THE NATIONAL BANK OF BLACKSBURG

Salary Continuation Agreement

 

FIRST AMENDMENT

TO

THE NATIONAL BANK OF BLACKSBURG

SALARY CONTINUATION AGREEMENT

DATED FEBRUARY 8, 2006

FOR

JAMES G. RAKES

 

THIS FIRST AMENDMENT is adopted this _19th__ day of December____, 200_7_,
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 JAMES G. RAKES (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

 

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THE NATIONAL BANK OF BLACKSBURG

Salary Continuation Agreement

 

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.

 

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THE NATIONAL BANK OF BLACKSBURG

Salary Continuation Agreement

 

 

IN WITNESS OF THE ABOVE, the Bank and the Executive hereby consent to this First
Amendment.

 

 

Executive:

 

The National Bank of Blacksburg

 

 

 

 

 

 

/s/ JAMES G. RAKES

By

/s/ F. BRAD DENARDO

James G. Rakes

Title

EVP / COO

 

 

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