UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report: February 8, 2006 Commission File Number: 0-15204
National Bankshares, Inc.
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(Exact name of Registrant as specified in its charter)
Virginia 54-1375874
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
101 Hubbard Street
Blacksburg, VA 24060
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(Address of principal executive offices)
Registrant's telephone number, including area code (540) 951-6300
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Page 1 of 3 Pages
ITEM 1.01 - ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On February 8, 2006, National Bankshares, Inc. subsidiary, the National Bank of
Blacksburg (NBB), entered into new salary continuation agreements with James G.
Rakes, Chairman, President and Chief Executive Officer of both the Company and
of NBB, and also with F. Brad Denardo, Corporate Officer of the Company and
Executive Vice President and Chief Operating Officer of NBB. On the same date,
National Bankshares, Inc. subsidiary, Bank of Tazewell County (BTC), entered
into a new salary continuation agreement with J. Robert Buchanan, Treasurer of
the Company and Executive Vice President and Chief Operating Officer of BTC, and
National Bankshares, Inc. entered into a new salary continuation agreement with
Marilyn B. Buhyoff, Secretary of the Company. The named executive officers are
part of a select group of Company and subsidiary bank executives who receive
similar benefits under a salary continuation plan that is funded by an
investment in and bank subsidiary-owned life insurance policies on the
lives of the executives. The executives and their beneficiaries are unsecured
creditors of the Company and the subsidiary banks with respect to the benefits
under the salary continuation plan.
Each of the salary continuation agreements provides an annual benefit for the
executive officer at normal retirement age (age 65), that is payable for the
greater of 15 years or the executive's lifetime. If the executive dies before
receiving annual benefit for 15 years, the benefit is paid to the executive's
beneficiary for the remainder of that period. A reduced benefit is payable upon
the executive's early termination, disability or upon a change in control of the
executive's employer. "Early termination", "disability" and "change in control"
are each defined in the salary continuation agreements. A death benefit that is
equal in amount to the retirement benefit is paid to the executive's beneficiary
for 15 years in the event of the executive's death while an active employee. No
benefit is payable if the executive is terminated for cause, as that term is
defined in the agreement.
The salary continuation agreement with Mr. Rakes provides that he will receive
annual payments of $106,268 beginning at normal retirement in 2009. The
agreement with Mr. Denardo calls for annual payments of $44,476 at his normal
retirement in 2017. Under his agreement, Mr. Buchanan will be paid annual
payments of $28,225 at normal retirement in 2016. The salary continuation
agreement with Mrs. Buhyoff provides for annual payments of $28,513 at normal
retirement in 2013.
A copy of each of the salary agreements with Mr. Rakes, Mr. Denardo, Mr.
Buchanan and with Mrs. Buhyoff are attached as Exhibit 10(iii)(A).
Page 2 of 3 Pages
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NATIONAL BANKSHARES, INC.
Date: February 8, 2006 By: /s/ JAMES G. RAKES
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James G. Rakes
Chairman
President and Chief Executive Officer
Page 3 of 3 Pages