TowneBank : Form 8-K~Current Report

FEDERAL DEPOSIT INSURANCE CORPORATION

Washington, D.C. 20429

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 18, 2023

(Exact name of registrant as specified in its charter)

(Registrant's telephone number, including area code): (757) 638-7500

No change

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

• Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
• Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
• Pre-commencementcommunications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
• Pre-commencementcommunications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On December 18, 2023, TowneBank and G. Robert Aston, Jr., its Executive Chairman of the Board, entered into a Supplemental Executive Retirement Plan Agreement Amendment, effective as of January 1, 2023 (the "Aston SERP Amendment"). The Aston SERP Amendment amended the Supplemental Executive Retirement Plan Agreement between the parties, originally effective January 1, 2008, as subsequently amended and restated effective December 31, 2015, to provide for an increased retirement benefit while Mr. Aston continues to work for TowneBank. As of its effective date, the Aston SERP Amendment will provide a retirement benefit equal to an annual amount of $740,123 increased by a rate of 4% per year compounded annually on December 31 of each year until Mr. Aston's separation from service. The retirement benefit will continue to increase as Mr. Aston continues in service and is payable in monthly installments for a period of 15 years. The Aston SERP Amendment also provides for subsequent changes in the time and form of payment in accordance with applicable Treasury regulations under section 409A of the Internal Revenue Code of 1986, as amended (the "Code").

Also on December 18, 2023, TowneBank and William B. Littreal, its Senior Executive Vice President and Chief Financial Officer, entered into a Supplemental Executive Retirement Plan Agreement, effective as of January 1, 2023 (the "Littreal SERP Agreement"). The Littreal SERP Agreement amended and restated the Supplemental Executive Retirement Plan Agreement between the parties, originally effective August 14, 2012, as subsequently amended and restated effective January 1, 2019, to provide for an increased retirement benefit commensurate with Mr. Littreal's current salary. As of its effective date, the Littreal SERP Agreement will provide an annual retirement benefit equal to 50% of Mr. Littreal's 2023 base salary ($750,000) with an annual 4% increase until age 65. Accordingly, assuming a full service period through March 13, 2035, the annual retirement benefit under the Littreal SERP Agreement at that time will equal $600,387. The retirement benefit is payable in monthly installments for a period of 15 years. The Littreal SERP Agreement also provides for subsequent changes in the time and form of payment in accordance with applicable Treasury regulations under section 409A of the Code.

The foregoing descriptions of the Aston SERP Amendment and the Littreal SERP Agreement are qualified in their entirety by reference to the full text of each such agreement, which are attached as Exhibits 10.1 and 10.2, respectively, to this report and incorporated by reference into this Item 5.02.

Item 9.01 Financial Statements and Exhibits.

1. Exhibits.

1. Supplemental Executive Retirement Plan Agreement Amendment, effective as of January 1, 2023, between TowneBank and G. Robert Aston, Jr..
2. Supplemental Executive Retirement Plan Agreement, effective as of January 1, 2023, between TowneBank and William B. Littreal.

1

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

2

Exhibit 10.1

[Execution Copy]

TOWNEBANK

SUPPLEMENTAL RETIREMENT PLAN AGREEMENT AMENDMENT

FOR

G. ROBERT ASTON, JR

Originally Effective January 1, 2008

Amended December 31, 2015

Amended January 1, 2023

Exhibit 10.1

The TowneBank Supplemental Executive Retirement Plan Agreement (the "Plan") between TowneBank, a Virginia banking corporation (the "Bank"), and G. Robert Aston, Jr. (the "Participant"), effective January 1, 2008, and amended and restated effective December 31, 2015, is amended further as set forth herein effective January 1, 2023. The amended Plan provides for annual increases to the Retirement Benefit (as defined in the Plan) while the Participant continues to work for the Bank.

AMENDED & RESTATED

ARTICLE III

BENEFITS

1. Section 1.10 is amended and restated as follows:
2. 1. Retirement Benefit. The benefit represents an amount equal to seven hundred forty thousand one hundred twenty-three dollars ($740,123) increased by a rate of four percent (4%) per year compounded annually on each December 31st and continuing until the Participant's Retirement, as described in the schedule under Section 3.03.
3. A new Section 1.14 is added to the Plan as follows:
4. 1. Death Benefits. The benefits payable to the Beneficiary upon the Participant's death as described in Section 3.07.
5. The first paragraph of Section 3.01 is amended in its entirety to read as follows:
6. 1. Retirement Benefit. Upon Retirement, the Participant shall be entitled to an annual Retirement Benefit equal to seven hundred forty thousand one hundred twenty- three dollars ($740,123) increased by a rate of four percent (4%) per year compounded annually on each December 31st and continuing until the Participant's Retirement, as described in the schedule under Section 3.03.
7. The table in Section 3.03 is amended in its entirety to read as follows:

5. Section 3.03 is amended further by replacing the last two sentences therein with the following:

Retirement and Death Benefits shall be paid in equal monthly payments for a 15-year period, commencing on the first day of the month following separation from service, or as soon as administratively possible thereafter, after May 21, 2020 (or, in the event of death, within 90 days following the Participant's death). For the avoidance of doubt, if the Vested Benefit is $832,537, the benefit will be paid in monthly payments of $69,378.08 (i.e., $832,537 / 12) for 15 years, for an aggregate total payment of $12,488,055 (i.e., $69,378.08 x 180). Notwithstanding any other provision of the Plan, payment to a Key Employee upon separation from service other than death or Disability shall not begin until at least six months following such termination. For the avoidance of doubt, if the Participant continues to be employed past December 31, 2028, the Retirement Benefit will continue to increase in accordance with Section 3.01. In addition, in the event the Participant (i) dies prior to termination of employment or (ii) terminates employment due to Disability, the Participant shall become fully vested in, and entitled to the payment of, the Vested Benefit amount determined as of the end of the calendar year in which such death or Disability occurs.

1. Section 3.07 is amended by adding a new subsection (c) to the end thereof:
2. 1. Notwithstanding the foregoing, pursuant to Section 9.07, the Participant shall be permitted to make a subsequent election concerning a delay in payment or a change in the form of payment with respect to the Death Benefits payable to the Participant's Beneficiary under this Section 3.07 on a form provided by the Bank.
3. Section 9.07 is amended by adding the following to the end thereof:

In accordance with Treasury Regulation Section 1.409A-2(b), this Agreement shall permit under a subsequent election a delay in payment or a change in the form of payment, provided the following conditions are met: (i) such election does not take effect until at least 12 months after the date on which such election is made; (ii) in the case of

Exhibit 10.1

an election related to a payment not described in Treasury Regulations Sections 1.409A- 3(a)(2) (payment on account of disability) or 1.409A-3(a)(3) (payment on account of death), the payment with respect to which such election is made must be deferred for a period of not less than five years from the date such payment otherwise would have been paid; and (iii) an election related to a payment described in Treasury Regulations Section 1.409A-3(a)(4) (payment at a specified time or pursuant to a fixed schedule) shall be made not less than 12 months before the date the payment is scheduled to be paid (or in the case of installment payments treated as a single payment, 12 months before the first amount was scheduled to be paid).

A subsequent election under this Section 9.07 shall be made on a form provided by the Bank and, if valid, shall be irrevocable once submitted. If the Participant experiences a separation from service within 12 months after submitting a subsequent election under this Section 9.07, the subsequent election shall be void and of no effect.

8. In all respects not amended, the Plan is ratified and confirmed.

AMENDED & RESTATED

ARTICLE XI

ADOPTION

The Bank has adopted this Plan pursuant to action taken by the Board of Directors.

As evidence of its adoption of the Plan, the Bank and the Participant have caused this document to be signed this 18th day of December, 2023.

TOWNEBANK

Signed: /s/ W. Ashton Lewis

By: W. Ashton Lewis

Its: Chairman, Compensation Committee

PARTICIPANT

Signed: /s/ G. Robert Aston, Jr.

By: G. Robert Aston, Jr.

Exhibit 10.2

[Execution Copy]

TOWNEBANK

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT

FOR

WILLIAM B. LITTREAL

Amended & Restated Effective January 1, 2023

Exhibit 10.2

INTRODUCTION

This TowneBank Supplemental Executive Retirement Plan Agreement between TowneBank, a Virginia banking corporation (the "Company"), and William B. Littreal (the "Participant") was originally effective August 14, 2012, as amended and restated effective January 1, 2019, and was amended and restated further as set forth herein effective January 1, 2023 (the "Plan").

The Company desires to provide an unfunded, nonqualified supplemental retirement benefit to the Participant, who is a select management and highly compensated employee who contributes materially to the long-term stability and financial success of the Company. Benefits under this Plan are intended to supplement benefits under the Company's tax-qualified retirement plan. The Company has determined that the benefits to be paid to the Participant constitute reasonable compensation for the services to be rendered by the Participant.

ARTICLE I

DEFINITIONS

The following phrases or terms have the indicated meanings:

1.01 Affiliate. Any business entity that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the Company.

1.02 Beneficiary. The person, persons, entity, entities or the estate of the Participant entitled to receive benefits under the Plan in accordance with a properly completed beneficiary designation form. If the Participant fails to complete a beneficiary designation form, or the form is incomplete, Beneficiary means the Participant's surviving spouse if he is married as of his date of death; otherwise, the Participant's estate. The Participant may amend or change his Beneficiary designation in accordance with procedures established by the Board.

1.03 Board. The Board of Directors of the Company.

1. 1.04 Cause. If the Participant is a party to an employment, change in control, or service agreement with the Company or an Affiliate and such agreement provides for a definition of Cause, the definition of Cause contained in the applicable agreement that is then in effect and governing the terms of the employment relationship. In all other cases, Cause shall mean:

2. Continual or deliberate neglect by the Participant in the performance of his material duties and responsibilities as established from time to time by the Board, or the Participant's willful failure to follow reasonable instructions or policies of the Company, in either case, after being advised in writing of such failure and being given a reasonable opportunity and period (as determined by the Board) to remedy such failure of not less than thirty (30) days (provided that such conduct is, in the reasonable discretion of the Board, susceptible to a cure);