Outside Directors Deferral Plan, as amended and restated effective November 19, 2013
VILLAGE BANK
OUTSIDE DIRECTORS DEFERRAL PLAN
Amended and Restated Effective November 19, 2013
VILLAGE BANK
OUTSIDE DIRECTORS DEFERRAL PLAN
Page
| 1.03 | Bankl |
| 1.04 | Beneficiary1 |
| 1.05 | Benefit Commencement Date1 |
| 1.06 | Board] |
| 1.08 | Coi11pa11y2 |
| 1.09 | Company Stock2 |
| 1.10 | Compensation2 |
| 1.11 | Death Benefit2 |
| 1.12 | Deferral Amount2 |
| 1.13 | Deferral Contributions2 |
| 1.14 | Deferral Election2 |
| 1.15 | Deferred Account3 |
| 1.16 | Deferred Benefit3 |
| 1.17 | Deferred Cash Subaccount.3 |
| 1.18 | Deferred Company Stock Subaccount3 |
| 1.20 | Eligible Director.3 |
| 1.21 | Fund3 |
| 1.22 | Participant3 |
| 1.25 | Rabbi Trust.4 |
| 1.26 | Rate ofReturn4 |
| 1.27 | Retirement4 |
| 1.28 | Trustee4 |
| 2.02 | Notice and Election Regarding Active Participation4 |
| 2.03 | Commencement of Active Participation5 |
| 2.04 | Length of Participation5 |
| 3.01 | Deferred Benefit.5 |
| 3.02 | Deferral Election5 |
| 3.03 | Crediting ofEarnings6 |
| 3.04 | Equitable Adjustment in Case of Error or Omission6 |
ARTICLE V VESTING?
| 6.01 | Pre-Benefit Commencement Date Death Benefit.? |
| 6.02 | Post-Benefit Commencement Date Death Benefit7 |
| 7.01 | Payment of Deferred Benefit8 |
| 7.02 | Payment of Death Benefit8 |
| 7.03 | Form of Payment of Deferred Benefit8 |
| 7.05 | Payments to Minors and Incompetents8 |
| 7.07 | Beneficiary Designation9 |
| 7.08 | Delay for Specified Employees9 |
| 8.01 | Funding9 |
| 8.02 | Purchase of Life Insurance10 |
| 8.03 | Rabbi Trust.l 0 |
| 8.04 | Fund Divisions10 |
| 8.05 | Participant Investment Directions10 |
| 9.01 | Appointment of Administrator11 |
| 9.02 | Duties and Responsibilities of Plan Administrator11 |
| 11.01 | Non-assignability11 |
| 11.02 | Notices and Elections12 |
| 11.03 | Delegation of Authority12 |
| 11.04 | Service of Process12 |
| 11.05 | Governing Law12 |
| 11.06 | Binding Effect12 |
| 11.07 | Severability12 |
| 11.08 | Gender and Number12 |
| 11.09 | Titles and Captions13 |
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INTRODUCTION
Effective January I, 2005, the Board of Directors of Village Bank adopted the Outside Directors Deferral Plan (the "Plan"), under which non-employee directors of Village Bank have the opportunity to defer receipt of certain compensation until retirement or departure from the Board. The Plan has been amended and restated effective November 19, 2013 to permit Participants to elect to have all or a portion of their Plan benefit invested in Company Stock to be held in a Rabbi Trust.
ARTICLE I DEFINITIONS
| 1.01 | Administrator |
Administrator means the Compensation Committee of the Board unless responsibility is delegated as provided for in Article IX.
| 1.02 | Affiliate |
Affiliate means any subsidiary, parent, affiliate, or other related business entity to the
Bank.
| 1.03 | Bank |
Bank means Village Bank, or any successor thereto.
| 1.04 | Beneficiary |
Beneficiary means the person or persons designated by a Participant or otherwise entitled pursuant to Section 7.07 to receive benefits under the Plan attributable to such Participant after the death of such Participant.
Benefit Commencement Date means the first day of the month following the Participant's Retirement.
| 1.06 | Board |
Board means the present and any succeeding Board of Directors of the Company and/the Bank, unless such term is used with respect to a particular Affiliate and its Directors, in which event it shall mean the present and any succeeding Board of Directors of that Affiliate.
| 1.07 | Code |
Code means the Internal Revenue Code of 1986, as amended from time to time.
Reference to a particular section of the Code includes reference to any regulations issued by the Department of Treasury and any notices and other releases issued by the Internal Revenue Service interpreting or implementing that Code Section.
| 1.08 | Company |
Company means Village Bank and Trust Financial Corp.
| 1.09 | Company Stock |
Company Stock means shares of Common Stock of the Village Bank and Trust Financial
Corp.
1.10Compensation
Compensation means fees payable to a Participant for service as a member of the Board, including (i) an annual retainer fee ("Retainer") and (ii) meeting or committee fees (collectively referred to as "Additional Fees") paid by the Bank to an Eligible Director, but excluding any such compensation deferred from a prior period, expense reimbursement and allowances and benefits not normally paid in cash to the Participant.
1.llDeath Benefit
Death Benefit means the benefit with respect to a Participant due a Participant's Beneficiary, determined in accordance with Article VI.
| 1.12 | Deferral Amount |
Deferral Amount means, with respect to each Plan Year, the sum of the Deferral Contributions of a Participant with respect to his Retainer and/or his Additional Fees to be paid during the Plan Year.
| 1.13 | Deferral Contributions |
Deferral Contributions means that portion of a Participant's Compensation which is deferred under the Plan.
| 1.14 | Deferral Election |
Deferral Election means an irrevocable election of a Deferral Amount in writing executed by the Eligible Director or Participant and timely filed with the Administrator.
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| 1.15 | Deferred Account |
Subject to Plan section 1.20 and Article VIII, Account means the unfunded, bookkeeping account maintained on the books of the Bank for a Participant which reflects his interest in amounts attributable to his Deferral Contributions under the Plan.
| 1.16 | Deferred Benefit |
Deferred Benefit means the balance in a Participant's Deferred Account.
| 1.17 | Deferred Cash Subaccount |
Deferred Cash Subaccount means, with respect to a Participant, the Deferred Cash Subaccount established for the Participant pursuant to Article IV.
| 1.18 | Deferred Company Stock Subaccount |
Deferred Company Stock Subaccount means, with respect to a Participant, the Deferred Company Stock Subaccount established for the Participant pursuant to Article IV.
| 1.19 | Director |
Director means an individual who serves as a member of the Board.
| 1.20 | Eligible Director |
Eligible Director means a Director who is not an employee of the Company or the Bank.
| 1.21 | Fund |
If a trust fund is established and maintained for the Plan, Fund means that trust fund, which shall consist of the Fund divisions described in Plan Section 8.04. Notwithstanding the foregoing, any reference to the Fund is intended only for purposes of providing a measurement of benefits and account balances under the Plan and is not intended to segregate assets or identify assets that may or must be used to satisfy benefit liabilities under the Plan.
| 1.22 | Participant |
Participant means an Eligible Director who elects to participate in the Plan, and further differentiated as follows:
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| 1.23 | Plan |
Plan means the Village Bank Outside Directors Deferral Plan.
| 1.24 | Plan Year |
Plan Year means the calendar year.
| 1.25 | Rabbi Trust |
Rabbi Trust means a trust fund described in Plan Section 8.03 and established or maintained for the Plan.
Rate of Return means the fixed rate of return for allocations made by a Participant to his Deferred Cash Subaccount. Such rate of return shall be established by the Board of Directors in its sole discretion prior to the beginning of each Plan Year.
| 1.27 | Retirement |
Retirement means a Participant's termination of service from the Board, provided such event constitutes a separation from service within the meaning of Treasury Regulation
Section 1.409A-1(h).
| 1.28 | Trustee |
Trustee means the entity serving from time to time as trustee of the Fund pursuant to any Rabbi Trust.
ARTICLE II ELIGIBILITY AND PARTICIPATION
| 2.01 | Eligibility |
Each Eligible Director shall be eligible to participate in the Plan and to defer Compensation hereunder for such Plan Year.
| 2.02 | Notice and Election Regarding Active Participation |
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later than the December 31 preceding such Plan Year. An individual who becomes an Eligible Director during a Plan Year must file a Deferral Election with the Administrator within 30 days after becoming an Eligible Director.
thereto.
| (ii) |
To be bound by all terms and conditions of the Plan and all amendments
| 2.03 | Commencement of Active Participation |
An Eligible Director shall become an Active Participant with respect to a Plan Year only ifhe is expected to have Compensation during such Plan Year, and he timely files and has in effect a Deferral Election for such Plan Year.
| 2.04 | Length of Participation |
An individual who is or becomes a Participant shall be or remain an Active Participant as long as he has a Deferral Election in effect; and he shall be or remain an Inactive Participant as long as he is entitled to future benefits under the terms of the Plan and is not considered an Active Participant.
ARTICLE III DETERMINATION OF DEFERRAL
| 3.01 | Deferred Benefit |
A Participant's Deferred Benefit shall be the balance in his Deferred Account as of the date of determination.
section 2.02(a).
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| (b) | The following conditions apply: |
section 2.02(a).
| 3.04 | Equitable Adjustment in Case of Error or Omission |
If an error or omission is discovered in a Participant's Deferred Account, the Administrator shall make such equitable adjustment as the Administrator deems appropriate.
ARTICLE IV
DEFERRED ACCOUNTS AND INVESTMENTS
A separate Deferred Account under the Plan shall be established for each Participant.
Such Deferred Account shall be (a) credited with the amounts deferred in accordance with Plan Section 3.02, (b) credited with investment earnings, and (c) charged with the amounts paid by the
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Plan to or on behalf of the Participant in accordance with Article VII. With each Participant's Deferred Account, separate subaccounts shall be maintained to the extent that the Board determines them necessary or useful in the administration of the Plan, including a Deferred Company Stock Subaccount for Participants who select Company Stock as an investment on their Deferral Election.
ARTICLEV VESTING
A Participant's Deferred Account shall be fully vested and non-forfeitable at all times.
ARTICLE VI DEATH BENEFITS
In the event that a Participant dies prior to his Benefit Commencement Date, the Beneficiary of such Participant shall be entitled to receive as a Death Benefit an amount equal to the Deferred Benefit that the Participant would have received as of his date of death. This Death Benefit shall be calculated by (a) increasing the Participant's Account by any amounts that have been deferred and amounts not yet credited to the Account, and (b) increasing the value of the Participant's Deferred Cash Subaccount and/or Deferred Company Stock Subaccount, as applicable, by the amount that would have been credited as interest at the Rate of Return (for the Deferred Cash Subaccount) or gains and losses on the underlying Company Stock (for the Deferred Company Stock Subaccount) from the date of death through the Beneficiary's Benefit Commencement Date. This Death Benefit shall begin to be paid on the first of January after the Participant's date of death. The Participant's Deferred Cash Subaccount shall accrue interest thereafter at the Rate of Return, and the Participant's Deferred Company Stock Subaccount, if applicable, shall be credited with gains and losses on the underlying Company Stock.
| 6.02 | Post-Benefit Commencement Date Death Benefit |
In the event that a Participant dies after his Benefit Commencement Date, then the Beneficiary of such Participant shall be entitled to receive as a Death Benefit a continuation of the payment of the Deferred Benefit in the same manner and in the same amount that the Participant would have received had the Participant lived to receive the Deferred Benefit.
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ARTICLE VII PAYMENT OF BENEFITS
| 7.01 | Payment of Deferred Benefit |
A Participant's Deferred Benefit, if any, shall become payable to the Participant as of the Benefit Commencement Date. Each of the Participant's installment payments shall be comprised of accrued interest, if any, and that portion of the Participant's Deferred Benefit equal to the balance in the Participant's Deferred Account.
| 7.02 | Payment of Death Benefit |
A Participant's pre-benefit commencement Death Benefit shall be payable to his Beneficiary as set forth in Article VI and shall be paid in installments payable over a ten-year period beginning as of the January 1 following the Participant's date of death.
| 7.03 | Form of Payment of Deferred Benefit |
A Participant's Deferred Account shall be paid in cash and/or Company Stock, in accordance with the applicable Deferral Election form.
| 7.04 | Benefit Determination and Payment Procedure |
The Administrator shall make all determinations concerning eligibility for benefits under the Plan, the time or terms of payment, and the form or mariner 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 Bank of each such determination that benefit payments are due and provide to the Bank all other information necessary to allow the Bank to carry out such determination, whereupon the Bank shall pay such benefits in accordance with the Administrator's determination.
| 7.05 | 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.
| 7.06 | Distribution of Benefit When Distributee Cannot Be Located |
The Administrator shall make all reasonable attempts to determine the identity and/or whereabouts of a Participant or a Participant's Beneficiary entitled to benefits under the Plan, including the mailing by certified mail of a notice to the last known address shown on the Bank's or the Administrator's records. If the Administrator is unable to locate such a person entitled to
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benefits hereunder, or if there has been no claim made for such benefits, the Bank shall continue to hold the benefit due such person, subject to any applicable statute of escheats.
| 7.07 | Beneficiary Designation |
| 7.08 | Delay For Specified Employees |
Because the Plan is only for Eligible Directors (those who are not employees of the Bank), it is not expected that any Participants will be Specified Employees under Code
Section 409A. However, in the event that a Participant is a Specified Employee at the time of his separation from service, then notwithstanding any other provision of the Plan, unless the Participant's separation from service is by reason of the Participant's death, then any amount that becomes payable under the Plan due to the Participant's separation from service will be paid on the first day that is six months after the date on which the Participant's separation from service occurs.
ARTICLE VIII
FUNDING
| 8.01 | Funding |
All Plan Participants and Beneficiaries are general unsecured creditors of the Bank with respect to the benefits due hereunder and the Plan constitutes a mere promise by the Bank to make benefit payments in the future. It is the intention of the Bank that the Plan be considered unfunded for tax purposes.
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| 8.02 | Purchase of Life Insurance |
The Bank may, but is not required to, purchase life insurance in amounts sufficient to provide some or all of the benefits provided under this Plan or may otherwise segregate assets for such purpose.
| 8.03 | Rabbi Trust |
The Bank may, but is not required to, establish a Rabbi Trust which may be used to hold assets of the Bank which are maintained as reserves against the Bank's unfunded, unsecured obligations hereunder. Such reserves shall at all times be subject to the claims of the Bank's creditors. To the extent such trust or other vehicle is established, and assets contributed, for the purpose of fulfilling the Bank's obligation hereunder, then such obligation of the Bank shall be reduced to the extent such assets are utilized to meet its obligations hereunder. To the extent any benefits provided under the Plan are paid from a Rabbi Trust, the Bank will have no further obligation to pay Plan benefits. Any Plan benefits not paid from the Rabbi Trust will remain the Bank's obligation.
| 8.04 | Fund Divisions |
8.5Participant Investment Directions
The Deferred 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 the Participant's Deferred Account, but any such direction shall not give the Participant any right, title or interest in any specific asset or assets of the Fund.
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ARTICLE IX PLAN ADMINISTRATOR
| 9.01 | Appointment of Administrator |
The Plan shall be administered by the Compensation Committee. The Compensation Committee may appoint one or more persons to serve as the Administrator for the purpose of administering the Plan. 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 Compensation Committee, and may, by 30 days prior written notice to the Compensation Committee, terminate such appointment.
| 9.02 | Duties and Responsibilities of Plan Administrator |
ARTICLEX
AMENDMENT OR TERMINATION OF PLAN
The Board may amend or terminate the Plan from time to time, effective as of any date specified. Any such action taken by the Board shall be evidenced by a resolution and shall be communicated to Participants and Beneficiaries prior to the effective date thereof. No amendment or termination shall decrease a Participant's Deferred Benefit accrued prior to the effective date of the amendment or termination.
ARTICLE XI MISCELLANEOUS
| 11.01 | Nonassignability |
The interests of each Participant under the Plan are not subject to claims of the Participant's creditors; and neither the Participant nor his Beneficiary shall have any right to sell,
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assign, transfer or otherwise convey the right to receive any payments hereunder or any interest under the Plan, which payments and interest are expressly declared to be non-assignable and nontransferable.
| 11.02 | Notices and Elections |
All notices required to be given in writing and all elections 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 or election by a Participant or Beneficiary, unless executed by the Participant or Beneficiary giving such notice or making such election. Notices and elections shall be deemed given or made when received by any member of the committee that serves as Administrator.
| 11.03 | Delegation of Authority |
Whenever the Bank is permitted or required to perform any act, such act may be performed by its Chief Executive Officer or President or other person duly authorized by its Chief Executive Officer or President or its Board.
| 11.04 | Service of Process |
The Administrator shall be the agent for service of process on the Plan.
| 11.05 | Governing Law |
The Plan shall be construed, enforced and administered in accordance with the laws of the Commonwealth of Virginia.
| 11.06 | Binding Effect |
The Plan shall be binding upon and inure to the benefit of the Bank, its successors and assigns, and the Participant and his heirs, executors, administrators and legal representatives.
| 11.07 | 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.
| 11.08 | 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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| 11.09 | 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.
11.10 Code Section 409A
The Plan is intended to comply with Code Section 409A, and it will be construed and administered accordingly. The provisions of the Plan and all Deferral Elections under the Plan will be effected, construed, interpreted, and applied in a manner consistent with Code
Section 409A. To the extent that any terms of the Plan or a Deferral Election would subject any Participant to gross income inclusion, interest, or additional tax pursuant to Code Section 409A, those terms are to that extent superseded by the applicable Section.
IN WITNESS WHEREOF, the Company and the Bank have caused this Plan to be executed by their duly authorized officers.
VILLAGE BANK AND TRUST
FINANCIAL CORP.
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