Document:

ex_345675.htm

 

Exhibit 10.7

 

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This Amended and Restated Employment Agreement (this “Agreement”) is dated as of January 1, 2022, by and between American National Bank and Trust Company, a national banking association (the “Bank”), and Charles T. Canaday, Jr. (“you”).

 

The parties, intending to be legally bound, agree as follows:

 

1.         Employment and Acceptance. You shall be employed as Executive Vice President and Regional President – East Region of the Bank. You shall have the duties and responsibilities that are commensurate with your position and shall also render such other services and duties as may be reasonably assigned you from time to time by the Board of Directors of the Bank, consistent with your position with the Bank, including serving in a senior executive capacity with any one or more of the Bank’s Affiliates (as defined below). You hereby accept and agree to such employment and agree to carry-out your duties and responsibilities to the best of your ability in a competent, efficient and businesslike manner. You further agree to comply with all the policies, standards and codes of conduct of the Bank now or hereafter adopted.

 

Unless the context otherwise requires, references in this Agreement to the “Bank” also shall mean and refer to American National Bankshares, Inc., the parent holding company for the Bank (the “Company”), any other business entity that, directly or indirectly through one or more intermediaries, is controlled by, or is under common control with the Bank (each, an “Affiliate”).

 

2.         Term. This Agreement is effective as of the date of this Agreement written above and will expire on December 31, 2023 (the “Initial Two Year Term”); provided that on and after January 1, 2023, the Initial Two Year Term shall be automatically extended by one (1) day on each day that passes while you are employed pursuant to this Agreement (including any day after the end of the Initial Two Year Term) so that there will always be one (1) year remaining in the term of this Agreement (the Initial Two Year Term and any extended term of this Agreement is referred to as the “Employment Period”). In the event of the termination of your employment for any reason after January 1, 2023 when the automatic one-day extensions begin, the automatic one-day extensions shall cease as of your last day of employment pursuant to this Agreement. At any time on or after January 1, 2023, the Bank may give you written notice that the Employment Period will not be extended on a daily basis (“Nonrenewal Notice”), in which case this Agreement will terminate one (1) year after the date of the Nonrenewal Notice, but not before the completion of the Initial Two Year Term, or such later date as may be specified in the Nonrenewal Notice. Notwithstanding anything in this Agreement to the contrary, this Agreement and the Employment Period will automatically terminate on the first day of the month immediately following the month in which you turn sixty-seven (67). The last day of the Employment Period is sometimes referred to in this Agreement as the “Expiration Date.”

 

3.         Compensation.

 

(a)         Base Salary. During the Employment Period, you shall receive for your services an annual base salary (the “Base Salary”) in an amount to be determined by the Bank in accordance with the salary administration program of the Bank as it may from time to time be in effect. The Base Salary will be reviewed annually and may be adjusted upward or downward in the sole discretion of the Human Resources and Compensation Committee of the Board of Directors of the Bank (the “Compensation Committee”) or the Board of Directors of the Bank. The initial Base Salary will be $230,686.04. In no event will the Base Salary be less than $230,686.04 during the Employment Period.

 

(b)         Short-Term and Long-Term Incentives. During the Employment Period and beginning for the 2022 calendar year, you may participate in such short-term and/or long-term cash and/or equity incentive plan(s) in such manner and subject to such terms and conditions as the Compensation Committee or the Board of Directors of the Bank, in its sole discretion, may determine. An annual bonus, if any, will be paid within two and a half months after the end of the applicable year. To be eligible to receive any bonus, you must be employed by the Bank on the date such bonus is paid, unless you have retired in accordance with the Bank’s retirement policy after the date on which you were deemed to have earned any bonus under the applicable bonus or incentive plan.

 

4.         Benefits; Business Expenses.

 

(a)         Benefits. You will eligible to participate in any plans, programs, or forms of compensation or benefits that the Bank provides to the class of employees that includes you, on a basis not less favorable than that provided to such class of employees, including without limitation, group medical, disability and life insurance, vacation and sick leave, and retirement. It is understood that the Board of Directors of the Bank may, in its sole discretion, establish, modify or terminate such plans, programs or benefits.

 

(b)         Business Expenses. The Bank will pay on your behalf (or promptly reimburse you for) reasonable expenses incurred by you at the request of, or on behalf of, the Bank in the performance of your duties pursuant to this Agreement and in accordance with the Bank’s policies.

 

(c)         Paid Time-Off. You will be entitled to paid time-off based upon your position and years of service, as established by the Bank, to be taken at such times and intervals as shall be determined by you with the approval of the Bank, which approval shall not be unreasonably withheld.

 

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5.         Termination and Termination Benefits. The Employment Period and your employment may be terminated by either the Bank or you at any time or for any reason. Upon termination of your employment during the Employment Period, you shall be entitled to the compensation and benefits described in this Section 5 and shall have no further rights to any compensation or other benefits from the Bank or any of its Affiliates, provided that Section 6 shall govern the compensation and other benefits payable to you in connection with the termination of your employment following a Change in Control (as defined in Section 6(b)) of the Company.

 

(a)         Termination as a Consequence of Death or Incapacity. If you die while employed by the Bank, in addition to all other benefits accruing upon your death the Bank will pay your beneficiary designated in writing (provided such writing is executed and dated by you and delivered to the Bank in a form acceptable to the Bank prior to your death) and surviving you or, if none, your estate an amount equal to three (3) months of your Base Salary in effect at your death. Such amount will be payable over the three (3) month period beginning the month following the month in which your death occurs in accordance with the established payroll practices of the Bank.

 

If the Bank determines that the Incapacity (as defined below) of you has occurred, it may terminate your employment and this Agreement upon thirty (30) days’ written notice, provided that, within thirty (30) days after receipt of such notice you shall not have returned to full-time performance of your assigned duties. Incapacity shall mean either: (i) your failure to perform your assigned duties and responsibilities with the Bank on a full-time basis as a result of mental or physical illness or injury as determined by a physician selected by the Bank for ninety (90) consecutive calendar days; or (ii) incapacity or disability as defined in the long-term disability insurance policy maintained by the Bank for your benefit, whichever definition is more favorable to you. You will not be entitled to any additional benefits under this Agreement as a result of a termination due to your Incapacity.

 

(b)         Termination for Cause. Your employment may be terminated by the Bank for Cause (as defined below). If your employment is terminated by the Bank for Cause, you will be entitled to receive:

 

(i)         Any accrued but unpaid Base Salary which shall be paid on the payroll date immediately following the date of termination in accordance with the Bank’s customary payroll procedures;

 

(ii)         Reimbursement for unreimbursed expenses properly incurred by you, which shall be subject to and paid in accordance with the Bank’s expense reimbursement policy; and

 

(iii)         Such employee benefits (including equity compensation), if any, to which you may be entitled under the Bank’s employee benefit plans and programs as of the date of termination (items (i) through (iii) are referred to collectively as the “Accrued Amounts”).

 

(c)         Definition of Cause.         For purposes of this Agreement, Cause shall mean:

 

(i)         your willful failure to perform any of your material duties and responsibilities required of your position (other than by reason of Incapacity), or your willful failure to follow reasonable instructions or policies of the Bank, in either case after being advised in writing of such failure and being given a reasonable opportunity and period (as determined by the Bank) to remedy such failure;

 

(ii)         your breach of fiduciary duties owed to the Bank or an Affiliate;

 

(iii)         your conviction of or plea of guilty or no contest to a crime that constitutes a felony under federal or state law or a crime that constitutes a misdemeanor involving moral turpitude or any other crime with respect to which imprisonment is a possible punishment, or your misappropriation or embezzlement of funds or property of the Bank or an Affiliate;

 

(iv)         your fraud or dishonesty with respect to the Bank or its Affiliates;

 

(v)         the breach by you of a material term of this Agreement or violation in any material respect of any code or standard of behavior generally applicable to employees of the Bank, in either case after being advised in writing of such breach or violation and being given a reasonable opportunity and period (as determined by the Bank) to remedy such breach or violation; or

 

(vi)         the willful engaging by you in conduct that, if it became known by any regulatory or governmental agency or the public, is reasonably likely to result in material injury to the Bank, monetarily or otherwise.

 

(d)         Termination by You Without Good Reason. You may terminate your employment under this Agreement without Good Reason (as defined below) by written notice to the Bank effective thirty (30) days after receipt of such notice by the Bank or at any time upon mutual agreement in writing. If you terminate your employment without Good Reason, you will be entitled to receive the Accrued Amounts as provided in Section 5(b). It shall not constitute a breach of this Agreement for the Bank to suspend your duties and to place you on paid leave during the notice period.

 

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(e)         Termination by the Bank Without Cause. Your employment may be terminated by the Bank without Cause at any time upon written notice to you, which termination will be effective immediately or on such later date as specified in the written notice. In the event your employment is terminated without Cause, you shall receive the Accrued Amounts and, provided you sign a release and waiver of claims in favor of the Bank and its Affiliates and their respective officers and directors in a form provided by the Bank (the “Release”) and the Release has become effective not later than the 30th day following the date your employment terminates, you shall receive the following payments and benefits:

 

(i)         Any earned but unpaid annual bonus with respect to any completed calendar year immediately preceding the date of termination, which shall be paid on the applicable payment date for such bonus; and

 

(ii)         The Bank shall pay you a severance benefit (the “Severance Benefit”) in an amount equal to the product of (x) your Total Annual Compensation (as defined below) divided by twelve (12) times (y) the number of months remaining between the date of termination of your employment and the Expiration Date, including pro-rated credit for any partial month. For purposes of this Agreement, Total Annual Compensation means the sum of (1) your Base Salary in effect at the date of termination of your employment or, if higher and applicable under Section 6 hereof, immediately prior to the date of a Change in Control, (2) the greater of the maximum annual bonus opportunity for the year in which your employment terminates and the annual bonus earned for the most recently completed calendar year, (3) the grant date value of any equity awards granted to you over the twelve (12) months immediately prior to your termination of employment or, if higher and applicable under Section 6 hereof, immediately prior to the date of a Change in Control (the applicable period, the “prior 12 months”), (4) any tax-qualified or non-tax qualified plan contributions or allocations made on your behalf over the prior 12 months, and (5) the value of your Company or Affiliate perquisites and any other benefits, including the employer portion of benefit premiums, paid or made available to you or on your behalf over the prior 12 months. The Severance Benefit will be paid to you in a lump sum cash payment not later than the 30th day following the date your employment terminates, subject to compliance with Section 9(i) of this Agreement regarding the requirements of Section 409A of the Internal Revenue Code of 1986 (the “Code”).

 

(f)         Termination by You for Good Reason. You may voluntarily terminate your employment under this Agreement at any time for Good Reason and be entitled to receive the compensation and other benefits set forth in Section 5(e) relating to a termination without Cause, provided you sign a Release and it becomes effective not later than the 30th day following the date your employment terminates and you comply with the notice provisions of Section 5(g). You must provide written notice to the Bank of the existence of the event or condition constituting such Good Reason within ninety (90) days of the initial occurrence of the event or condition alleged to constitute Good Reason. Upon delivery of such notice by you, the Bank shall have a period of thirty (30) days during which it may remedy in good faith the event or condition constituting Good Reason, and your employment shall continue in effect during such time so long as the Bank is making diligent efforts to cure. In the event the Bank shall remedy in good faith the event or condition constituting Good Reason, then such notice of termination shall be null and void, and the Bank shall not be required to pay the amount due to you under this Section 5(f). If the Company has not remedied the event or condition constituting Good Reason during the thirty (30) day cure period and you do not terminate your employment for Good Reason within ninety (90) days thereafter, then you will deemed to have waived your right to terminate for Good Reason with respect to such grounds.

 

For purposes of this Agreement, Good Reason shall mean:

 

(i)         the assignment to you, without your written consent, of duties inconsistent with your position, authority, duties or responsibilities as contemplated by Section 1 hereof;

 

(ii)         any action taken by the Bank that results in a substantial reduction in your status, including a diminution in your position, authority, duties or responsibilities;

 

(iii)         the requirement by the Bank that you be based at any office that is greater than thirty-five (35) miles from where your office is located when your employment begins, unless you are asked to move your primary office to the principal executive offices of the Bank; or

 

(iv)         the failure of the Bank to comply with the provisions of Section 3 or a material breach by the Bank of any other provision of this Agreement.

 

Notwithstanding the above, Good Reason shall not include any resignation by you where Cause for your termination by the Bank exists.

 

(g)         Requirements Relating to Prospective Employers. During the twelve (12) month period following the date of termination of your employment, you shall provide the Bank with at least ten (10) days written notice before the starting date of any employment, identifying the prospective employer and its affiliated companies and the job description, including a description of the proposed geographic market area associated with the new position. You shall notify in writing any new employer of the existence of the restrictive covenants set forth in Section 7 of this Agreement.

 

(h)         Resignation of All Other Positions. Effective upon the termination of your employment for any reason, you shall be deemed to have resigned from all positions that you hold as an officer or member of the Board of Directors (or a committee thereof) of the Bank or any of its Affiliates.

 

(i)         Regulatory Requirement. The Bank shall not be required to make payment of, or provide any benefit under, this Section 5 to the extent such payment or benefit is prohibited by the regulations presently found at 12 C.F.R. Part 359, as amended, or to the extent that any other governmental approval for the payment or benefit that is required by law is not received.

 

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6.         Change in Control Termination.

 

(a)         Change in Control Payments and Benefits. Notwithstanding any other provision in this Agreement, if your employment is terminated by you for Good Reason or by the Bank on account of its failure to renew the Agreement in accordance with Section 2 or without Cause (other than on account of your death or Incapacity), in each case within twenty-four (24) months following a Change in Control, you shall be entitled to receive the Accrued Amounts and, provided you sign a Release and it becomes effective not later than the 30th day following the date your employment terminates, the following payments and benefits:

 

(i)         The sum of: (A) the amount, if any, of any earned but unpaid incentive or bonus compensation with respect to any completed calendar year immediately preceding the date of termination; (B) the product of the annual cash bonus paid or payable, including by reason of deferral, for the most recently completed year and a fraction, the numerator of which is the number of days in the current year through the date of termination and the denominator of which is 365; and (C) any benefits or awards (including both the cash and stock components) which pursuant to the terms of any plans, policies or programs have been earned or become payable, but which have not been paid to you (to the extent not Accrued Amounts). These amounts will be paid to you in a lump sum cash (or, for stock-based benefits or awards, stock) payment not later than the 30th day after the date your employment terminates, unless a different payment date is required by Section 409A of the Code; and

 

(ii)         An amount equal to the product of (x) your Total Annual Compensation divided by twelve (12) times (y) the lesser of twenty-four (24) or the number of months remaining between the date of termination of your employment and the date you attain your U.S. Social Security Administration normal retirement age, including pro-rated credit for any partial month. This amount will be paid to you in a lump sum cash payment not later than the 30th day after the date your employment terminates, subject to compliance with Section 9(i) of this Agreement regarding the requirements of Section 409A of the Code.

 

(b)         For purposes of this Agreement, Change in Control means the occurrence of any of the following:

 

(i)         The acquisition by any Person (as defined below) of beneficial ownership of 25% or more of the then outstanding shares of common stock of the Company, provided that an acquisition directly from the Company (excluding an acquisition by virtue of the exercise of a conversion privilege) shall not constitute a Change in Control;

 

(ii)         individuals who constitute the Board of Directors of the Company on the effective date of this Agreement (the “Incumbent Board”) cease to constitute a majority of the Board of Directors, provided that any director whose nomination was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board will be considered a member of the Incumbent Board, but excluding any such individual whose assumption of office is in connection with an actual or threatened election contest relating to the election of directors of the Bank;

 

(iii)         consummation by the Company of a reorganization, merger, share exchange or consolidation (a “Reorganization”), provided that the consummation of a Reorganization will not constitute a Change in Control if, upon consummation of the Reorganization, each of the following conditions is satisfied:

 

(A)         more than 50% of the then outstanding shares of common stock of the corporation resulting from the Reorganization is beneficially owned by all or substantially all of the former shareholders of the Company in substantially the same proportions as their ownership existed in the Company immediately prior to the Reorganization; and

 

(B)         at least a majority of the members of the board of directors of the corporation resulting from the Reorganization were members of the Incumbent Board at the time of the execution of the initial agreement providing for the Reorganization; or

 

(iv)         the complete liquidation or dissolution of the Company, or the sale or other disposition of all or substantially all of the assets of the Company.

 

For purposes of this Agreement, “Person” means any individual, entity or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934 (the “Exchange Act”), other than any employee benefit plan (or related trust) sponsored or maintained by the Company or any affiliated company, and “beneficial ownership” has the meaning given the term in Rule 13d-3 under the Exchange Act.

 

(c)         Potential Limitation of Benefits Under Certain Circumstances. Notwithstanding any other provision of this Agreement, in the event that:

 

(i)         the aggregate value of the payments and benefits to which you may be entitled under this Agreement or any other agreement, plan, program or arrangement in connection with a Change in Control that are deemed to be “parachute payments,” as defined in Section 280G of the Code or any successor thereof (the “Change in Control Termination Benefits”), would be deemed to include an “excess parachute payment” under Section 280G of the Code;

 

(ii)         if such Change in Control Termination Benefits were reduced to an amount (the “Non-Triggering Amount”), the value of which is one hundred dollars ($100.00) less than an amount equal to three (3) times your “base amount,” as determined in accordance with Section 280G of the Code, and

 

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(iii)         the Non-Triggering Amount as reduced by the product of the Non-Triggering Amount and the highest marginal rate of any applicable state and federal income taxes, would represent 95% or more of the value of the Change in Control Termination Benefits (without such reduction), as reduced by (x) the amount of tax required to be paid by you thereon pursuant to Section 4999 of the Code and (y) the product of the Change in Control Termination Benefits and the highest marginal rate of any applicable state and federal income taxes, then the total Change in Control Termination Benefits shall be reduced to the Non-Triggering Amount. The allocation of the reduction in the Change in Control Termination Benefits to the extent required hereby shall be determined by the Bank in its reasonable discretion and in a manner that is consistent with the requirements of Section 409A of the Code until no amount or benefit payable to you will be an “excess parachute payment” under Section 280G of the Code. All calculations and determinations under this Section 6(c) shall be made by an independent accounting firm or independent tax counsel appointed by the Bank (the “Tax Advisor”) whose determinations shall be conclusive and binding on the Bank and you for all purposes. The Tax Advisor may rely on reasonable, good faith assumptions and approximations concerning the application of Section 280G and Section 4999 of the Code. The Bank shall bear all costs of the Tax Advisor.

 

7.         Covenants.

 

(a)         Noncompetition. In consideration of your key position within the Bank and the compensation, benefits and access to Confidential Information (as defined below) provided to you by the Bank, you agree that during your employment with the Bank or its Affiliates and for a six (6) month period following the cessation of your employment, for any reason, you will not perform the same or substantially same duties or services for any Competitive Business anywhere in the Market Area (as such terms are defined below) as you performed while you were employed with the Bank or any of its Affiliates. Notwithstanding the foregoing, you may purchase or otherwise acquire up to (but not more than) 10% of any class of securities of any business enterprise (but without otherwise participating in the activities of such enterprise) that engages in a Competitive Business in the Market Area.

 

(b)         Non-solicitation. You further agree that during your employment with the Bank or its Affiliates and for a twelve (12) month period following the cessation of your employment, for any reason, you will not directly, or instruct or encourage anyone else on your behalf to: (i) solicit, or assist any other Person in soliciting, any Customers to make deposits in, borrow money from, or become customers of any other business conducting a Competitive Business in the Market Area; (ii) induce or encourage any Customers to terminate their relationship with the Bank or its Affiliates; (iii) contact, solicit, assist in the solicitation, or otherwise encourage any employee of the Bank to terminate his or her employment with the Bank or any of its Affiliates for the benefit of a Competitive Business; or (iv) offer employment or participate in the recruiting or hiring of any current employee of the Bank or any former employee who was employed by the Bank in the six (6) months preceding the proposed hire for the benefit of any Competitive Business.

 

(c)         Definitions. As used in this Agreement, the term “Competitive Business” means the financial services business, which includes one or more of the following businesses: depository accounts, consumer and commercial lending, residential and commercial mortgage lending, and any other business in which the Bank or any of its Affiliates are engaged and in which you are significantly engaged at the time of termination of your employment; the term “Market Area” means the area within a fifteen (15) mile radius of any full-service banking office established by the Bank at the time of the cessation of your employment and in which you performed any services or for which any employee under your direct supervision was employed or performed services. “Customer” means any customer or depositor of the Bank or its Affiliates who you were aware was a customer of the Bank or its Affiliates during your employment or for whom you or anyone you directly supervised had direct contact or provided services on behalf of the Bank or its Affiliates during your employment; and the term “Confidential Information” shall include, but not be limited to, all financial and personnel data, computer software and all data base technologies, capital plans, customer lists and requirements, customer account information, market studies, know-how, processes, trade secrets, and any other information concerning the non-public business and affairs of the Bank.

 

(d)         Confidentiality. During the Employment Period and for a period of ten (10) years following the cessation of your employment, for whatever reason, or for however long the information constitutes a trade secret under applicable federal or state law, and except as required by any court, supervisory authority or administrative agency or as may be otherwise required by applicable law, you shall not, without the written consent of a person duly authorized by the Bank, disclose to any person (other than your personal attorney, or an employee of the Bank or an Affiliate, or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by you of your duties as an employee of the Bank) or utilize any Confidential Information obtained by you while in the employ of the Bank, unless such information has become a matter of public knowledge at the time of such disclosure.

 

(e)         Acknowledgment. The covenants contained in this Section 7 shall be construed and interpreted in any proceeding to permit their enforcement to the maximum extent permitted by law. You agree that the restrictions imposed herein are necessary for the reasonable and proper protection of the Bank and its Affiliates, and that each and every one of the restrictions is reasonable in respect to length of time, geographic area and scope of prohibited activities, and that the restrictions are neither overly restrictive on your post-employment activity nor overly burdensome for you to abide by. You covenant that you will not make any contention contrary to any of the foregoing representations in the future and agree that you will be estopped to deny or contradict the truth or accuracy of these representations. If, however, the time, geographic and/or scope of activity restrictions set forth in this Section 7 are found by a court to exceed the standards deemed enforceable, the court is empowered and directed to modify the restriction(s) to the extent necessary to make them enforceable. Notwithstanding anything to the contrary herein, nothing in this Agreement shall be construed to prohibit any activity that cannot reasonably be construed to further in any meaningful way any actual or potential competition against the Bank or an Affiliate.

 

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(f)         Enforcement. You acknowledge that damages at law would not be a measurable or adequate remedy for breach of the covenants contained in this Section 7 and, accordingly, you agree to submit to the equitable jurisdiction of any court of competent jurisdiction in connection with any action to enjoin you from violating any such covenants. If the Bank is successful in whole or in part in any legal or equitable action against you in connection with the enforcement of the covenants included in this Section 7, the Bank shall be entitled to payment of all costs, including reasonable attorney’s fees, from you. If, on the other hand, it is finally determined by a court of competent jurisdiction that a breach or threatened breach did not occur under this Section 7, the Bank shall reimburse you for reasonable legal fees incurred to defend the claim. In the event legal action is commenced with respect to the provisions of this Section 7 and you have not strictly observed the restrictions set forth in this Section 7, then the restricted periods described in Paragraphs (a) and (b) shall begin to run anew from the date of any Final Determination (as defined below) of such legal action. For the purposes of this Agreement, Final Determination shall mean the expiration of time to file any possible appeal from a final judgment in such legal action or, if an appeal be taken, the final determination of the final appellate proceeding. All the provisions of this Section 7 will survive termination and expiration of this Agreement.

 

(g)         Notice. The U.S. Defense of Trade Secrets Act provides civil and criminal immunity to certain whistleblowers for the confidential disclosure of trade secrets (i) to relevant federal government officials or an engaged attorney, when such disclosure is made solely for the purpose of reporting or investigating a suspected violation of law or (ii) in a document filed under seal in a lawsuit or other proceeding.

 

(h)         Change in Control. Notwithstanding anything to the contrary contained in this Agreement, in the event of a Change in Control, the restrictions imposed by Paragraphs (a) and (b) of this Section 7 shall not apply to you after you cease to be employed by the Bank if you are not entitled to receive the severance benefits described in Section 6(a).

 

8.         Dispute Resolution.

 

(a)         Except as provided in Section 8(c) below, any dispute or controversy arising out of, relating to, or in connection with this Agreement, your employment or the interpretation, validity, construction, performance, breach, or termination of this Agreement, shall be settled by binding arbitration. The party initiating arbitration may use the American Arbitration Association, JAMS, the McCammon Group or other firms providing arbitrators for resolution of disputes, or the parties may agree on the selection of a person to arbitrate the matter who is not associated with an arbitration firm. The arbitration will be conducted by a single arbitrator in Danville, Virginia. The arbitration should be conducted in a manner that facilitates an efficient and cost effective means of resolving the dispute. The arbitrator may allow for depositions and document requests, as well as subpoenas to third parties, but other forms of discovery, such as interrogatories and requests for admissions, are not permitted, absent good cause. The arbitrator may grant injunctions or other relief in such dispute or controversy. The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court having jurisdiction. The party against whom the arbitrator shall render an award shall pay the other party’s reasonable attorneys’ fees and other reasonable costs and expenses in connection with the enforcement of its rights under this Agreement (including the enforcement of any arbitration award in court), unless and to the extent the arbitrator shall determine that under the circumstances recovery by the prevailing party of all or a part of any such fees and costs and expenses would be unjust.

 

(b)         The arbitrator shall apply Virginia law to the merits of any dispute or claim, without reference to rules of conflicts of law.

 

(c)         The parties may apply to any court of competent jurisdiction for a temporary restraining order, preliminary injunction, or other interim or conservatory relief, as necessary, without breach of this arbitration agreement and without abridgment of the powers of the arbitrator. You hereby consent to the exclusive jurisdiction of the state and federal courts located in Virginia for any action or proceeding arising from or relating to this Agreement or relating to any arbitration in which the parties are participants. The prevailing party in any court proceeding shall be awarded the party’s reasonable attorneys’ fees and costs.

 

(d)         YOU HEREBY CONFIRM YOU HAVE READ AND UNDERSTAND THIS SECTION 8, WHICH DISCUSSES ARBITRATION, AND UNDERSTAND THAT BY SIGNING THIS AGREEMENT, YOU AGREE, EXCEPT AS PROVIDED IN SECTION 8(c), TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, UNLESS OTHERWISE REQUIRED BY LAW, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF YOUR RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF YOUR RELATIONSHIP WITH THE BANK.

 

9.          Miscellaneous.

 

(a)         Severability. If any clause or provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term hereof, then the remainder of this Agreement shall not be affected thereby, and in lieu of each clause or provision of this Agreement which is illegal, invalid or unenforceable, there shall be added, as part of this Agreement, a clause or provision as similar in terms to such illegal, invalid or unenforceable clause or provision as may be possible and as may be legal, valid and enforceable.

 

(b)         Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia, without regard to its conflicts of law principles.

 

(c)         Entire Agreement; Amendments. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, between the parties with respect to the subject matter hereof, including that certain (i) Employment Agreement, dated March 27, 2014, between American National Bank and Trust Company and you, and (ii) Executive Severance Agreement, dated December 15, 2010, as amended March 27, 2014, between American National Bank and Trust Company and you, which are of no further effect as of the date of this Agreement first written above; provided, however, the Bank and you acknowledge and agree that this Section 9(c) shall have no effect on the Restated Salary Continuation Agreement, dated as of May 27, 2008, between you and MidCarolina Bank and assumed by the Bank pursuant to the Consent to Assumption of Restated Salary Continuation Agreement, dated as of December 15, 2010. This Agreement may be amended only by an agreement signed by the parties hereto.

 

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(d)         Waiver. The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by either party in exercising, in whole or in part, any right, power or privilege under this Agreement will operate as a waiver of such right, power or privilege.

 

(e)         Binding Effect; Successors; Survival. This Agreement is binding upon and shall inure to the benefit of the parties and their respective successors, heirs and assigns, provided that no part of this Agreement is assignable by you. The Bank will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Bank to assume and agree to perform this Agreement in the same manner and to the same extent that the Bank would be required to perform it if no such succession had taken place. Except as otherwise expressly provided herein, upon the termination or expiration of this Agreement the respective rights and obligations of the parties hereto shall survive such termination or expiration to the extent necessary to carry out the intentions of the parties set forth in this Agreement. If the Bank elects not to renew this Agreement as provided in Section 2, this Agreement will no longer govern the terms of your employment following the Expiration Date, except for the provisions of Section 7 which will survive the termination and expiration of this Agreement, and your employment thereafter will be on an at-will employment basis.

 

(f)         No Construction Against Any Party. This Agreement is the product of informed negotiations between parties. If any part of this Agreement is deemed to be unclear or ambiguous, it shall be construed as if it were drafted jointly by all parties. The parties agree neither party was in a superior bargaining position regarding the substantive terms of this Agreement.

 

(g)         Clawback. You agree that any incentive based compensation or award that you receive, or have received, from the Bank or any Affiliate under this Agreement or otherwise, will be subject to clawback by the Bank as may be required by applicable law or, if applicable, any stock exchange listing requirement and on such basis as the Board of Directors of the Bank determines.

 

(h)         Documents. All documents, records, tapes and other media of any kind or description relating to the business of the Bank or its Affiliates (the “Documents”), whether or not prepared by you, shall be the sole and exclusive property of the Bank. The Documents, and any copies thereof, shall be returned to the Bank upon your termination of employment for any reason or at such earlier time as the Board of Directors of the Bank or its designees may specify.

 

(i)         Section 409A Compliance. This Agreement is intended to comply with Section 409A of the Code or an exemption thereunder and shall be construed and administered in accordance with Section 409A. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments to be made under this Agreement upon a termination of employment shall only be made upon a “separation from service” under Section 409A. Notwithstanding the foregoing, the Bank makes no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no event shall the Bank be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by you on account of non-compliance with Section 409A.

 

Notwithstanding any other provision of this Agreement, if any payment or benefit provided to you in connection with your termination of employment is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A and you are determined to be a “specified employee” as defined in Section 409A(a)(2)(b)(i), then such payment or benefit shall not be paid until the first payroll date to occur following the six-month anniversary of the date of termination (the “Specified Employee Payment Date”). The aggregate of any payments that would otherwise have been paid before the Specified Employee Payment Date shall be paid to you in a lump sum on the Specified Employee Payment Date and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule.

 

(j)         Stock Ownership Requirements. During the Employment Period, you will be expected to maintain ownership of Company common stock in accordance with the guidelines established by the Board of Directors from time to time.

 

 

 

 

(Signatures appear on the following page)

 

7

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the day and year first above written.

 

 

AMERICAN NATIONAL BANK

AND TRUST COMPANY

 

 

 

By: /s/ Jeffrey V. Haley                                    

Jeffrey V. Haley

President and Chief Executive Officer

 

 

 

/s/ Charles T. Canaday, Jr.                           

Charles T. Canaday, Jr.

 

 

 

 

 

 

 

 

 

 

8ex_345680.htm

Exhibit 10.12

 

 

 

 

 

 

VIRGINIA BANKERS ASSOCIATION

 

MODEL NON-QUALIFIED DEFERRED COMPENSATION PLAN 

 

FOR EXECUTIVES

 

(As Restated Effective January 1, 2017)

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

	 	 	 
	 	 	
			Page

			
	
			ARTICLE I

			
	Definition of Terms
	 	 	 
	
			1.1

				
			Act

				
			1

			
	
			1.2

				
			Administrator

				
			1

			
	
			1.3

				
			Adoption Agreement

				
			1

			
	
			1.4

				
			Affiliate

				
			1

			
	
			1.5

				
			Beneficiary

				
			2

			
	
			1.6

				
			Benefit Commencement Date

				
			2

			
	
			1.7

				
			Board

				
			2

			
	
			1.8

				
			Change in Control

				
			2

			
	
			1.9

				
			Code

				
			2

			
	
			1.10

				
			Compensation

				
			2

			
	
			1.11

				
			Deferral Account or Deferral Accounts

				
			2

			
	
			1.11(a)

				
			Employee Deferral Account

				
			2

			
	
			1.11(b)

				
			Employer Deferral Account

				
			2

			
	
			1.11(c)

				
			Predecessor Plan Account

				
			3

			
	
			1.12

				
			Deferral Benefit

				
			3

			
	
			1.13

				
			Deferred Compensation Election

				
			3

			
	
			1.14

				
			Deferral Contributions

				
			3

			
	
			1.15

				
			Effective Date of the Plan

				
			3

			
	
			1.16

				
			Effective Date of the Restatement of the Plan

				
			3

			
	
			1.17

				
			Eligible Employee

				
			3

			
	
			1.18

				
			Employee

				
			3

			
	
			1.19

				
			Employer

				
			3

			
	
			1.20

				
			Fund

				
			3

			
	
			1.21

				
			Participant

				
			4

			
	
			1.22

				
			Plan

				
			4

			
	
			1.23

				
			Plan Sponsor

				
			4

			
	
			1.24

				
			Plan Year

				
			4

			
	
			1.25

				
			Rabbi Trust

				
			4

			
	
			1.26

				
			Restated Plan

				
			4

			
	
			1.27

				
			Section 409A

				
			4

			
	
			1.28

				
			Separation from Service

				
			4

			
	
			1.29

				
			Termination of Employment

				
			4

			
	
			1.30

				
			Trustee

				
			4

			
	
			1.31

				
			Valuation Date

				
			4

			
	
			1.32

				
			VBA Plan

				
			4

			

 

	 	 	 
	
			ARTICLE II

			
	
			Eligibility and Participation

			
	 
	
			2.1

				
			Eligibility

				
			5

			
	
			2.2

				
			Notice Regarding Active Participation

				
			5

			
	
			2.3

				
			Length of Participation

				
			5

			
	
			2.4

				
			Termination of Active Participation

				
			5

			

 

 

 

 

 

	 	 	 
	
			ARTICLE III

			
	
			Employee Contributions

			
	 
	
			3.1

				
			Deferred Compensation Election

				
			5

			
	
			3.2

				
			Timing of Deferred Compensation Election

				
			7

			
	
			3.3

				
			Crediting of Employee Deferral Contributions

				
			8

			
	
			3.4

				
			Automatic Cancellation of Deferred Compensation Election upon Receipt of Hardship Withdrawal

				
			8

			
	
			3.5

				
			Cancellation of Deferred Compensation Election upon Disability

				
			8

			

 

	 	 	 
	
			ARTICLE IV

			
	
			Employer Contributions

			
	 
	
			4.1

				
			Employer Contribution Allocations

				
			9

			
	
			4.2

				
			Employment Taxes

				
			9

			

 

	 	 	 
	
			ARTICLE V

			
	
			Deemed Earnings and Accounting

			
	 
	
			5.1

				
			Fund Divisions

				
			10

			
	
			5.2

				
			Participant Investment Directions

				
			10

			
	
			5.3

				
			Crediting of Deemed Earnings

				
			10

			
	
			5.4

				
			Subtractions from Deferral Account

				
			11

			
	
			5.5

				
			Expenses Charged to Deferral Accounts

				
			11

			
	
			5.6

				
			Equitable Adjustment in Case of Error or Omission

				
			11

			
	
			5.7

				
			Statement of Benefits

				
			11

			

 

	 	 	 
	
			ARTICLE VI

			
	
			Vesting

			
	 
	
			6.1

				
			Vesting in Employee Deferral Account and Predecessor Plan Account

				
			11

			
	
			6.2

				
			Vesting in Employer Non-Elective Deferral Account

				
			11

			
	
			6.3

				
			Vesting in Employer Matching Deferral Account

				
			12

			
	
			6.4

				
			Forfeiture of Benefits

				
			12

			
	
			6.5

				
			No Restoration of Forfeited Benefits

				
			13

			

 

	 	 	 
	
			ARTICLE VII

			
	 
	
			Beneficiary Designation

			
	
			7.1

				
			Beneficiary Designation

				
			13

			

 

	 	 	 
	
			ARTICLE VIII

			
	
			Retirement Dates

			
	 
	
			8.1

				
			Normal Retirement Date

				
			14

			
	
			8.2

				
			Delayed Retirement Date

				
			14

			
	
			8.3

				
			Early Retirement Date

				
			14

			
	
			8.4

				
			Disability Retirement Date

				
			14

			
	
			8.5

				
			Use of Retirement Date Definitions

				
			14

			

 

	
			ARTICLE IX

			

- ii -

 

 

 

 

	
			Time and Form of Payment

			
	 
	
			9.1

				
			Time of Payment

				
			14

			
	
			9.2

				
			Form of Payment

				
			16

			
	
			9.3

				
			Permissible Changes to Benefit Commencement Date and/or Form of Payment

				
			16

			
	
			9.4

				
			Lump-Sum Payments and Periodic Installments

				
			16

			
	
			9.5

				
			Permissible Cash Out by Lump-Sum Payment

				
			17

			
	
			9.6

				
			Benefit Determination and Payment Procedure

				
			17

			
	
			9.7

				
			Payments to Minors and Incompetents

				
			17

			
	
			9.8

				
			Distribution of Benefit When Distributee Cannot Be Located

				
			18

			

 

	
			ARTICLE X

			
	
			Withdrawals

			
	 
	
			10.1

				
			Hardship Withdrawals

				
			18

			
	
			10.2

				
			Distributions in the Event of Income Inclusion

				
			19

			
	
			10.3

				
			No Other Withdrawals Permitted

				
			19

			

 

	
			ARTICLE XI

			
	
			Claims Procedure

			
	 
	
			11.1

				
			Initial Claim

				
			19

			
	
			11.2

				
			Appeals

				
			21

			
	
			11.3

				
			Time Calculation

				
			24

			
	
			11.4

				
			Definitions

				
			24

			
	
			11.5

				
			Authorized Representatives

				
			24

			

 

	 	 	 
	
			ARTICLE XII

			
	
			Funding

			
	 
	
			12.1

				
			Funding

				
			24

			
	
			12.2

				
			Use of Rabbi Trust Permitted

				
			25

			

 

	
			ARTICLE XIII

			
	
			Plan Administrator

			
	 
	
			13.1

				
			Appointment of Plan Administrator

				
			25

			
	
			13.2

				
			Plan Sponsor as Plan Administrator

				
			25

			
	
			13.3

				
			Procedure if a Committee

				
			25

			
	
			13.4

				
			Action by Majority Vote if a Committee

				
			25

			
	
			13.5

				
			Appointment of Successors

				
			25

			
	
			13.6

				
			Duties and Responsibilities of Plan Administrator

				
			25

			
	
			13.7

				
			Power and Authority

				
			26

			
	
			13.8

				
			Availability of Records

				
			26

			
	
			13.9

				
			No Action with Respect to Own Benefit

				
			26

			

 

	
			ARTICLE XIV

			
	
			Amendment and Termination of Plan

			
	 
	
			14.1

				
			Amendment or Termination of the Plan

				
			26

			

 

-  iii -

 

 

 

 

 

	 	 	 
	
			14.2

				
			Effect of Employer Merger, Consolidation, or Liquidation

				
			27

			

 

	 	 	 
	
			ARTICLE XV

			
	
			Participation by Additional Employers

			
	 
	
			15.1

				
			Adoption by Additional Employers

				
			27

			
	
			15.2

				
			Termination Events with Respect to Employers Other Than the Plan Sponsor

				
			27

			

 

 

	 	 	 
	
			ARTICLE XVI

			
	
			Miscellaneous

			
	 
	
			16.1

				
			Nonassignability

				
			27

			
	
			16.2

				
			Right to Require Information and Reliance Thereon

				
			28

			
	
			16.3

				
			Notices and Elections

				
			28

			
	
			16.4

				
			Delegation of Authority

				
			28

			
	
			16.5

				
			Service of Process

				
			28

			
	
			16.6

				
			Governing Law

				
			28

			
	
			16.7

				
			Binding Effect

				
			28

			
	
			16.8

				
			Severability

				
			28

			
	
			16.9

				
			No Effect on Employment Agreement

				
			28

			
	
			16.10

				
			Gender and Number

				
			28

			
	
			16.11

				
			Titles and Captions

				
			29

			
	
			16.12

				
			Construction

				
			29

			
	
			16.13

				
			Nonqualified Deferred Compensation Plan Omnibus Provision

				
			29

			

 

- iv  -

 

 

 

 

VIRGINIA BANKERS ASSOCIATION

MODEL NON-QUALIFIED DEFERRED COMPENSATION PLAN

FOR EXECUTIVES

(As Restated Effective January 1, 2018)

 

An employer desiring to adopt the Plan should complete the necessary information in the Adoption Agreement.  Any plan restatement using the form of this Model Non-Qualified Deferred Compensation Plan affects amounts that were deferred or that became vested on or after January 1, 2005.  The terms of this document are effective January 1, 2018.  Unless otherwise elected in Option 3(b)(2)(C) of the Adoption Agreement, all amounts deferred and vested prior to January 1, 2005 remain subject to the terms of the plan document as in effect on December 31, 2004.

 

The Virginia Bankers Association cannot guarantee that any Plan adopted by an employer will be deemed to satisfy, or will actually satisfy, the requirements of the Internal Revenue Code or ERISA applicable to non-qualified "top-hat" deferred compensation plans.  Employers considering the use of the Plan must recognize that neither the Virginia Bankers Association nor its affiliates or any of their employees or representatives can give any legal advice as to the acceptability or application of the Plan in any particular situation, and that employers should consult their own attorney for such advice.  The establishment, operation, and the related tax consequences of the adoption and maintenance of a non-qualified "top-hat" deferred compensation plan are the responsibilities of the employer and its own legal counsel.

 

ARTICLE I

Definition of Terms

 

The following words and terms as used in this Plan shall have the meaning set forth below, unless a different meaning is clearly required by the context:

 

1.1        “Act”:  The Employee Retirement Income Security Act of 1974, as the same may be amended from time to time, or the corresponding sections of any subsequent legislation which replaces it, and, to the extent not inconsistent therewith, the regulations issued thereunder.

 

1.2        “Administrator”:  The Plan Administrator named and serving in accordance with ARTICLE XIII hereof, and any successor or additional Administrator appointed and serving in accordance herewith, all as selected in Option 2(b) of the Adoption Agreement or as appointed, resigned or removed by separate instrument attached thereto.

 

1.3        “Adoption Agreement”:  The adoption agreement, and any amendment thereto, which sets forth certain elections and representations of the Plan Sponsor and any participating Employer and by execution of which the Plan Sponsor and any participating Employer adopt the Plan.

 

1.4        “Affiliate”:  Each of the following business entities or other organizations (whether or not incorporated) which during the relevant period is treated (but only for the portion of the period so treated and for the purpose and to the extent required to be so treated) together with the Employer as a single employer pursuant to the following sections of the Code (as modified where applicable by Section 415(h) of the Code):

 

1.4(a)    Any corporation which is a member of a controlled group of corporations (as defined in Section 414(b) of the Code) which includes the Employer, and

 

1.4(b)    Any trade or business (whether or not incorporated) which is under common control (as defined in Section 414(c) of the Code) with the Employer.

 

 

 

 

 

 

1.5        “Beneficiary”:  The person or persons designated by a Participant or otherwise entitled pursuant to ARTICLE VII to receive benefits under the Plan attributable to such Participant after the death of such Participant.

 

1.6        “Benefit Commencement Date”:  The date or dates designated or provided for in Option 8(a) of the Adoption Agreement.  Notwithstanding the foregoing, the Benefit Commencement Date for the Employer Non-Elective Deferral Account shall be the Participant’s Separation from Service.  If earlier than any Benefit Commencement Date designated or elected, a Participant’s Benefit Commencement Date shall be the date such Participant is determined to be Disabled as that term is defined in subparagraph 8.4(b).

 

1.7        “Board”:  The present and any succeeding Board of Directors of the Plan Sponsor, unless such term is used with respect to a particular Employer and its Employees or Participants, in which event it shall mean the present and any succeeding Board of Directors of that Employer.

 

1.8        “Change in Control”:  A change in the ownership, change in effective control, or change in the ownership of a substantial portion of the assets of the Plan Sponsor as defined in Treasury Regulation Section 1.409A-3(i)(5) or its successor or as otherwise defined as a special provision in Option 3(b)(3) of the Adoption Agreement.

 

1.9        “Code”:  The Internal Revenue Code of 1986, as the same may be amended from time to time, or the corresponding section of any subsequent Internal Revenue Code, and, to the extent not inconsistent therewith, regulations issued thereunder.

 

1.10      “Compensation”:  A Participant’s (a) annual base salary as more specifically designated in Option 4(a) of the Adoption Agreement (referred to as “Salary”) and (b) bonuses and incentive pay as more specifically designated in Option 4(a) of the Adoption Agreement (together, referred to as “Bonus”) including that portion of such compensation which is electively deferred under this Plan or any other plan of the Employer such as a 401(k) plan for such Plan Year or reduced pursuant to a salary reduction election permitted under Section 125 of the Code, but excluding any such compensation deferred from a prior period or any expense reimbursements, allowances, or benefits not normally paid in cash to the Participant.

 

1.11      “Deferral Account” or “Deferral Accounts”:  The unfunded, bookkeeping account(s) maintained on the books of the Employer for each Participant which reflects his interest in amounts attributable to Deferral Contributions and the deemed earnings or losses thereon determined pursuant to paragraph 5.3, consisting of the following:

 

1.11(a)  “Employee Deferral Account”:  The account or accounts attributable to Employee Deferral Contributions made pursuant to paragraph 3.1, subtractions pursuant to paragraph 5.4, and deemed earnings or losses thereon determined pursuant to paragraph 5.3.  A separate accounting shall be made for Employee Deferral Contributions for each Plan Year and earnings attributable thereto.

 

1.11(b)  “Employer Deferral Account”:  The account or accounts attributable to contributions made by the Employer, consisting of the following subaccounts, for which a separate accounting shall be made for each contribution type for each Plan Year and earnings attributable thereto:

 

(i)          “Employer Non-Elective Deferral Account”:  The subaccount attributable to Employer Non-Elective Contributions made pursuant to Option 5(a) of the Adoption Agreement and paragraph 4.1 of the Plan and the earnings attributable thereto.  If applicable, a subdivision of the Employer Non-Elective Deferral Account shall be maintained to reflect Employer Non-Elective Contributions and the earnings attributable thereto until such time as the subaccount becomes fully vested.

 

(ii)         “Employer Matching Deferral Account”:  The subaccount attributable to Employer Matching Contributions made pursuant to Option 5(a) of the Adoption Agreement and paragraph 4.1 of the Plan and the earnings attributable thereto.  If applicable, a subdivision of the Employer Matching Deferral

 

-  2  -

 

 

 

 

 

Account shall be maintained to reflect Employer Matching Contributions and the earnings attributable thereto until such time as the subaccount becomes fully vested.

 

1.11(c)  “Predecessor Plan Account”:  The account or accounts attributable to any elective or non-elective deferral of remuneration by or on behalf of the Participant under any “top-hat” deferred compensation plan previously maintained by the Employer that is merged into or transferred to the Plan.

 

For purposes of this restatement of the Plan, unless elected in Option 3(b)(2)(C) of the Adoption Agreement, Deferral Accounts do not include accounts under the Plan attributable to amounts deferred and vested before January 1, 2005.  Such accounts are considered grandfathered and are subject to the rules of Plan as in effect on December 31, 2004.

 

1.12      “Deferral Benefit”:  The sum of the vested balances of Participant’s Deferral Accounts as of the most recent Valuation Date (or as otherwise provided herein).

 

1.13      “Deferred Compensation Election”:  The election made by the Participant pursuant to paragraph 3.1 of the Plan.

 

1.14      “Deferral Contributions”:  That portion of a Participant’s Compensation which is deferred under the Plan and/or the non-elective or matching contributions made under the Plan by the Employer.

 

1.15      “Effective Date of the Plan”: The date or dates specified in Option 3(a) (or in Option 1(f), in the case of an adopting Employer) of the Adoption Agreement.

 

1.16      “Effective Date of the Restatement of the Plan”: The date or dates specified in Option 3(b)(2) of the Adoption Agreement.

 

1.17      “Eligible Employee”:  Any Employee included within the definition of Eligible Employee as more specifically designated in Option 4(b) of the Adoption Agreement; provided,  however, in order to be an Eligible Employee, the Employee must be in the “highly compensated group”.  The term “highly compensated group” means a select group of management or highly compensated employees as described and used in Sections 201(2), 301(a)(3), and 401(a)(1) of the Act.

 

1.18      “Employee”:  Any individual employed in the service of the Employer as a common law employee of the Employer.

 

1.19      “Employer”:  The Plan Sponsor and those Affiliates named in Option 1(f) of the Adoption Agreement as adopting the Plan, collectively, unless the context indicates otherwise.

 

1.20      “Fund”:

 

1.20(a)  If a Rabbi Trust is established and maintained for the Plan, that Rabbi Trust, which shall consist of the Fund divisions described in paragraph 5.1.  Notwithstanding the foregoing, any reference to the Fund is intended only for purposes of providing a measurement of Deferral Benefits and Deferral Account balances and is not intended to segregate assets or identify assets that may or must be used to satisfy benefit liabilities under the Plan.

 

1.20(b)  If a Rabbi Trust is not established and maintained for the Plan, that separate bookkeeping account maintained by the Plan Sponsor to make deemed investments of Deferral Contributions, which shall consist of the Fund divisions described in paragraph 5.1.

 

- 3  -

 

 

 

 

 

1.21      “Participant”:  An Eligible Employee or other person qualified to participate in the Plan for so long as he is considered a Participant as provided in ARTICLE II hereof.

 

1.22      “Plan”:  This document, including the Appendices hereto, as contained herein or duly amended all as adopted by the Plan Sponsor through the Adoption Agreement.

 

1.23      “Plan Sponsor”:  The employer named in Option 1(a) of the Adoption Agreement.

 

1.24      “Plan Year”:  The twelve consecutive month period commencing upon the first day of January of each year; provided,  however, in the event that this is a Restated Plan which was maintained previously on the basis of a different plan year, the prior plan year and short plan year needed to effect the plan year change shall be as set forth in Option 4(c) of the Adoption Agreement.

 

1.25      “Rabbi Trust”:  A trust fund described in paragraph 12.2 and established or maintained for the Plan.

 

1.26      “Restated Plan”:  The Plan, if it is elected in Option 3(b)(2) of the Adoption Agreement that the Plan is adopted as an amendment or restatement of a “top-hat” deferred compensation plan previously maintained by the Employer.

 

1.27      “Section 409A”: Section 409A of the Code, including the regulations promulgated thereunder, and any other applicable published guidance of the Internal Revenue Service for Section 409A of the Code.

 

1.28      “Separation from Service”:  The death, retirement or other Termination of Employment with the Employer and all Affiliates (whether or not the Affiliate is an adopting Employer) for reasons other than Disability as defined in subparagraph 8.4(b).  For purposes hereof the employment relationship is treated as continuing intact while the individual is on military leave, sick leave or other bona fide leave of absence if the period of leave does not exceed six (6) months, so long as the individual’s right to reemployment is provided either by statute or by contract.  If the period exceeds six (6) months and the individual’s right to reemployment is not provided by contract or statute, then the employment relationship is deemed to terminate on the first date immediately following such six-month period.

 

1.29      “Termination of Employment”:  Facts and circumstances indicating a date beyond which the Employer does not intend for the Employee to provide more than insignificant services for the Employer (regardless of whether provided as an Employee or as an independent contractor) and Affiliates (whether or not the Affiliate is a participating Employer).  For purposes hereof, whether any services are more than insignificant will be determined in accordance with the provisions of Section 409A.  Unless otherwise stated in Option 3(b)(3) of the Adoption Agreement, if the level of bona fide service the Employee would perform after such date will permanently decrease to No more than twenty percent (20%) of the average level of bona fide service over the preceding thirty-six (36) months, such services shall be treated as insignificant and a Termination of Employment will be deemed to occur, unless facts and circumstances indicate that the Employee continues to be treated as an Employee for other purposes.  With respect to a Participant who provides services for the Employer both as an Employee and a member of the Board, services as a member of the Board shall not be taken into account in determining whether a Participant has experienced a Separation from Service under this Plan.

 

1.30      “Trustee”:  The person(s) serving from time to time as trustee of any Rabbi Trust.

 

1.31      “Valuation Date”:  Each business day (based on the days the underlying investment funds are valued and transactions are effectuated in the applicable financial markets) of the Plan Year (which Valuation Date is sometimes referred to as a “daily” valuation date), or such other dates as the Administrator may designate from time to time.

 

1.32      “VBA Plan”:  The Virginia Bankers Association Master Defined Contribution Plan and Trust.

 

- 4  -

 

 

 

 

ARTICLE II

Eligibility and Participation

 

2.1        Eligibility.  Each Eligible Employee shall be eligible to participate in the Plan effective as provided for in Option 4(d) of the Adoption Agreement.

 

2.2        Notice Regarding Active Participation.  The Administrator shall give notice of eligibility to each Eligible Employee.

 

2.3        Length of Participation.  Each Eligible Employee shall automatically become a Participant upon his timely filing a Deferred Compensation Election or other election to participate and remain a Participant as long as he is entitled to future benefits under the terms of the Plan.

 

2.4        Termination of Active Participation.  Subject to compliance with Section 409A and paragraphs 3.4 or 3.5, a Participant who is an active Participant for an applicable contribution election period (that is, the calendar year generally or the period for which Bonuses are determined, as applicable) shall cease to be an active Participant for the applicable year or period, as the case may be, if and when he ceases to be an Eligible Employee during the applicable year or period, in which case he may not again become an active Participant until a subsequent calendar year or period for which Bonuses are determined, as applicable.  A leave of absence (whether paid or unpaid) which does not result in a Separation from Service shall not be considered cessation of status as an Eligible Employee for this purpose.

 

ARTICLE III

Employee Contributions

 

3.1        Deferred Compensation Election.

 

3.1(a)    Subject to the restrictions and conditions hereinafter provided, an Eligible Employee shall be entitled to elect to defer, as an Employee Deferral Contribution with respect to a Plan Year, an amount of his Compensation which is specified by and in accordance with his direction in his Deferred Compensation Election for such Plan Year.  Any such election must be filed with the Administrator at the time required under paragraph 3.2.

 

3.1(b)    Deferred Compensation Elections shall be subject to the following rules:

 

(i)          A separate Deferred Compensation Election must be filed for each Plan Year;

 

(ii)         Each Deferred Compensation Election must specify the following:

 

(A)        The Plan Year to which it relates;

 

(B)        The amount or percentage of Compensation to be deferred;

 

(C)        The Compensation from which the Employee Deferral Contribution shall be withheld, if appropriate;

 

(D)        If Option 8(a)(2) of the Adoption Agreement is selected, the Benefit Commencement Date, which date (I) may be one of the dates permitted in Option 8(a)(2)(A) of the Adoption Agreement and (II) shall be irrevocable;

 

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(E)        If permitted in Option 8(a)(2)(A)(vi), whether the Benefit Commencement Date shall be accelerated upon a Change in Control, if a Change in Control occurs prior to the Benefit Commencement Date otherwise elected;

 

(F)         If Option 8(b)(2) of the Adoption Agreement is selected, the form of payment (and if periodic installments are elected, the duration and frequency of the installments), which  election shall be irrevocable; and

 

(G)        Such other information as the Administrator may require.

 

(iii)       A Participant shall have No unilateral right to change or terminate his Deferred Compensation Election once the annual filing deadline established by the Administrator has passed, which deadline shall be No later than the dates prescribed in paragraph 3.2.

 

(iv)        The Benefit Commencement Date and form of payment election made in the Deferred Compensation Election with respect to the Employee Deferral Account for any Plan Year shall also apply to each subdivision of the Employer Matching Deferral Account for the same Plan Year.

 

3.1(c)    Each Employee Deferral Contribution is intended to be an elective salary reduction amount which shall be deducted from a Participant’s Compensation otherwise payable to him for a Plan Year by way of Salary or Bonus.  Unless otherwise approved by the Administrator:

 

(i)          Employee Deferral Contribution of Salary shall be withheld from annual salary on a pro rata basis throughout the Plan Year (or remainder of the Plan Year, in the case of an Eligible Employee who first becomes a Participant after the first day of the Plan Year or if the Effective Date of the Plan is after the first day of the Plan Year); and

 

(ii)         Unless otherwise specifically stated in the Deferred Compensation Election filed by the Participant, Employee Deferral Contributions of Bonus shall be withheld on a first dollar basis from the Bonus before any part is paid to the Participant.  However, the Deferred Compensation Election filed by the Participant may, if permitted by the Administrator, provide that the Employee Deferral Contribution of Bonus be withheld after a threshold level of Bonus has been paid to the Participant in cash.

 

3.1(d)    Paired Plan.  Notwithstanding any provision of the Plan to the contrary, if the Plan Sponsor has elected in Option 3(c) of the Adoption Agreement that this Plan is intended to be paired with a qualified deferred compensation plan (a “Paired Plan”), then the Employee Deferral Contribution and any associated Employer Matching Contribution for a Plan Year of a Participant who is also a participant in such Paired Plan shall be transferred to the Paired Plan by the Employer No later than March 15 following the Plan Year, subject to the following provisions:

 

(i)          The election to participate in a paired arrangement must be made in the Deferred Compensation Election for the Plan Year and shall be irrevocable.

 

(ii)         The amount of the Employee Deferral Contribution transferred shall not exceed the lesser of the limit with respect to elective deferrals under Section 402(g)(1)(A), (B) and (C) of the Code, taking into account catch-up contributions allowed under Section 414(v)(2)(B)(i) of the Code, or the amount of the elective deferral permitted after application of the actual deferral percentage limitation or any other applicable limitation in such Paired Plan.

 

(iii)       The amount of the Employer Matching Contribution transferred shall not exceed the lesser of the limit with respect to elective deferrals under Section 402(g)(1)(A), (B) and (C) imposed on

 

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the Paired Plan or the amount of matching contributions permitted after application of the actual contribution percentage limitation or any other applicable limitation in such Paired Plan.

 

3.1(e)    Employment taxes required to be withheld on any Employee Deferral Contributions shall be withheld from Compensation that is not being deferred in a manner determined by the Employer.  However, if necessary, the Administrator may reduce the Employee Deferral Contribution as needed to comply with applicable employment tax withholding requirements.

 

3.2        Timing of Deferred Compensation Election.

 

3.2(a)    With respect to the Plan Year in which the Effective Date of the Plan or the effective date of coverage as described in Option 4(d) of the Adoption Agreement occurs (“first year of eligibility”), in order to make Employee Deferral Contributions with respect to such Plan Year, an Eligible Employee who is a newly Eligible Employee must file a Deferred Compensation Election with the Administrator within thirty (30) days of such Effective Date of the Plan or effective date of coverage.  The Deferred Compensation Election shall be effective to defer Compensation for services performed in pay periods after the pay period in which it is filed.  For this purpose:

 

(i)         Compensation based on a performance period (such as an annual bonus) is deemed earned ratably throughout the period for which earned.

 

(ii)        An Eligible Employee’s first year of eligibility is the year in which he first becomes eligible to participate in any account balance type deferred compensation plan, within the meaning of Section 409A, maintained by the Employer or any Affiliate.

 

(iii)       If all amounts owed an Employee from all account balance plans maintained by the Plan Sponsor and its Affiliates subject to Section 409A have been paid to the Employee and if the Employee has become ineligible to accrue further benefits, then if he thereafter becomes an Eligible Employee, the year in which he again becomes an Eligible Employee may be treated as his first year of eligibility.

 

(iv)        If a Participant is not an Eligible Employee for at least twenty-four (24) consecutive months, then if he thereafter becomes an Eligible Employee, the year in which he again becomes an Eligible Employee may be treated as his first year of eligibility.

 

3.2(b)    With respect to Plan Years beginning on or after the first year of eligibility, in order to make Employee Deferral Contributions of Salary with respect to such a Plan Year, an Eligible Employee must file a Deferred Compensation Election with the Administrator prior the annual filing deadline established by the Administrator, which deadline must be in the calendar year immediately preceding the year in which the Salary relates.  The Deferred Compensation Election for Salary shall be effective as of the first day of the Plan Year in which the services that give rise to the Salary to be deferred are rendered.

 

3.2(c)    With respect to Plan Years beginning on or after the first year of eligibility, in order to make Employee Deferral Contributions of Bonus with respect to the Plan Year, an Eligible Employee must file a Deferred Compensation Election with the Administrator prior to the annual filing deadline established by the Administrator, which deadline must be in the calendar year or, if different and permitted by the Administrator (as evidenced by the applicable Deferred Compensation Election form) where the Bonus is earned on the basis of the Plan Sponsor’s fiscal year, the Plan Sponsor’s fiscal year immediately preceding the applicable year in which the period to which the Bonus relates commences.

 

3.2(d)    Notwithstanding subparagraph 3.2(c), if elected in Option 4(e) of the Adoption Agreement, the Administrator may permit a Deferred Compensation Election relating to a Bonus which is Performance-Based

 

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Compensation (within the meaning of Section 409A(a)(4)(B)(iii) of the Code) based on services performed over a period of at least twelve (12) consecutive months to be made prior to the annual filing deadline established by the Administrator, which deadline must be not later than six (6) months prior to the end of the period for which the Bonus is earned, so long as the Eligible Employee has been continuously employed by the Employer from the later of the date the performance criteria are established or the performance period begins through the date of the election.  For this purpose, performance-based compensation must be based on pre-established organizational or individual performance criteria relating to a performance period of at least twelve (12) consecutive months, provided the criteria are established in writing No later than ninety (90) days after the beginning of the period of service to which the Bonus and performance relate and the outcome is substantially uncertain at the time the performance criteria are established, as more specifically described in Treasury Regulation Section 1.409A-1(e).

 

3.3        Crediting of Employee Deferral Contributions.  Employee Deferral Contributions shall be credited to an Employee Deferral Account as of the date an amount equal to each Employee Deferral Contribution is credited on the accounting records of the Plan as directed by the Administrator, which date shall be No later than the end of the calendar month following the month the Compensation from which such contribution is deducted would otherwise have been paid to the Participant and may be as soon as the date as of which the amount would otherwise have been paid to the Participant.

 

3.4        Automatic Cancellation of Deferred Compensation Election upon Receipt of Hardship Withdrawal.

 

3.4(a)    In the event of an Unforeseeable Emergency withdrawal (as described in paragraph 10.1), any Deferred Compensation Election shall be cancelled (rather than postponed or delayed) prospectively so that No further deferrals from Salary or Bonus shall be made during the remainder of the Plan Year in which the withdrawal occurred.

 

3.4(b)    In the event of a 401(k) hardship withdrawal, any Deferred Compensation Election shall be cancelled (rather than postponed or delayed) prospectively so that No further deferrals from Salary or Bonus shall be made during the remainder of the Plan Year in which the withdrawal occurred.  Any Deferred Compensation Election for the succeeding Plan Year shall not be effective until the 401(k) required cancellation period ends.

 

3.4(c)    The Participant whose Deferred Compensation Election is cancelled pursuant to this paragraph must file a new Deferred Compensation Election in order to commence or recommence making deferrals under the Plan from his Salary or Bonus.

 

3.4(d)    For purposes hereof, the following terms have the following meanings:

 

(i)          A “401(k) hardship withdrawal” is a hardship withdrawal from any 401(k) Plan which requires a suspension of employee contributions and elective deferrals in order to satisfy the regulations under Section 401(k) of the Code.

 

(ii)         The “401(k) required cancellation period” means a six-month period (or other stated period in the applicable 401(k) Plan) during which employee contributions and elective deferrals must be suspended as a result of receipt of a 401(k) hardship withdrawal in order to satisfy the regulations under Section 401(k) of the Code.

 

(iii)       A “401(k) Plan” means any deferred compensation plan intended to meet the requirements of Section 401(k) of the Code and maintained by the Employer or any Affiliate.

 

3.5        Cancellation of Deferred Compensation Election upon Disability.

 

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3.5(a)    If elected in Option 4(f) of the Adoption Agreement, in the event of Disability, any Deferred Compensation Election shall be cancelled (rather than postponed or delayed) prospectively so that No further deferrals from Salary or Bonus shall be made during the remainder of the Plan Year provided such cancellation occurs by the later of the end of the Participant’s taxable year or the fifteenth (15th) day of the third (3rd) month following the date the Participant incurs the Disability.

 

3.5(b)    For purposes hereof, “Disability” shall mean any medically determinable physical or mental impairment which results in the Participant’s inability to perform the duties of his position or any substantially similar position and can be expected to result in death or to last for a continuous period of not less than six (6) months.  The determination of Disability shall be made by the Administrator, on the advice of one or more physicians appointed and approved by the Employer, and the Administrator shall have the right to require further medical examinations from time to time to determine whether there has been any change in the Participant’s condition.

 

ARTICLE IV

Employer Contributions

 

4.1        Employer Contribution Allocations.

 

4.1(a)    If elected in Option 5(a)(2) of the Adoption Agreement, the Employer Non-Elective Contributions for each Plan Year shall be allocated to the Employer Non-Elective Deferral Accounts of Participants described in Option 5(a)(2) of the Adoption Agreement in the manner and as of the date set forth in Option 5(a)(2) of the Adoption Agreement.

 

4.1(b)    If elected in Option 5(a)(3) of the Adoption Agreement, the Employer Matching Contributions for each Plan Year shall be allocated to the Employer Matching Deferral Accounts of Participants described in Option 5(a)(3) of the Adoption Agreement in the manner and as of the date set forth in Option 5(a)(3) of the Adoption Agreement.

 

4.1(c)    Notwithstanding anything to the contrary herein, each Deferral Contribution of the Employer is not intended to be an actual contribution by the Employer, but rather is only a bookkeeping amount credited for benefit determination purposes under the Plan.

 

4.1(d)    The Employer may from time to time make a discretionary contribution to the Plan on behalf of one or a group of Participants.  At the time the contribution is made the Employer will specify how such amounts are allocated among the Participants accounts and the timing of such allocation.

 

4.2        Employment Taxes.  Employment taxes required to be withheld on any Employer Contributions shall be withheld from Compensation that is not being deferred in a manner determined by the Employer.  However, if necessary, the Administrator may reduce the Employer Contributions needed to comply with applicable employment tax withholding requirements.

 

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ARTICLE V

Deemed Earnings and Accounting

 

5.1        Fund Divisions.

 

5.1(a)    It is contemplated that the Fund will be considered to be held in divisions (sometimes referred to as “divisions of the Fund”, “Fund divisions” or “investments funds” herein) as hereinafter provided, and each Participant’s Deferral Benefit shall be subdivided to reflect its deemed interest in each Fund division.

 

5.1(b)    The Administrator shall establish from time to time the Fund divisions which shall be maintained in the Fund, which are designed to mirror the investment options available under the VBA Plan, to the extent legally practical, with alternate funds designated where collective investment funds may not be offered under a nonqualified plan.

 

5.1(c)    If the Plan Sponsor permits investment in a Company Stock Fund, the availability, restrictions, limitations, and special rules relating to such investment shall be established by the Plan Sponsor from time to time and communicated to Participants and to the Administrator.

 

5.2        Participant Investment Directions.  The Deferral Benefit of a Participant in the Plan shall be divided or allocated to reflect the amount of each such Participant’s deemed interest in each Fund division as hereinafter provided for the purpose of determining the earnings or loss to be credited to his Deferral Account, but any such direction shall not give the Participant any right, title or interest in any specific asset or assets of the Fund.

 

5.2(a)    If and to the extent permitted in Option 10(a) of the Adoption Agreement, upon becoming a Participant without a contribution investment direction in force, a Participant may direct that future contributions and Deferral Account balances shall be invested in the funds available for directed investment as selected in Option 10(b) of the Adoption Agreement by filing an “investment direction” with the Administrator in accordance with the procedures established by the Administrator.  The Administrator (or its designee) generally will process investment directions on a current basis after received, but shall not be obligated to process any investment directions on a retroactive basis.

 

5.2(b)    If or to the extent a Participant (or if deceased, his Beneficiary) has No investment direction in effect, his Deferral Accounts shall be invested in the default fund designated by the Administrator from time to time.

 

5.2(c)    The Administrator may, on a uniform and non-discriminatory basis from time to time, set or change the advance notice requirement for effecting investment directions, may limit the number of investment direction changes made in a Plan Year, may limit investment directions, if any, which can be made by telephone, electronically or through the internet, may impose blackout periods for changes, may temporarily or permanently suspend the offering of an investment fund, and generally may change any of the investment direction procedures or options from time to time and at any time.

 

5.3        Crediting of Deemed Earnings.

 

5.3(a)    As of each Valuation Date, there shall be credited to each Participant’s Deferral Account an amount representing deemed earnings or loss on the “valuation balance” of each such account in accordance with procedures adopted by the Administrator from time to time.

 

5.3(b)    Such deemed earnings or loss shall be determined as follows:

 

(i)          For periods during which a Fund is maintained and Plan benefits may be paid therefrom because the Plan Sponsor or any other Employer is not insolvent, such earnings or loss shall be based on the

 

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net investment rate of return or loss of the Fund division(s) in which the Participant’s Deferral Benefit under the Plan is considered invested for the period, determined separately for each Fund division and the portion of the Participant’s Deferred Benefit considered invested in each such Fund division, based on the Participant’s applicable or deemed investment directions pursuant to paragraph 5.2.  The net investment rate of return or loss means earnings or loss (including valuation changes and charges for expenses) for the period of the Fund compared to the aggregate valuation balances sharing in those earnings or loss.

 

(ii)         For periods during which the Fund is not maintained or Plan benefits may not be paid therefrom because the Plan Sponsor or any other Employer is insolvent, such earnings or loss shall be based on an annual rate determined for each Plan Year and equal to the 1 year U.S. Treasury Rate as of the December 31 immediately preceding the Plan Year.

 

5.3(c)    Notwithstanding the other provisions of this ARTICLE V, whenever the Plan accounting is based on daily Valuation Dates, the valuation adjustments to Participants’ accounts shall be effected on such basis and subject to such rules and procedures as the Administrator may determine to reflect daily accounting.

 

5.4        Subtractions from Deferral Account.  All distributions (including any withheld income or other taxes) and withdrawals shall be subtracted from a Participant’s Deferral Account and the applicable subdivision thereof when made.

 

5.5        Expenses Charged to Deferral Accounts.  Notwithstanding any other provision of the Plan to the contrary, expenses incurred in the administration of the Plan and the Rabbi Trust may be charged to Deferral Accounts on either a pro rata basis or a per capita basis, and/or may be charged to the Deferral Account of the affected Participant(s) and Beneficiary(ies) (which term is intended to include any alternate payee(s)) on a usage basis (rather than to all Deferral Accounts), as directed by the Administrator.  Without limiting the foregoing, some or all of the reasonable expenses attendant to the determinations needed with respect to and making of withdrawals, the calculation of benefits payable under different Plan distribution options and the distribution of Plan benefits may be charged directly to the Deferral Account of the affected Participant and Beneficiary, and different rules (i.e., pro rata, per capita, or direct charge to Deferral Accounts) may apply to different groupings of Participants and Beneficiaries.

 

5.6        Equitable Adjustment in Case of Error or Omission.  Where an error or omission is discovered in the Deferral Account of a Participant, the Administrator shall be authorized to make such equitable adjustment as the Administrator deems appropriate.

 

5.7        Statement of Benefits.  Within a reasonable time after the end of each calendar quarter and at the date a Participant’s Deferral Benefit or death benefit becomes payable under the Plan, the Administrator shall provide to each Participant (or, if deceased, to his Beneficiary) a statement of the benefit under the Plan.

 

ARTICLE VI

Vesting

 

6.1        Vesting in Employee Deferral Account and Predecessor Plan Account.  A Participant’s rights to the balance in his Employee Deferral Account and, unless provided otherwise in Option 3(b)(3) of the Adoption Agreement, in his Predecessor Plan Account shall be fully vested and nonforfeitable at all times, and his Separation from Service shall not diminish the amount payable to the Participant or his Beneficiary.

 

6.2        Vesting in Employer Non-Elective Deferral Account.  A Participant shall have a vested interest in a percentage of his Employer Non-Elective Deferral Account determined in accordance with the vesting provisions selected in Option 6(a)(1) of the Adoption Agreement.

 

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6.3        Vesting in Employer Matching Deferral Account.  A Participant shall have a vested interest in a percentage of his Employer Matching Deferral Account determined in accordance with the vesting provisions selected in Option 6(a)(2) of the Adoption Agreement.

 

6.4        Forfeiture of Benefits.

 

6.4(a)    Notwithstanding any contrary provision hereof, a Participant’s Employer Deferral Account shall be irrevocably forfeited upon the occurrence of any the following events (as defined in subparagraph 6.4(b)):

 

(i)          The Participant’s termination of employment with the Employer for “cause”;

 

(ii)         The Participant’s entering into “competition”, or his making an “unauthorized disclosure of confidential information”, after his termination of or retirement from employment with the Employer, in which case all payments to, or with respect to, the Participant shall cease and all payments made to the Participant or his Beneficiary under the Plan since the occurrence of such event of forfeiture shall be returned to the Employer (provided however, forfeiture shall not occur upon a Participant’s entering into competition following a Change in Control); or

 

(iii)       The discovery, after the Participant’s termination of or retirement from employment with Employer or death, of “cause” for his termination or of his “unauthorized disclosure of confidential information” prior to his termination, retirement or death, in which case all payments under the Plan to, or with respect to, the Participant shall cease and all payments previously made to the Participant or his Beneficiary under the Plan shall be returned to the Employer.

 

All determinations hereunder shall be made by the Administrator, in its sole and absolute discretion.

 

6.4(b)    For purposes of subparagraph 6.4(a):

 

(i)          “Cause” means the willful gross misconduct of the Participant which is materially injurious to the Employer or any Affiliate, including but not limited to the Participant’s knowingly or intentionally providing the Employer with materially false reports concerning the Participant’s business interests or employment-related activities, making materially false representations relied on by the Employer in furnishing information to shareholders and the Securities Exchange Commission, willfully concealing unauthorized material conflicts of interest in the discharge of duties owed by the Participant to the Employer, willfully causing a serious violation by the Employer of state or federal laws, theft or misappropriation of the assets of the Employer, or conviction of a felony (excluding traffic violations).

 

(ii)         “Competition” means engaging by the Participant, without the written consent of the Board or a person authorized thereby, in a business as a more than one percent (1%) stockholder, an officer, a director, an employee, a partner, an agent, a consultant, or any other individual or representative capacity (unless the Participant’s duties, responsibilities, and activities, including supervisory activities, for or on behalf of such business, are not related in any way to such “competitive activity”) if it involves:

 

(A)        Engaging in, or entering into services or providing advice pertaining to, any line of business that the Employer or any Affiliate actively conducts or develops in the same geographic area (generally, within a one hundred (100) mile radius of the Employer’s principal place of business), or

 

(B)        Employing or soliciting for employment any employees of the Employer or any Affiliate.

 

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(iii)       “Unauthorized disclosure of confidential information” means the disclosure by the Participant, without the written consent of the Board or a person authorized thereby, to any person other than as required by law or court order, or other than to an authorized employee of the Employer or an Affiliate, or to a person to whom disclosure is necessary or appropriate in connection with the performance by the Participant of his duties as an employee or director of the Employer or an Affiliate (including, but not limited to, disclosure to the Employer’s or an Affiliate’s outside counsel, accountants or bankers of financial data properly requested by such persons and approved by an authorized officer of the Employer), any confidential information of the Employer or any Affiliate with respect to any of the products, services, customers, suppliers, marketing techniques, methods or future plans of the Employer or any Affiliate; provided,  however, that:

 

(A)        Confidential information shall not include any information known generally to the public (other than as a result of unauthorized disclosure by the Participant) or any information of a type not otherwise considered confidential by persons engaged in the same business or a business similar to that conducted by the Employer or any Affiliate; and

 

(B)        The Participant shall be allowed to disclose confidential information to his attorney solely for the purpose of ascertaining whether such information is confidential within the intent of the Plan, but only so long as the Participant both discloses to his attorney the provisions of this paragraph and agrees not to waive the attorney-client privilege with respect thereto.

 

6.5        No Restoration of Forfeited Benefits.  There shall be No restoration of forfeited benefits.

 

ARTICLE VII

Beneficiary Designation

 

7.1        Beneficiary Designation.

 

7.1(a)    Each Participant shall be entitled to designate a Beneficiary to receive any unpaid Deferral Benefit hereunder by filing a designation in writing with the Administrator on the form provided for such purpose.  Any Beneficiary designation shall be effective only if signed and dated by the Participant and delivered to the Administrator prior to the time of the Participant’s death.  Any Beneficiary designation shall remain effective until changed or revoked hereunder.

 

7.1(b)    Any Beneficiary designation may include multiple, contingent or successive Beneficiaries and may specify the proportionate distribution to each Beneficiary.  If multiple Beneficiaries are designated, absent any other provision by the Participant, those named or the survivor of them shall share equally in any amounts payable hereunder.

 

7.1(c)    A Beneficiary designation may be changed by the Participant at any time, or from time to time, by filing a new designation in writing with the Administrator.

 

7.1(d)    If a Participant dies without having designated a Beneficiary, or if the Beneficiary so designated has predeceased the Participant or cannot be located by the Administrator, then the Participant’s spouse or, if none, the executor or the administrator of his estate shall be deemed to be his Beneficiary.

 

7.1(e)    If a Beneficiary shall survive the Participant but die before the Participant’s remaining benefit under the Plan has been distributed, then, absent any other provision by the Participant, the unpaid balance thereof

 

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shall be distributed to the such other beneficiary named by the deceased Beneficiary to receive his interest or, if none, to the estate of the deceased Beneficiary.

 

ARTICLE VIII

Retirement Dates

 

8.1        Normal Retirement Date.  The Normal Retirement Date designated in Option 7(a) of the Adoption Agreement.

 

8.2        Delayed Retirement Date.  A Participant who continues in the active employment of the Employer beyond his Normal Retirement Date shall continue to participate in the Plan, and his Delayed Retirement Date shall be the first day of the calendar month coinciding with or next following the date of his Separation from Service.

 

8.3        Early Retirement Date.  If elected in Option 7(b) of the Adoption Agreement, a Participant who has satisfied the age and service requirements selected in Option 7(b) of the Adoption Agreement may retire from the employment of the Employer prior to his Normal Retirement Date and his Early Retirement Date shall be the first day of the calendar month coinciding with or next following the date of such Separation from Service.

 

8.4        Disability Retirement Date.

 

8.4(a)    If elected in Option 7(c) of the Adoption Agreement, a Participant who, while an Eligible Employee, is totally and permanently disabled, as hereinafter determined, and who has satisfied the age and service requirements selected in Option 7(c) of the Adoption Agreement, may retire from the employment of the Employer prior to his Normal Retirement Date and his Disability Retirement Date shall be the first day of the calendar month coinciding with or next following the date as of which he is determined to be totally and permanently disabled.

 

8.4(b)    A Participant shall be totally and permanently disabled if the Participant 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.  The determination of total and permanent disability shall be made by the Administrator, on the advice of one or more physicians appointed and approved by the Employer, and the Administrator shall have the right to require further medical examinations from time to time to determine whether there has been any change in the Participant’s condition.  A Participant shall be deemed disabled if determined to be totally disabled by the Social Security Administration.

 

8.5        Use of Retirement Date Definitions.  Retirement Date definitions, other than Normal Retirement Date, are set forth in the Plan for the sole purpose of defining Participants entitled to share in Employer Contributions if elected in Option 5(a)(2)(B) or 5(a)(3)(B) of the Adoption Agreement.

 

ARTICLE IX

Time and Form of Payment

 

9.1        Time of Payment.

 

9.1(a)    A Participant’s Deferral Benefit, if any, shall become payable to the Participant, if then alive, on his Benefit Commencement Date.

 

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(i)          The Benefit Commencement Date for the Employer Non-Elective Deferral Account shall be the Participant’s Separation from Service.

 

(ii)         If Option 8(a)(1) of the Adoption Agreement is selected, the Benefit Commencement Date for all other Deferral Accounts (excluding the Employer Non-Elective Deferral Account) shall be the first day of the calendar quarter next following the date selected in Option 8(a)(1) of the Adoption Agreement.

 

(iii)       If Option 8(a)(2) of the Adoption Agreement is selected, the Participant may select the Benefit Commencement Date for all other Deferral Accounts (excluding the Employer Non-Elective Deferral Account) within the guidelines set forth in Option 8(a)(2) of the Adoption Agreement.  The Benefit Commencement Date for any subdivision of the Employer Matching Deferral Account related to a Plan Year shall be the same as that provided for or elected under the Plan for the subdivision of a Participant’s Employee Deferral Account related to the same Plan Year.

 

(iv)        In the absence of any valid Benefit Commencement Date election, payment will be made on the Participant’s Separation from Service.

 

9.1(b)    In the event of the Participant’s death before his Benefit Commencement Date, the Participant’s Deferral Benefit shall become payable to the Beneficiary on the first day of the calendar quarter following the date of the Participant’s death or as soon as practicable thereafter, but in No case later than December 31 of the first year following the year of the Participant’s death.

 

9.1(c)    Notwithstanding the foregoing provisions of this paragraph:

 

(i)          Payment to a Participant shall be delayed as required by Section 409A in the case of a Participant who, with respect to the Employer, is a “specified employee” of a corporation any stock of which is publicly traded on an established securities market or otherwise as provided in Section 409A(2)(B)(i) of the Code. For this purpose, specified employees shall be identified on the date and the identification shall be effective as provided in Option 4(g)(1) of the Adoption Agreement.  The delayed payment requirement will be applied as provide in Option 4(g)(2) of the Adoption Agreement.

 

(ii)         Payment may be delayed for a reasonable period in the event the payment is not administratively practical due to events beyond the recipient’s control such as where the recipient is not competent to receive the benefit payment, there is a dispute as to amount due or the proper recipient of such benefit payment, additional time is needed to calculate the payment, or the payment would jeopardize the solvency of the Employer.

 

(iii)       Payment shall be delayed in the following circumstances:

 

(A)        Where the Administrator reasonably anticipates that a delay in payment is necessary to comply with Federal securities laws or other applicable laws; or

 

(B)        Where the Administrator reasonably determines that a delay is permissible for other events or conditions under applicable published guidance of the Internal Revenue Service for Section 409A;

 

provided that any payment delayed by operation of this clause (iii) will be made at the earliest date at which the Administrator reasonably anticipates that the payment will not be limited or will cease to be so delayed.

 

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9.2        Form of Payment.

 

9.2(a)    Payment of any Employer Non-Elective Deferral Account will be made in a single lump sum.

 

9.2(b)    If Option 8(b)(1) of the Adoption Agreement is selected, a Participant shall be paid the Deferral Benefit (excluding the Employer Non-Elective Deferral Account), if any, to which he is entitled, commencing at the applicable time provided in paragraph 9.1, in the form selected in Option 8(b)(1) of the Adoption Agreement and, if applicable, over a period selected in Option 8(b)(1) of the Adoption Agreement.

 

9.2(c)    If Option 8(b)(2) of the Adoption Agreement is selected, a Participant shall be paid the Deferral Benefit (excluding the Employer Non-Elective Deferral Account), if any, to which he is entitled, commencing at the applicable time provided in paragraph 9.1, in the form selected by the Participant within the guidelines set forth in Option 8(b)(2) of the Adoption Agreement.

 

9.2(d)    If Option 8(c)(1) of the Adoption Agreement is selected, in the event of the Participant’s death before his Benefit Commencement Date, the Beneficiary shall be paid the Deferral Benefit (excluding the Employer Non-Elective Deferral Account), if any, to which he is entitled, commencing at the applicable time provided in paragraph 9.1, in the form selected in Option 8(c)(1) of the Adoption Agreement and, if applicable, over a period selected in Option 8(c)(1) of the Adoption Agreement.

 

9.2(e)    If Option 8(c)(2) of the Adoption Agreement is selected, in the event of the Participant’s death before his Benefit Commencement Date, the Beneficiary shall be paid the Deferral Benefit (excluding the Employer Non-Elective Deferral Account), if any, to which he is entitled, commencing at the applicable time provided in paragraph 9.1, in the form selected by the Participant within the guidelines set forth in Option 8(c)(2) of the Adoption Agreement.

 

9.2(f)     In the absence of any valid form of payment election, payment will be made in a single lump sum.

 

9.3        Permissible Changes to Benefit Commencement Date and/or Form of Payment.  Any election of a Benefit Commencement Date applicable to a subdivision of a Deferral Account or a form of payment applicable to a subdivision of a Deferral Account may be changed only if the election to change:  (a) is not effective until at least twelve (12) months after the date filed, (b) delays the Benefit Commencement Date for at least five (5) years, and (c) is filed at least twelve (12) months before benefits would otherwise commence.  Notwithstanding the above, the requirement to delay the Benefit Commencement Date for at least five (5) years in (b) above shall not apply in the case of any election to change a payment on account of Disability (as defined in paragraph 8.4(b)), death or Unforeseeable Emergency (as defined in paragraph 10.1).  For purposes of changes to the time or form of payment, in the event a Participant elects to receive payment of his benefit in periodic installments, the installment payment as a whole will be treated as a single payment.

 

9.4        Lump-Sum Payments and Periodic Installments.

 

9.4(a)    If a lump-sum payment is permitted under the Plan, the amount of a lump-sum payment to or with respect to a Participant shall be determined by reference to the Deferral Benefit as of the last Valuation Date (or other time of valuation hereunder) immediately preceding the date of payment.

 

9.4(b)    If periodic installment payments are permitted under the Plan, the amount of each periodic installment payment shall be the lesser of:

 

(i)          The quotient obtained by dividing (A) the amount of such Participant’s vested Deferral Account held in the applicable subdivision, determined as though a lump-sum payment were being made

 

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as of the last Valuation Date of the calendar quarter preceding the date of payment of such installment, by (B) the number of installment payments then remaining to be made; or

 

(ii)         The amount of such vested Deferral Benefit at such time.

 

9.4(c)    In the event that a Participant who has begun to receive periodic installment payments again becomes an Employee of the Employer, his periodic installments shall continue regardless of his return to employment with the Employer.

 

9.5        Permissible Cash Out by Lump-Sum Payment.  Notwithstanding the time and form of benefit payment provisions of paragraphs 9.1 and 9.2, a Participant’s vested Deferral Benefit may be cashed out in a lump-sum payment in an amount equal to the vested balance in the Participant’s Deferral Accounts if (a) the payment will constitute a payout of the Participant’s entire interest in this Plan and all similar arrangements that are treated as a single plan under Treasury Regulation Section 1.409A-1(c)(2); (b) the payment is made on or before the later of December 31 of the calendar year in which the Participant’s Separation from Service occurs, or the fifteenth (15th) day of the third (3rd) month following the Participant’s Separation from Service; and (iii) the payment of the entire vested Deferral Benefit is not over the limit set forth in Section 402(g) of the Code applicable to the Plan Year in which the cash out occurs.

 

9.6        Benefit Determination and Payment Procedure.

 

9.6(a)    The Administrator shall make all determinations concerning eligibility for benefits under the Plan, the time or terms of payment, and the form or manner of payment to the Participant or the Participant’s Beneficiary, in the event of the death of the Participant.  The Administrator shall promptly notify the Employer and, where payments are to be made from a Rabbi Trust, the Trustee thereof of each such determination that benefit payments are due and provide to the Employer and, where applicable, such Trustee all other information necessary to allow the Employer or such Trustee, as the case may be, to carry out said determination, whereupon the Employer or such Trustee, as the case may be, shall pay such benefits in accordance with the Administrator’s determination.

 

9.6(b)    Benefit payments shall normally be made from the Fund to such payee(s), in such amounts, at such times and in such manner as the Administrator shall from time to time direct; provided,  however, that the Employer may advance any payment due subject to a right of reimbursement from the Fund.

 

9.6(c)  Notwithstanding any other provision of the Plan, the Administrator shall delay any benefit payment (including any withdrawal pursuant to ARTICLE X) if in the Administrator’s judgment the payment would not be deductible under Section 162(m) of the Code and the delay will permit the deductibility of the payment, in which case the delayed payment shall be made as soon as it is possible to do so within the deduction limits of Section 162(m) of the Code but in No event later then the end of the Employer’s fiscal year in which the Employer or the Administrator reasonably anticipates, or should reasonable anticipate, that the payment would be deductible or, any earlier time required under Section 409A.

 

9.6(d)  The Employer or Trustee may deduct from payments under the Plan such reasonable amount as it shall deem necessary, based upon information provided by the Administrator upon which the payor may rely, to pay any federal, state, or local income, employment, or other taxes attributable to the payment or required to be withheld from the payment.

 

9.7           Payments to Minors and Incompetents.  If a Participant or Beneficiary entitled to receive any benefits hereunder is a minor or is adjudged to be legally incapable of giving valid receipt and discharge for such benefits, or is deemed so by the Administrator, benefits will be paid to such person as the Administrator may designate for the benefit of such Participant or Beneficiary.  Such payments shall be considered a payment to such Participant or Beneficiary and shall, to the extent made, be deemed a complete discharge of any liability for such payments under the Plan.

 

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9.8           Distribution of Benefit When Distributee Cannot Be Located.  If any payment made under the Plan is returned unclaimed, the payor shall notify the Administrator and shall dispose of the payment as the Administrator shall direct.  The Administrator shall make all reasonable attempts to determine the whereabouts of a Participant or Beneficiary entitled to benefits under the Plan, including the mailing by certified mail of a notice to the last known address shown on the Employer’s or the Administrator’s records.  If the Administrator is unable to locate such a Participant or Beneficiary entitled to benefits hereunder, the Employer will issue a payment in the appropriate amount and in the name of the Participant or Beneficiary, and the Employer will retain such benefit payment on behalf of the Participant or Beneficiary, without any adjustment for interest or deemed earnings, subject to any applicable statute of escheats not preempted by the Act.

 

ARTICLE X

Withdrawals

 

10.1      Hardship Withdrawals.  If permitted in Option 9(a) of the Adoption Agreement, in the event of any Unforeseeable Emergency and upon written request of the Participant (or, if subsequent to his death, his Beneficiary), the Administrator in its sole discretion may direct the payment in one lump sum to the Participant or his Beneficiary of all or any portion of the Participant’s vested Deferral Benefit which the Administrator determines is necessary to alleviate the financial need related to the Unforeseeable Emergency.  For purposes hereof:

 

10.1(a)  An “Unforeseeable Emergency” means an unforeseeable emergency as defined in Section 409A and generally means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, the Participant’s Beneficiary, or the Participant’s dependent (as defined in Section 152 of the Code, without regard to Section 152(b)(1), (b)(2), and (d)(1)(B)) thereof); loss of the Participant’s or the Participant’s Beneficiary’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant or Beneficiary.

 

10.1(b)  Examples of what may be considered an Unforeseeable Emergency include the imminent foreclosure of or eviction from the Participant’s or Participant’s Beneficiary’s primary residence, the need to pay for medical expenses, including non-refundable deductibles, as well as for the costs of prescription drug medication, the need to pay for the funeral expenses of the Participant’s spouse, Beneficiary, or the Participant’s dependent (as defined in Section 152 of the Code, without regard to Section 152(b)(1), (b)(2), and (d)(1)(B)) thereof).  Except as otherwise provided this subparagraph 10.1(b), the purchase of a home and the payment of college tuition are not Unforeseeable Emergencies.

 

10.1(c)  The existence of an Unforeseeable Emergency shall be determined by the Administrator on the basis of the facts and circumstances of each case.

 

10.1(d)  Distributions because of an Unforeseeable Emergency must be limited to the amount reasonably necessary to satisfy the need (which may include amounts necessary to pay any Federal, state, local, or foreign income taxes or penalties reasonably anticipated to result from the distribution), taking in to account the potential that the need is or may be relieved through reimbursement or compensation by insurance or otherwise, by liquidation of the Participant’s, to the extent the liquidation of such assets would not cause an Unforeseeable Emergency, or by cessation of deferrals under the Plan (if the Plan provides for cancellation of a Deferred Compensation Election upon a payment due to an Unforeseeable Emergency).  The determination of amounts reasonably necessary to satisfy the need is not required to take into account any additional compensation that, due to the Unforeseeable Emergency, is available under another nonqualified deferred compensation plan but has not actually been paid, or that is available, due to the Unforeseeable Emergency, under another plan that would provide for deferred compensation except due to the application of the effective date provisions of Section 409A.

 

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10.2      Distributions in the Event of Income Inclusion.  If any portion of a Deferral Account under the Plan is required to be included in income by the Participant or Beneficiary prior to receipt due to a failure of the Plan to comply with the requirements of Section 409A, the Administrator may determine that such Participant shall receive a distribution from the Plan in an amount equal to the lesser of (a) the portion of the Deferral Account required to be included in income as a result of such failure or (b) the unpaid vested Deferral Account.

 

10.3      No Other Withdrawals Permitted.  No withdrawals or other distributions shall be permitted except as provided in ARTICLE IX or this ARTICLE X.

 

ARTICLE XI

Claims Procedure

 

11.1      Initial Claim.  A Participant or Beneficiary (the “claimant”) shall have the right to request any benefit under the Plan by filing a written claim for any such benefit with the Administrator on a form provided or approved by the Administrator for such purpose.  The Administrator (or a claims administrator appointed by the Administrator) shall give such claim due consideration and shall either approve or deny it in whole or in part.  The following procedure shall apply:

 

11.1(a)  The Administrator (or a claims administrator appointed by the Administrator) may schedule and hold a hearing.

 

11.1(b)  If the claim is not a Disability Benefit Claim, within ninety (90) days following receipt of such claim by the Administrator, notice of any approval or denial thereof, in whole or in part, shall be delivered to the claimant or his duly authorized representative or such notice of denial shall be sent by mail (postage prepaid) to the claimant or his duly authorized representative at the address shown on the claim form or such individual’s last known address.  The aforesaid ninety (90) day response period may be extended to one hundred eighty (180) days after receipt of the claimant’s claim if special circumstances exist and if written notice of the extension to one hundred eighty (180) days indicating the special circumstances involved and the date by which a decision is expected to be made is furnished to the claimant or his duly authorized representative within ninety (90) days after receipt of the claimant’s claim.

 

11.1(c)  If the claim is a Disability Benefit Claim, within forty-five (45) days following receipt of such claim by the Administrator, notice of any approval or denial thereof, in whole or in part, shall be delivered to the claimant or his duly authorized representative or such notice of denial shall be sent by mail to the claimant or his duly authorized representative at the address shown on the claim form or such individual’s last known address.  The aforesaid forty-five (45) day response period may be extended to seventy-five (75) days after receipt of the claimant’s claim if it is determined that such an extension is necessary due to matters beyond the control of the Plan and if written notice of the extension to seventy-five (75) days indicating the circumstances involved and the date by which a decision is expected to be made is furnished to the claimant or his duly authorized representative within forty-five (45) days after receipt of the claimant’s claim.  Thereafter, the aforesaid seventy-five (75) day response period may be extended to one hundred five (105) days after receipt of the claimant’s claim if it is determined that such an extension is necessary due to matters beyond the control of the Plan and if written notice of the extension to one hundred five (105) days indicating the circumstances involved and the date by which a decision is expected to be made is furnished to the claimant or his duly authorized representative within seventy-five (75) days after receipt of the claimant’s claim.  In the event of any such extension, the notice of extension shall specifically explain, to the extent applicable, the standards on which entitlement to a benefit is based, the unresolved issues that prevent a decision on the claim, and the additional information needed to resolve those issues, and the claimant shall be afforded at least forty-five (45) days within which to provide any specified information which is to be provided by the claimant.

 

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11.1(d)  Any notice of denial shall be written in a manner calculated to be understood by the claimant and shall:

 

(i)          Set forth a specific reason or reasons for the denial,

 

(ii)         Make reference to the specific provisions of the Plan document or other relevant documents, records or information on which the denial is based,

 

(iii)       Describe any additional material or information necessary for the claimant to perfect the claim and explain why such material or information is necessary,

 

(iv)        Explain the Plan’s claim review procedures, including the time limits applicable to such procedures (which are generally contained in paragraph 11.2), and provide a statement of the claimant’s right to bring a civil action in state or federal court under Section 502(a) of the Act following an adverse determination on review of the claim denial,

 

(v)         In the case of a Disability Benefit Claim filed before January 1, 2018 (and thereafter if the final regulation published in 81 Fed. Reg. 92316 (Dec. 19, 2016) is not yet effective for claims filed as of such date):

 

(A)        If an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination, either provide the specific rule, guideline, protocol or other similar criterion, or provide a statement that such a rule, guideline, protocol or other similar criterion was relied upon in making the adverse determination and that a copy of such rule, guideline, protocol or other criterion will be provided free of charge to the claimant or his duly authorized representative upon request in writing, and

 

(B)        If the adverse benefit determination is based on a medical necessity or experimental treatment or similar exclusion or limit, either provide an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to the claimant’s medical circumstances, or provide a statement that such explanation will be provided free of charge upon request in writing; and

 

(vi)        In the case of a Disability Benefit Claim filed on or after January 1, 2018 (to the extent the final regulation published in 81 Fed. Reg. 92316 (Dec. 19, 2016) is effective for claims filed on and after such date):

 

(A)        Provide a discussion of the decision, including an explanation of the basis for disagreeing with or not following: (1) the views, presented by the claimant to the Plan, of health care professionals treating the claimant and vocational professionals who evaluated the claimant, (2) the views of medical or vocational experts whose advice was obtained on behalf of the Plan in connection with the initial claim, without regard to whether the advice was relied upon in making the benefit determination, and (3) a disability determination regarding claimant, presented by claimant to the Plan, made by the Social Security Administration,

 

(B)        If the adverse benefit determination is based on a medical necessity or experimental treatment or similar exclusion or limit, either provide an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to the claimant’s medical circumstances, or provide a statement that such explanation will be provided free of charge upon request in writing,

 

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(C)        Either provide the specific internal rules, guidelines, protocols, standards or other similar criteria relied upon in making the adverse determination, or, alternatively, provide a statement that such rules, guidelines, protocols, standards or other similar criteria do not exist,

 

(D)        Provide a statement that reasonable access to and copies of, all documents, records and other information relevant to the claimant’s claim will be provided free of charge to the claimant or his duly authorized representative upon request in writing, and

 

(E)        Be provided in a culturally and linguistically appropriate manner as described in applicable regulations.

 

11.2      Appeals.  A Participant or Beneficiary whose claim filed pursuant to paragraph 11.1 has been denied, in whole or in part, may, within sixty (60) days (or one hundred eighty (180) days in the case of a Disability Benefit Claim) following receipt of notice of such denial, make written application to the Administrator for a review of such claim, which application shall be filed with the Administrator.  For purposes of such review, the following procedure shall apply:

 

11.2(a)  The Administrator (or a claims administrator appointed by the Administrator) may schedule and hold a hearing.

 

11.2(b)  The claimant or his duly authorized representative shall be provided the opportunity to submit written comments, documents, records, and other information relating to the claim for benefits.

 

11.2(c)  The claimant or his duly authorized representative shall be provided, upon request in writing and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to such claim and may submit to the Administrator written comments, documents, records, and other information relating to such claim.

 

11.2(d)  The Administrator (or a claims administrator appointed by the Administrator) shall make a full and fair review of any denial of a claim for benefits, which shall include:

 

(i)          Taking into account all comments, documents, records, and other information submitted by the claimant or his duly authorized representative relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination,

 

(ii)         In the case of a Disability Benefit Claim filed before January 1, 2018 (and thereafter if the final regulation published in 81 Fed. Reg. 92316 (Dec. 19, 2016) is not yet effective for claims filed as of such date):

 

(A)        Providing for a review that does not afford deference to the initial claim denial and that is conducted by an appropriate named fiduciary of the Plan who is neither the individual who made the claim denial that is the subject of the review, nor the subordinate of such individual,

 

(B)        In making its decision on a review of any claim denial that is based in whole or in part on a medical judgment, including determinations with regard to whether a particular treatment, drug, or other item is experimental, investigational, or not medically necessary or appropriate, consulting with a health care professional who has appropriate training and experience in the field of medicine involved in the medical judgment,

 

(C)        Providing to the claimant or his authorized representative, either upon request in writing and free of charge or automatically, the identification of medical or vocational experts whose advice was obtained on behalf of the Plan in connection with the claim denial that is the

 

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subject of the review, without regard to whether the advice was relied upon in making the benefit determination, and

 

(D)        Ensuring that the health care professional engaged for purposes of a consultation under clause (iv)(B)(II) of this subparagraph shall be an individual who is neither an individual who was consulted in connection with the claim denial that is the subject of the review, nor the subordinate of any such individual,

 

(iii)       In the case of a Disability Benefit Claim filed on or after January 1, 2018 (to the extent the final regulation published in 81 Fed. Reg. 92316 (Dec. 19, 2016) is effective for claims filed on and after such date):

 

(A)        Provide that before the Plan can issue an adverse benefit determination on review, the Administrator shall provide the claimant, free of charge, with any new or additional evidence considered, relied upon, or generated by the Plan, insurer, or other person making the benefit determination (or at  the direction of the Plan, insurer or such other person) in connection with the claim; such evidence must be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required to be provided under subparagraph 11.2(f) to give the claimant a reasonable opportunity to respond prior to that date; and

 

(B)        Provide that, before the Plan can issue an adverse benefit determination on review based on a new or additional rationale, the Administrator shall provide the claimant, free of charge, with the rationale; the rationale must be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required to be provided under subparagraph 11.2(f) to give the claimant a reasonable opportunity to respond prior to that date.

 

11.2(e)  If the claim is not a Disability Benefit Claim, the decision on review shall be issued promptly, but No later than sixty (60) days after receipt by the Administrator of the claimant’s request for review, or one hundred twenty (120) days after such receipt if a hearing is to be held or if other special circumstances exist and if written notice of the extension to one hundred twenty (120) days indicating the special circumstances involved and the date by which a decision is expected to be made on review is furnished to the claimant or his duly authorized representative within sixty (60) days after the receipt of the claimant’s request for a review.

 

11.2(f)   If the claim is a Disability Benefit Claim, the decision on review shall be issued promptly, but No later than forty-five (45) days after receipt by the Administrator of the claimant’s request for review, or ninety (90) days after such receipt if a hearing is to be held or if other special circumstances exist and if written notice of the extension to ninety (90) days indicating the special circumstances involved and the date by which a decision is expected to be made on review is furnished to the claimant or his duly authorized representative within forty-five (45) days after the receipt of the claimant’s request for a review.

 

11.2(g)  The decision on review shall be in writing, shall be delivered or mailed by the Administrator to the claimant or his duly authorized representative in the manner prescribed in subparagraph 11.1 for notices of approval or denial of claims, shall be written in a manner calculated to be understood by the claimant and shall in the case of an adverse determination:

 

(i)          Include the specific reason or reasons for the adverse determination,

 

(ii)         Make reference to the specific provisions of the Plan on which the adverse determination is based,

 

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(iii)       Include a statement that the claimant is entitled to receive, upon request in writing and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits,

 

(iv)        Include a statement of the claimant’s right to bring a civil action in state or federal court under Section 502(a) of the Act following the adverse determination on review,

 

(v)         In the case of a Disability Benefit Claim filed before January 1, 2018 (and thereafter if the final regulation published in 81 Fed. Reg. 92316 (Dec. 19, 2016) is not yet effective for claims filed as of such date):

 

(A)        If an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination, either provide the specific rule, guideline, protocol or other similar criterion, or provide a statement that such a rule, guideline, protocol or other similar criterion was relied upon in making the adverse determination and that a copy of such rule, guideline, protocol or other criterion will be provided free of charge to the claimant or his duly authorized representative upon request in writing,

 

(B)        If the adverse benefit determination is based on a medical necessity or experimental treatment or similar exclusion or limit, either provide an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to the claimant’s medical circumstances, or provide a statement that such explanation will be provided free of charge upon request in writing, and

 

(vi)        In the case of a Disability Benefit Claim filed on or after January 1, 2018 (to the extent the final regulation published in 81 Fed. Reg. 92316 (Dec. 19, 2016) is effective for claims filed on and after such date):

 

(A)        Provide a discussion of the decision, including an explanation of the basis for disagreeing with or not following: (1) the views, presented by the claimant to the Plan, of health care professionals treating the claimant and vocational professionals who evaluated the claimant, (2) the views of medical or vocational experts whose advice was obtained on behalf of the Plan in connection with the adverse determination review, without regard to whether the advice was relied upon in making the benefit determination, and (3) a disability determination regarding claimant, presented by claimant to the Plan, made by the Social Security Administration,

 

(B)        If the adverse benefit determination is based on a medical necessity or experimental treatment or similar exclusion or limit, either provide an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to the claimant’s medical circumstances, or provide a statement that such explanation will be provided free of charge upon request in writing,

 

(C)        Either provide the specific internal rules, guidelines, protocols, standards or other similar criteria relied upon in making the adverse determination, or, alternatively, provide a statement that such rules, guidelines, protocols, standards or other similar criteria do not exist, and

 

(D)        Be provided in a culturally and linguistically appropriate manner as described in applicable regulations.

 

The Administrator’s decision made in good faith shall be final.

 

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11.3      Time Calculation.  The period of time within which a benefit determination initially or on review is required to be made shall begin at the time the claim or request for review is filed in accordance with the procedures of the Plan, without regard to whether all the information necessary to make a benefit determination accompanies the filing.  In the event that a period of time is extended as permitted pursuant to this paragraph due to the failure of a claimant or his duly authorized representative to submit information necessary to decide a claim or review, the period for making the benefit determination shall be tolled from the date on which the notification of the extension is sent to the claimant or his duly authorized representative until the date on which the claimant or his duly authorized representative responds to the request for additional information.

 

11.4      Definitions.  For purposes of the Plan’s claims procedure:

 

11.4(a)  A “Disability Benefit Claim” is a claim for a Plan benefit whose availability is conditioned on a determination of disability and where the Plan’s claim’s adjudicator must make a determination of disability in order to decide the claim.  A claim is not a Disability Benefit Claim where the determination of disability is made by a party (other than the Plan’s claim’s adjudicator or other fiduciary) outside the Plan for purposes other than making a benefit determination under the Plan (such as a determination of disability by the Social Security Administration or under the Employer’s long term disability plan).

 

11.4(b)  A document, record, or other information shall be considered “relevant” to a claimant’s claim if such document, record, or other information (i) was relied upon in making the benefit determination, (ii) was submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record, or other information was relied upon in making the benefit determination, (iii) demonstrates compliance with the administrative processes and safeguards required in making the benefit determination, or (iv) in the case of a Disability Benefit Claim, constitutes a statement of policy or guidance with respect to the Plan concerning the denied treatment option or benefit for the claimant’s diagnosis, without regard to whether such advice or statement was relied upon in making the benefit determination.

 

11.5      Authorized Representatives.  The Administrator may establish reasonable procedures for determining whether a person has been authorized to act on behalf of a claimant.

 

ARTICLE XII

Funding

 

12.1      Funding.

 

12.1(a)  The undertaking to pay benefits hereunder shall be an unfunded obligation payable solely from the general assets of the Employer and subject to the claims of the Employer’s creditors.  The Deferral Accounts shall be maintained as book reserve accounts solely for accounting purposes.

 

12.1(b)  Except as provided in the Rabbi Trust established as permitted in paragraph 12.2, nothing contained in the Plan and No action taken pursuant to the provisions of the Plan shall create or be construed to create a trust of any kind or a fiduciary relationship between the Employer and the Participant or his Beneficiary or any other person.  To the extent that any person acquires a right to receive payments from the Employer under the Plan, such rights shall be No greater than the right of any unsecured general creditor of the Employer.

 

12.1(c)  Where more than one Employer participates in the Plan, the funding and payment provisions hereof shall apply separately to each such Employer.

 

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12.1(d)  The Plan Sponsor may in its discretion make the payment of any or all benefits under the Plan in lieu of payment by one or more Employer.  Where the Plan Sponsor makes payments on behalf of other Employers, the Plan Sponsor may require contributions by participating Employers to the Plan Sponsor at such times (whether before, at or after the time of payment), in such amounts and or such basis as it may from time to time determine in order to defray the cost of benefits and administration of the Plan.

 

12.2      Use of Rabbi Trust Permitted.  Notwithstanding any provision herein to the contrary, the Plan Sponsor may in its sole discretion elect to establish and fund a Rabbi Trust for the purpose of providing benefits under the Plan.

 

ARTICLE XIII

Plan Administrator

 

13.1      Appointment of Plan Administrator.  The Plan Sponsor may appoint one or more persons to serve as the Plan Administrator (the “Administrator”) for the purpose of carrying out the duties specifically imposed on the Administrator by the Plan and the Code.  In the event more than one person is appointed, the persons shall form a committee for the purpose of functioning as the Administrator of the Plan.  The person or committeemen serving as Administrator shall serve for indefinite terms at the pleasure of the Plan Sponsor, and may, by thirty (30) days prior written notice to the Plan Sponsor, terminate such appointment.  The Plan Sponsor shall inform the Trustee of any such appointment or termination, and the Trustee may assume that any person appointed continues in office until notified of any change.

 

13.2      Plan Sponsor as Plan Administrator.  In the event that No Administrator is appointed or in office pursuant to paragraph 13.1, the Plan Sponsor shall be the Administrator.

 

13.3      Procedure if a Committee.  If the Administrator is a committee, it shall appoint from its members a Chair and a Secretary.  The Secretary shall keep records as may be necessary of the acts and resolutions of such committee and be prepared to furnish reports thereof to the Plan Sponsor and the Trustee.  Except as otherwise provided, all instruments executed on behalf of such committee may be executed by its Chair or Secretary, and the Trustee may assume that such committee, its Chair or Secretary are the persons who were last designated as such to them in writing by the Plan Sponsor or its Chair or Secretary.

 

13.4      Action by Majority Vote if a Committee.  If the Administrator is a committee, its action in all matters, questions and decisions shall be determined by a majority vote of its members qualified to act thereon.  They may meet informally or take any action without the necessity of meeting as a group.

 

13.5      Appointment of Successors.  Upon the death, resignation or removal of a person serving as, or on a committee which is, the Administrator, the Employer may, but need not, appoint a successor.

 

13.6      Duties and Responsibilities of Plan Administrator.  The Administrator shall have the following duties and responsibilities under the Plan:

 

13.6(a)  The Administrator shall be responsible for the fulfillment of all relevant reporting and disclosure requirements set forth in the Plan, the Code, and the Act, the distribution thereof to Participants and their Beneficiaries and the filing thereof with the appropriate governmental officials and agencies.

 

13.6(b)  The Administrator shall maintain and retain necessary records respecting its administration of the Plan and matters upon which disclosure is required under the Plan, the Code, and the Act.

 

13.6(c)  The Administrator shall make any elections for the Plan required to be made by it under the Plan, the Code, and the Act.

 

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13.7      Power and Authority.

 

13.7(a)  The Administrator is hereby vested with all the power and authority necessary in order to carry out its duties and responsibilities in connection with the administration of the Plan imposed hereunder.  For such purpose, the Administrator shall have the power to adopt rules and regulations consistent with the terms of the Plan.

 

13.7(b)  The Administrator shall exercise its power and authority in its discretion.  The Administrator has the discretionary authority to construe the Plan, correct defects, supply omissions, or reconcile inconsistencies to the extent necessary to effectuate the Plan and such action shall be conclusive.  It is intended that a court review of the Administrator’s exercise of its power and authority with respect to matters relating to claims for benefits by, and to eligibility for participation in and benefits of, Participants and Beneficiaries shall be made only on an arbitrary and capricious standard.  Benefits under the Plan will be paid only if the Administrator decides in its discretion that the applicant is entitled to them.

 

13.7(c)  The Administrator is empowered to settle claims against the Plan and to make such equitable adjustments in a Participant’s or Beneficiary’s rights or entitlements under the Plan as it deems appropriate in the event an error or omission is discovered or claimed in the operation or administration of the Plan.

 

13.8      Availability of Records.  The Employer and the Trustee shall, at the request of the Administrator, make available necessary records or other information they possess which may be required by the Administrator in order to carry out its duties hereunder.

 

13.9      No Action with Respect to Own Benefit.  No Administrator who is a Participant shall take any part as the Administrator in any discretionary action in connection with his participation as an individual.  Such action shall be taken by the remaining Administrator, if any, or otherwise by the Plan Sponsor.

 

ARTICLE XIV

Amendment and Termination of Plan

 

14.1      Amendment or Termination of the Plan.

 

14.1(a)  The Plan may be terminated at any time by the Board, subject to the restrictions imposed by and consistent with applicable provisions of Section 409A.  The Plan may be amended in whole or in part from time to time by the Board effective as of any date specified, subject to the restrictions imposed by and consistent with applicable provisions of Section 409A.  No amendment or termination shall operate to decrease a Participant’s vested Deferral Benefit as of the earlier of the date on which the amendment or termination is approved by the Board or the date on which an instrument of amendment or termination is signed on behalf of the Plan Sponsor.  No amendment shall increase the Trustee’s duties or obligations or decrease its compensation unless contained in an amendment of, or document expressly pertaining to, the Rabbi Trust which includes the Trustee’s written consent or for which the Trustee’s written consent is separately obtained.  Any such termination of or amendment to the Plan may provide for the acceleration of payment of benefits under the Plan to one or more Participants or Beneficiaries.  Any such termination of or amendment to the Plan shall be in writing and shall be adopted pursuant to action by the Board (including pursuant to any standing authorization for any officer, director or committee to adopt amendments) in accordance with its applicable procedures, including where applicable by majority vote or consent in writing.

 

14.1(b)  In addition, and as an alternative, to amendment of the Plan by action of the Board, but subject to the limitations on amendment contained in subparagraph 14.1(a), the Administrator shall be and is hereby authorized to adopt on behalf of the Board and to execute any technical amendment or amendments to the Plan which in the opinion of counsel for the Plan Sponsor are required by law and are deemed advisable by the Administrator and to

 

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so adopt and execute any other discretionary amendment or amendments to the Plan which are deemed advisable by the Administrator so long as any such amendments do not, in view of the Administrator, materially affect the eligibility, vesting or benefit accrual or allocation provisions of the Plan.

 

14.1(c)  Termination of the Plan shall mean termination of active participation by Participants, but shall not mean immediate payment of all vested Deferral Benefits unless the Plan Sponsor so directs, subject to the restrictions imposed by and consistent with applicable provisions of Section 409A.  On termination of the Plan, the Board of the Plan Sponsor may provide for the acceleration of payment of the vested Deferral Benefits of all affected Participants on such basis as it may direct.

 

14.2      Effect of Employer Merger, Consolidation, or Liquidation.  Notwithstanding the foregoing provisions of this ARTICLE XIV, the merger or liquidation of any Employer into any other Employer or the consolidation of two (2) or more of the Employers shall not cause the Plan to terminate with respect to the merging, liquidating or consolidating Employers, provided that the Plan has been adopted or is continued by and has not terminated with respect to the surviving or continuing Employer.

 

ARTICLE XV

Participation by Additional Employers

 

15.1      Adoption by Additional Employers.  Any Affiliate of the Plan Sponsor may adopt the Plan with the consent of the Board of the Plan Sponsor and approval by its Board.

 

15.2      Termination Events with Respect to Employers Other Than the Plan Sponsor.

 

15.2(a)  The Plan shall terminate with respect to any Employer other than the Plan Sponsor, and such Employer shall automatically cease to be a participating Employer in the Plan, upon the happening of any of the following events, subject to the restrictions imposed by and consistent with applicable provisions of Section 409A:

 

(i)          The Employer ceasing to be an Affiliate; or

 

(ii)         Action by the Board or Chief Executive Officer of the Plan Sponsor terminating an Employer’s participation in the Plan and specifying the date of such termination.  Notice of such termination shall be delivered to the Administrator and the former participating Employer.

 

15.2(b)  Termination of the Plan with respect to any Employer shall mean termination of active participation in the Plan of the Participants employed by such Employer, but shall not mean immediate payment of all vested Deferral Benefits with respect to the Employees of such Employer unless the Plan Sponsor so directs consistent with applicable provisions of Section 409A.  On termination of the Plan with respect to any Employer, the Administrator may provide for the acceleration of payment of the vested Deferral Benefits of all affected Participants and Beneficiaries of that former participating Employer on such basis as it may direct.

 

ARTICLE XVI

Miscellaneous

 

16.1      Nonassignability.  The interests of each Participant or Beneficiary under the Plan are not subject to claims of the Participant’s or Beneficiary’s creditors; and neither the Participant, nor his Beneficiary, shall have any right to sell, assign, transfer or otherwise convey the right to receive any payments hereunder or any interest under the Plan,

 

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which payments and interest are expressly declared to be nonassignable and nontransferable and any attempt to assign or transfer any benefit hereunder shall be void ab initio.

 

16.2      Right to Require Information and Reliance Thereon.  The Employer and Administrator shall have the right to require any Participant, Beneficiary or other person receiving benefit payments to provide it with such information, in writing, and in such form as it may deem necessary to the administration of the Plan and may rely thereon in carrying out its duties hereunder.  Any payment to or on behalf of a Participant or Beneficiary in accordance with the provisions of the Plan in good faith reliance upon any such written information provided by a Participant or any other person to whom such payment is made shall be in full satisfaction of all claims by such Participant and his Beneficiary; and any payment to or on behalf of a Beneficiary in accordance with the provision so the Plan in good faith reliance upon any such written information provided by such Beneficiary or any other person to whom such payment is made shall be in full satisfaction of all claims by such Beneficiary.

 

16.3      Notices and Elections.

 

16.3(a)   Except as provided in subparagraph 16.3(b), all notices required to be given in writing and all elections, consents, applications and the like required to be made in writing, under any provision of the Plan, shall be invalid unless made on such forms as may be provided or approved by the Administrator and, in the case of a notice, election, consent or application by a Participant or Beneficiary, unless executed by the Participant or Beneficiary giving such notice or making such election, consent or application.

 

16.3(b)   Subject to limitations under applicable provisions of the Code or the Act, the Administrator is authorized in its discretion to accept other means for receipt of effective notices, elections, consents, applications and/or other forms or communications by Participants and/or Beneficiaries, including but not limited to electronic transmissions through interactive on-line transmissions, e‐mail, voice mail, recorded messages on electronic telephone systems, and other permissible methods, on such basis and for such purposes as it determines from time to time.

 

16.4      Delegation of Authority.  Whenever the Plan Sponsor or any other Employer is permitted or required to perform any act, such act may be performed by its President or Chief Executive Officer or other person duly authorized by its President or Chief Executive Officer or the Board of the Employer.

 

16.5      Service of Process.  The Administrator shall be the agent for service of process on the Plan.

 

16.6      Governing Law.  The Plan shall be construed, enforced, and administered in accordance with the laws of the Commonwealth of Virginia, and any federal law which preempts the same.

 

16.7      Binding Effect.  The Plan shall be binding upon and inure to the benefit of the Employer, its successors and assigns, and the Participant and his Beneficiary (and their heirs, executors, administrators and legal representatives).

 

16.8      Severability.  If any provision of the Plan should for any reason be declared invalid or unenforceable by a court of competent jurisdiction, the remaining provisions shall nevertheless remain in full force and effect.

 

16.9      No Effect on Employment Agreement.  The Plan shall not be considered or construed to modify, amend, or supersede any employment or other agreement between the Employer and the Participant heretofore or hereafter entered into unless so specifically provided.

 

16.10    Gender and Number.  In the construction of the Plan, the masculine shall include the feminine or neuter and the singular shall include the plural and vice-versa in all cases where such meanings would be appropriate.

 

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16.11    Titles and Captions.  Titles and captions and headings herein have been inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof.

 

16.12    Construction.  The Plan and Fund are intended to be construed as a “plan which is unfunded and is maintained by the employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees,” within the meaning of Sections 201(2), 301(a)(3), and 401(a)(1) of the Act, and shall be interpreted and administered accordingly.

 

16.13    Nonqualified Deferred Compensation Plan Omnibus Provision.

 

16.13(a)  It is intended that any compensation, benefits or other remuneration which is provided pursuant to or in connection with the Plan which is considered to be nonqualified deferred compensation subject to Section 409A shall be provided and paid in a manner, and at such time and in such form, as complies with the applicable requirements of Section 409A to avoid a plan failure described in Section 409A(a)(1) of the Code, including without limitation, deferring payment until the occurrence of a specified payment event described in Section 409A(a)(2) of the Code and to avoid the unfavorable tax consequences provided therein for non-compliance, and that, notwithstanding any other provision thereof or document pertaining to any such compensation, benefit or other remuneration subject to the provisions of Section 409A, each provision of any plan, program or arrangement (including without limitation the Plan) relating to the provision of such compensation, benefit or other remuneration to or with respect to the Eligible Employee, shall be so construed and interpreted.

 

16.13(b)  It is specifically intended that all elections, consents and modifications thereto under the Plan will comply with the requirements of Section 409A (including any transition or grandfather rules thereunder).  The Administrator is authorized to adopt rules or regulations deemed necessary or appropriate in connection therewith to anticipate and/or comply the requirements of Section 409A (including any transition or grandfather rules thereunder).

 

16.13(c)  It is also intended that if any compensation, benefits or other remuneration which is provided pursuant to or in connection with the Plan is considered to be nonqualified deferred compensation subject to Section 409A but for being earned and vested as of December 31, 2004, then No material modification of the Plan after October 3, 2004 shall apply to such Plan benefits which are earned and vested as of December 31, 2004 unless such modification expressly so provides.

 

16.14(d)  Notwithstanding the foregoing, the Participant, the Beneficiary, and any successor in interest shall be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on the Participant, the Beneficiary, or any successor in interest in connection with this Plan (including any taxes and penalties under Section 409A); and neither the Plan Sponsor, the Employer, the Administrator nor any Affiliate shall have any obligation to indemnify or otherwise hold the Participant, the Beneficiary, or any successor in interest harmless from any or all of such taxes or penalties.

 

 

September 1, 2017

 

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