EXHIBIT 10.10
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
EXECUTIVE AGREEMENT
THIS AGREEMENT is made and entered into this 10th day of August, 2000,
by and between The Fauquier Bank, a Bank organized and existing under the laws
of the Commonwealth of Virginia, (hereinafter referred to as the, "Bank"), and
C. Xxxxxx Xxxxxxx, an Executive of the Bank (hereinafter referred to as the,
"Executive").
WHEREAS, the Executive is now in the employ of the Bank and has for
many years faithfully served the Bank. It is the consensus of the Board of
Directors (hereinafter referred to as the, "Board") that the Executive's
services have been of exceptional merit, in excess of the compensation paid and
an invaluable contribution to the profits and position of the Bank in its field
of activity. The Board further believes that the Executive's experience,
knowledge of corporate affairs, reputation and industry contacts are of such
value, and the Executive's continued services so essential to the Bank's future
growth and profits, that it would suffer severe financial loss should the
Executive terminate their services;
ACCORDINGLY, the Board has adopted the Fauquier Bank Executive
Supplemental Retirement Plan (hereinafter referred to as the, "Executive Plan")
and it is the desire of the Bank and the Executive to enter into this agreement
which the Bank will agree to make certain payments to the Executive upon the
Executive's retirement and to the Executive's beneficiary(ies) in the event of
the Executive's death pursuant to the Executive Plan;
FURTHERMORE, it is the intent of the parties hereto that this Executive
Plan be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Executive, and to be considered a
non-qualified benefit plan for purposes of the Employee Retirement Security Act
of 1974, as amended ("ERISA"). The Executive is fully advised of the Bank's
financial status and has had substantial input in the design and operation of
this benefit plan; and
NOW THEREFORE, in consideration of services the Executive has performed
in the past and those to be performed in the future, and based upon the mutual
promises and covenants herein contained, the Bank and the Executive agree as
follows:
I. DEFINITIONS
A. Effective Date:
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The Effective Date of the Plan shall be June 30, 2000.
B. Plan Year:
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Any reference to the "Plan Year" shall mean a calendar year from
January 1st to December 31st. In the year of implementation, the
term the "Plan Year" shall mean the period from the Effective Date to
December 31st of the year of the Effective Date.
C. Retirement Date:
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Retirement Date shall mean retirement from service with the Bank which
becomes effective on the first day of the calendar month following the
month in which the Executive reaches age sixty-five (65) or such later
date as the Executive may actually retire.
D. Termination of Service:
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Termination of Service shall mean the Executive's voluntary resignation
of service by the Executive or the Bank's discharge of the Executive
without Cause, prior to the Normal Retirement Age [Subparagraph I (J)].
E. Pre-Retirement Account:
----------------------
A Pre-Retirement Account shall be established as a liability reserve
account on the books of the Bank for the benefit of the Executive.
Prior to the Executive's Retirement Date [Subparagraph I (C)l, such
liability reserve account shall be increased or decreased each Plan
Year, until the aforestated event occurs, by the Index Retirement
Benefit [Subparagraph I (F)].
F. Index Retirement Benefit
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The Index Retirement Benefit for each Executive in the Executive Plan
for each Plan Year shall be equal to the excess (if any) of the Index
[Subparagraph I (G)] for that Plan Year over the Cost of Funds Expense
[Subparagraph I (H)] for that Plan Year.
G. Index:
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The Index for any Plan Year shall be the aggregate annual after-tax
income from the life insurance contract(s) described hereinafter as
defined by FASB Technical Bulletin 85-4. This Index shall be applied as
if such insurance contract(s) were purchased on the Effective Date of
the Executive Plan.
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Insurance Company: Jefferson Pilot Life Insurance Company
Policy Form: Flexible Premium Adjustable Life
Policy Name: Executive Security Plan VI
Insured's Age and Sex: 61, Male
Riders: None
Ratings: None
Option: Level
Face Amount: $690,000
Premiums Paid: $374,500
Number of Premium Payments: Single
Assumed Purchase Date: June 30,2000
Insurance Company: ING Southland Life Insurance Company
Policy Form: Flexible Premium Adjustable Life
Policy Name: Max Universal Life
Insured's Age and Sex: 61, Male
Riders: None
Ratings: None
Option: Level
Face Amount: $670,077
Premiums Paid: $374,500
Number of Premium Payments: Single
Assumed Purchase Date: June 30,2000
If such contracts of life insurance are actually purchased by the Bank, then the
actual policies as of the dates they were actually purchased shall be used in
calculations under this Executive Plan. If such contracts of life insurance are
not purchased or are subsequently surrendered or lapsed, then the Bank shall
receive annual policy illustrations that assume the above-described policies
were purchased or had not subsequently surrendered or lapsed, which illustration
will be received from the respective insurance companies and will indicate the
increase in policy values for purposes of calculating the amount of the Index.
In either case, references to the life insurance contracts are merely for
purposes of calculating a benefit. The Bank has no obligation to purchase such
life insurance and, if purchased, the Executives and their beneficiary(ies)
shall have no ownership interest in such policy and shall always have no greater
interest in the benefits under this Executive Plan than that of an unsecured
creditor of the Bank.
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H. Cost of Funds Expense:
---------------------
The Cost of Funds Expense for any Plan Year shall be calculated by
taking the sum of the amount of premiums for the life insurance
policies described in the definition of "Index" plus the amount of any
after-tax benefits paid to the Executive pursuant to the Executive Plan
(Paragraph II hereinafter) plus the amount of all previous years
after-tax Costs of Funds Expense, and multiplying that sum by the
Average After-Tax Cost of Funds [Subparagraph I (K)].
I. Change of Control:
-----------------
For purposes of this Agreement, a Change of Control of the Bank occurs
if, after the date of this Agreement, (i) any person, including a
"group" as defined in Section 13(d)(3) of the Securities Exchange Act
of 1934 (but excluding any group of which the Executive is a member),
becomes the owner or beneficial owner of securities of the Bank or of
Fauquier Bankshares, Inc. (the "Holding Company") having 20% or more of
the combined voting power of the then outstanding Bank or Holding
Company securities that may be cast for the election of the Bank or
Holding Company directors other than a result of the issuance of
securities initiated by the Bank or Holding Company, as long as the
majority of the Board of Directors approving the purchases is a
majority at the time the purchases are made; or (ii) as the direct or
indirect result of, or in connection with, a tender or exchange offer,
a merger or other business combination, a sale of assets, contested
election, or any combination of these events, the persons who were
directors of the Bank or Holding Company before such events cease to
constitute a majority of the Bank's or Holding Company's Board, or any
successor's board, within two years of the last date of such
transactions. For purposes of this Agreement, the Control Change Date
is the date on which an event described in (i) or (ii) occurs. If a
Change of Control occurs on account of a series of transactions, the
Control Change Date is the date of the last of such transactions.
J. Normal Retirement Age:
---------------------
Normal Retirement Age shall mean the date on which the Executive
attains age sixty-five (65).
K. Average After-Tax Cost of Funds:
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Average After-Tax Cost of Funds means, at any particular time, a ratio,
the numerator of which is the total interest expense as set forth on
Schedule RI-Income Statement on the Bank's most recently filed
Consolidated Report of Condition and Income (the "Call Report") and the
denominator of which is an amount equal to: (i) the amount of deposits
in domestic
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offices (sum of total of columns A and C from Schedule RC-E of the Call
Report), plus (ii) the amount of Federal funds purchased and securities
sold under agreements to repurchase, as set forth on Schedule
RC-Balance Sheet of the Call Report.
II. INDEX BENEFITS
A. Retirement Benefits:
-------------------
Unless terminated for Cause under Subparagraph II (D) hereinafter, an
Executive who remains in the employ of the Bank until the Normal
Retirement Age [Subparagraph I (J)] shall be entitled to receive the
balance in the Pre-Retirement Account in one hundred eighty (180) equal
monthly installments commencing thirty (30) days following the
Executive's retirement. In addition to these payments and commencing in
conjunction therewith, the Index Retirement Benefit [Subparagraph I
(F)] for each Plan Year subsequent to the Executive's retirement, and
including the remaining portion of the Plan Year following said
retirement, shall be paid to the Executive until the Executive's death.
Notwithstanding the foregoing, the total amount of said benefit (i.e.
the Pre-Retirement Account and the Index Retirement Benefit combined or
the Index Retirement Benefit alone) to be received by the Executive at
the Retirement Date shall be a maximum of $30,000.00. For each year
thereafter that the Executive receives a benefit, said total maximum
benefit amount shall be increased by four percent (4%) from the
previous years benefit amount.
B. Termination of Service:
----------------------
Unless terminated for Clause under Subparagraph II (U), should an
Executive suffer a Termination of Service the Executive shall be
entitled to receive the balance in the Pre-Retirement Account payable
to the Executive in one hundred eighty (180) equal monthly installments
commencing thirty (30) days following the Executive's Normal Retirement
Age [Subparagraph I (J)]. In addition to these payments and commencing
in conjunction therewith, the Index Retirement Benefit for each Plan
Year subsequent to the year in which the Executive attains Normal
Retirement Age, and including the remaining portion of the Plan Year in
which the Executive attains Normal Retirement Age, shall be paid to the
Executive until the Executive's death.
Notwithstanding the foregoing. the maximum total amount of said benefit
(i.e. the Pre-Retirement Account and the Index Retirement Benefit
combined or the Index Retirement Benefit) to be received by the
Executive at Normal Retirement Age shall be the Executive`s vested
percentage in
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said benefits, as set forth hereinabove, times $30,000.00. For each
year thereafter that the Executive receives a benefit, said total
maximum benefit amount shall be increased by four percent (4%) from the
previous years benefit amount.
C. Death.
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Should the Executive die prior to having received the balance of the
Pre-Retirement Account the Executive is entitled to under the terms of
this Executive Plan, the entire unpaid balance of the Executive's Pre-
Retirement Account shall be paid in a lump sum to the individual or
individuals the Executive may have designated in writing and filed with
the Bank. In the absence of any effective designation of
beneficiary(ies), the unpaid balance shall be paid as set forth herein
to the duly qualified executor or administrator of the Executive's
estate. Said payment due hereunder shall be made the first day of the
second month following the decease of the Executive. Provided, however,
that anything hereinabove to the contrary notwithstanding, no death
benefit shall be payable hereunder if the Executive dies on or before
the 30th day of June, 2002.
D. Discharge for Cause:
-------------------
The Bank may terminate the Executive's employment for Cause. For the
purposes of this Agreement, "Cause" shall mean the Executive's gross
negligence or willful misconduct, which is detrimental to the best
interests of the Bank's business operations. For purposes of this
paragraph, no act, or failure to act, on the Executive's part shall be
considered "willful" unless done, or omitted to be done, by him not in
good faith and without reasonable belief that his act or omission was
in the best interest of the Bank; provided that any act or omission to
act on the Executive's behalf in reliance upon an opinion of counsel to
the Bank or counsel to the Executive's shall be deemed to be
willful. Notwithstanding the foregoing, the Executive shall not be
deemed to have been terminated for Cause unless and until there shall
have been delivered to him a copy of a certification by a majority of
the outside members of the Board of Directors of the Bank finding that,
in the good faith opinion of such majority, the Executive was guilty of
conduct which is deemed to be Cause within the meaning of the first
sentence of this paragraph and specifying the particulars thereof in
detail, after reasonable notice to the Executive and an opportunity for
him, together with his counsel, to be heard before such majority.
E. Death Benefit:
-------------
Except as set forth above, there is no death benefit provided under
this Agreement.
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F. Disability Benefit:
------------------
In the event the Executive becomes disabled prior to any Termination of
Service, and the Executive's employment is terminated because of such
disability, he shall begin receiving one hundred percent (100%) of the
benefits in Subparagraph II (A) above only upon the occurrence of one
of the following events, whichever shall first occur: (i) the Bank's
long term disability coverage payments to the Executive cease, (ii) the
Bank's long term disability policy shall terminate, or (iii) when the
Executive attains age sixty-five (65). An Executive shall be considered
disabled if the Executive is unable to perform the duties of the
Executive's regular position due to any medically determinable physical
or mental impairment that is expected to be permanent or of indefinite
duration.
III. RESTRICTIONS UPON FUNDING
The Bank shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Executive Plan.
The Executive, their beneficiary(ies), or any successor in interest shall
be and remain simply a general creditor of the Bank in the same manner as
any other creditor having a general claim for matured and unpaid
compensation.
The Bank reserves the absolute right, at its sole discretion, to either
fund the obligations undertaken by this Executive Plan or to refrain from
funding the same and to determine the extent, nature and method of such
funding. Should the Bank elect to fund this Executive Plan, in whole or in
part, through the purchase of life insurance, mutual funds, disability
policies or annuities, the Bank reserves the absolute right, in its sole
discretion, to terminate such funding at any time, in whole or in part. At
no time shall any Executive be deemed to have any lien nor right, title or
interest in or to any specific funding investment or to any assets of the
Bank.
If the Bank elects to invest in a life insurance, disability or annuity
policy upon the life of the Executive, then the Executive shall assist the
Bank by freely submitting to a physical exam and supplying such additional
information necessary to obtain such insurance or annuities.
IV. CHANGE OF CONTROL
Upon a Change of Control [Subparagraph I (I)], if the Executive
subsequently suffers a Termination of Service [Subparagraph I (D)], then
the Executive shall receive the benefits promised in this Executive Plan
upon attaining Normal Retirement Age, as if the Executive had been
continuously employed by the Bank until the Executive's Normal Retirement
Age. The Executive will also remain eligible for all promised death
benefits in this Executive Plan. In addition, no
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sale. merger, or consolidation of the Bank shall take place unless the new
or surviving entity expressly acknowledges the obligations under this
Executive Plan and agrees to abide by its terms.
V. MISCELLANEOUS
A. Alienability and Assignment Prohibition
---------------------------------------
Neither the Executive, nor the Executive's surviving spouse, nor any
other beneficiary(ies) under this Executive Plan shall have any power
or right to transfer, assign, anticipate, hypothecate, mortgage,
commute, modify or otherwise encumber in advance any of the benefits
payable hereunder nor shall any of said benefits be subject to seizure
for the payment of any debts, judgments, alimony or separate
maintenance owed by the Executive or the Executive's beneficiary(ies),
nor be transferable by operation of law in the event of bankruptcy,
insolvency or otherwise. In the event the Executive or any beneficiary
attempts assignment, commutation, hypothecation, transfer or disposal
of the benefits hereunder, the Bank's liabilities shall forthwith
cease and terminate.
B. Binding Obligation of the Bank and any Successor in Interest:
------------------------------------------------------------
The Bank shall not merge or consolidate into or with another bank or
sell substantially all of its assets to another bank, firm or person
until such bank, firm or person expressly agrees, in writing, to
assume and discharge the duties and obligations of the Bank under this
Executive Plan. This Executive Plan shall be binding upon the parties
hereto, their successors. beneficiaries, heirs and personal
representatives.
C. Amendment or Revocation:
-----------------------
It is agreed by and between the parties hereto that, during the
lifetime of the Executive, this Executive Plan may be amended or
revoked at any time or times, in whole or in part, by the mutual
written consent of the Executive and the Bank.
D. Gender:
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Whenever in this Executive Plan words are used in the masculine or
neuter gender, they shall be read and construed as in the masculine,
feminine or neuter gender, whenever they should so apply.
E. Effect on Other Bank Benefit Plans:
----------------------------------
Nothing contained in this Executive Plan shall affect the right of the
Executive to participate in or be covered by any qualified or
non-qualified
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pension, profit-sharing, group, bonus or other supplemental
compensation or fringe benefit plan constituting a part of the Bank's
existing or future compensation structure.
F. Headings:
--------
Headings and subheadings in this Executive Plan are inserted for
reference and convenience only and shall not be deemed a part of this
Executive Plan.
G. Applicable Law:
--------------
The validity and interpretation of this Agreement shall be governed by
the laws of the Commonwealth of Virginia.
H. 12 U.S.C. ss. 1828(k):
---------------------
Any payments made to the Executive pursuant to this Executive Plan, or
otherwise, are subject to and conditioned upon their compliance with
12 U.S.C. ss. 1828(k) or any regulations promulgated thereunder.
I. Partial Invalidity:
------------------
If any term, provision, covenant, or condition of this Executive Plan
is determined by an arbitrator or a court, as the case may be, to be
invalid, void, or unenforceable, such determination shall not render
any other term, provision, covenant, or condition invalid, void, or
unenforceable, and the Executive Plan shall remain in full force and
effect notwithstanding such partial invalidity.
J. Employment:
----------
No provision of this Executive Plan shall be deemed to restrict or
limit any existing employment agreement by and between the Bank and
the Executive, nor shall any conditions herein create specific
employment rights to the Executive nor limit the right of the Employer
to discharge the Executive with or without cause. In a similar
fashion, no provision shall limit the Executive's rights to
voluntarily sever the Executive's employment at any time.
VI. ERISA PROVISION
A. Named Fiduciary and Plan Administrator:
--------------------------------------
The "Named Fiduciary and Plan Administrator" of this Executive Plan
shall be The Fauquier Bank until its resignation or removal by the
Board.
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As Named Fiduciary and Plan Administrator, the Bank shall be
responsible for the management, control and administration of the
Executive Plan. The Named Fiduciary may delegate to others certain
aspects of the management and operation responsibilities of the
Executive Plan including the employment of advisors and the delegation
of ministerial duties to qualified individuals.
B. Claims Procedure and Arbitration:
--------------------------------
In the event a dispute arises over benefits under this Executive Plan
and benefits are not paid to the Executive (or to the Executive's
beneficiary(ies) in the case of the Executive's death) and such
claimants feel they are entitled to receive such benefits, then a
written claim must be made to the Named Fiduciary and Plan
Administrator named above within sixty (60) days from the date
payments are refused. The Named Fiduciary and Plan Administrator shall
review the written claim and if the claim is denied, in whole or in
part, they shall provide in writing within sixty (60) days of receipt
of such claim its specific reasons for such denial, reference to the
provisions of this Executive Plan upon which the denial is based and
any additional material or information necessary to perfect the claim.
Such written notice shall further indicate the additional steps to be
taken by claimants if a further review of the claim denial is desired.
A claim shall be deemed denied if the Named Fiduciary and Plan
Administrator fail to take any action within the aforesaid sixty-day
period.
If claimants desire a second review they shall notify the Named
Fiduciary and Plan Administrator in writing within sixty (60) days of
the first claim denial. Claimants may review this Executive Plan or
any documents relating thereto and submit any written issues and
comments it may feel appropriate. In their sole discretion, the Named
Fiduciary and Plan Administrator shall then review the second claim
and provide a written decision within sixty (60) days of receipt of
such claim. This decision shall likewise state the specific reasons
for the decision and shall include reference to specific provisions of
the Plan Agreement upon which the decision is based.
If claimants continue to dispute the benefit denial based upon
completed performance of this Executive Plan or the meaning and effect
of the terms and conditions thereof, then claimants may submit the
dispute to an Arbitrator for final arbitration. The Arbitrator shall
be selected by mutual agreement of the Bank and the claimants. The
Arbitrator shall operate under any generally recognized set of
arbitration rules. The parties hereto agree that they and their heirs,
personal representatives, successors and assigns shall be bound by the
decision of such Arbitrator with respect to any controversy properly
submitted to it for determination.
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Where a dispute arises as to the Bank's discharge of the Executive for
"cause", such dispute shall likewise be submitted to arbitration as
above- described and the parties hereto agree to be bound by the
decision thereunder.
VII. TERMINATION OR MODIFICATION OF AGREEMENT BY REASON OF CHANGES IN THE
LAW, RULES OR REGULATIONS
The Bank is entering into this Agreement upon the assumption that
certain existing tax laws, rules and regulations will continue in
effect in their current form. If any said assumptions should change
and said change has a detrimental effect on this Executive Plan, then
the Bank reserves the right to terminate or modify this Agreement
accordingly. Upon a Change of Control [Subparagraph I (I)], this
paragraph shall become null and void effective immediately upon said
Change of Control.
IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Agreement and executed the original thereof on the 10th day
of August, 2000, and that, upon execution, each has received a conforming copy.
THE FAUQUIER BANK
Warrenton, Virginia
/s/ Illegible /s/ Illegible
------------------------- -----------------------------------
Witness Illegible Title
/s/ C. Xxxxxx Xxxxxxx
------------------------- -----------------------------------
Witness C. Xxxxxx Xxxxxxx
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