and (ii) decide or resolve
any and all questions 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.
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.
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.
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.
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 circumstances of the
retirement, Disability, death, or Separation from Service of the Executive, and
such other pertinent information as the Plan Administrator may reasonably
require.
6.6 Annual Statement. The Plan Administrator shall provide to the Executive,
within one hundred twenty (120) days after the end of each Plan Year, a
statement setting forth the benefits to be distributed under this Agreement.
Article 7
Claims And Review Procedures
7.1 Claims Procedure. An Executive or Beneficiary ("claimant") who has not
received benefits under the Agreement that he or she believes should be
distributed shall make a claim for such benefits as follows:
7.1.1 Initiation - Written Claim. The claimant initiates a claim by submitting
to the Plan Administrator a written claim for the benefits. If such a claim
relates to the contents of a notice received by the claimant, the claim must be
made within sixty (60) days after such notice was received by the claimant. All
other claims must be made within one hundred eighty (180) days of the date on
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which the event that caused the claim to arise occurred. The claim must state
with particularity the determination desired by the claimant.
7.1.2 Timing of Plan Administrator Response. The Plan Administrator shall
respond to such claimant within 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.
7.1.3 Notice of Decision. If the Plan Administrator denies part or all of the
claim, the Plan Administrator shall notify the claimant in writing of such
denial. The Plan Administrator shall write the notification in a manner
calculated to be understood by the claimant. The notification shall set forth:
(a) The specific reasons for the denial;
(b) A reference to the specific provisions of the Agreement on which the denial
is based; (c) A description of any additional information or material necessary
for the claimant to perfect the claim and an explanation of why it is needed;
(d) An explanation of the Agreement's review procedures and the time limits
applicable to such procedures; and (e) A statement of the claimant's right to
bring a civil action under ERISA Section 502(a) following an adverse benefit
determination on review.
7.2 Review Procedure. If the Plan Administrator denies part or all of the claim,
the claimant shall have the opportunity for a full and fair review by the Plan
Administrator of the denial, as follows:
7.2.1 Initiation - Written Request. To initiate the review, the claimant, within
60 days after receiving the Plan Administrator's notice of denial, must file
with the Plan Administrator a written request for review.
7.2.2 Additional Submissions - Information Access. The claimant shall then have
the opportunity to submit written comments, documents, records and other
information relating to the claim. The Plan Administrator shall also provide the
claimant, upon request and free of charge, reasonable access to, and copies of,
all documents, records and other information relevant (as defined in applicable
ERISA regulations) to the claimant's claim for benefits.
7.2.3 Considerations on Review. In considering the review, the Plan
Administrator shall take into account all materials and information the claimant
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submits relating to the claim, without regard to whether such information was
submitted or considered in the initial benefit determination.
7.2.4 Timing of Plan Administrator Response. The Plan Administrator shall
respond in writing to such claimant within 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.
7.2.5 Notice of Decision. The Plan Administrator shall notify the claimant in
writing of its decision on review. The Plan Administrator shall write the
notification in a manner calculated to be understood by the claimant. The
notification shall set forth:
(a) The specific reasons for the denial;
(b) A reference to the specific provisions of the Agreement on which the denial
is based; (c) A statement that the claimant is entitled to receive, upon request
and free of charge, reasonable access to, and copies of, all documents, records
and other information relevant (as defined in applicable ERISA regulations) to
the claimant's claim for benefits; and (d) A statement of the claimant's right
to bring a civil action under ERISA Section 502(a).
Article 8
Amendments and Termination
8.1 Amendments. This Agreement may be amended only by a written agreement signed
by the 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.
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:
(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; (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 (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
9.1 Binding Effect. This Agreement shall bind the Executive and the
Corporation, and their beneficiaries, survivors, executors, administrators and
transferees.
9.2 No Guarantee of Employment. This Agreement is not a contract for employment.
It does not give the Executive the right to remain as an employee of the
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.
9.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
9.4 Tax Withholding and Reporting. The 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
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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.
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.
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.
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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:
National Bankshares, Inc.
Attn: Xxxxx X. Xxxxx
X.X. Xxx 00000 Xxxxxxxxxx, XX 00000-0000
Such notice shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for
registration or certification.
Any notice or filing required or permitted to be given to the Executive under
this Agreement shall be sufficient if in writing and hand-delivered, or sent by
mail, to the last known address of the Executive.
9.14 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: CORPORATION:
National Bankshares, Inc.
/S/ XXXXXXX X.X. XXXXXXX By /S/ XXXXX X. XXXXX
------------------------ ---------------------------------
Xxxxxxx X.X. Xxxxxxx Title PRESIDENT, CHAIRMAN, & CEO
13
NATIONAL BANKSHARES, INC.
Salary Continuation Agreement
===============================================================================
BENEFICIARY DESIGNATION FORM
{ } New Designation
{ } Change in Designation
I, __________________________, designate the following as Beneficiary under the
Agreement:
Primary:
----------------------------------------------------------- -----%
----------------------------------------------------------- -----%
Contingent:
----------------------------------------------------------- -----%
----------------------------------------------------------- -----%
Notes:
? Please PRINT CLEARLY or TYPE the names of the beneficiaries.
? To name a trust as Beneficiary, please provide the name of the trustee(s) and
the exact name and date of the trust agreement. ? To name your estate as
Beneficiary, please write "Estate of [your name]". ? Be aware that none of the
contingent beneficiaries will receive anything unless ALL of the primary
beneficiaries predecease you.
I understand that I may change these beneficiary designations by delivering a
new written designation to the Plan Administrator, which shall be effective only
upon receipt and acknowledgment by the Plan Administrator prior to my death. I
further understand that the designations will be automatically revoked if the
Beneficiary predeceases me, or, if I have named my spouse as Beneficiary and our
marriage is subsequently dissolved.
Name: _______________________________
Signature: _______________________________ Date: _______
Received by the Plan Administrator this ________ day of _________________, 2___
By: _________________________________
Title: _________________________________
