FAUQUIER BANKSHARES, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
FAUQUIER BANKSHARES, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
ARTICLE I
DEFINITIONS
1.01 Agreement means a written agreement (including any amendment or supplement
thereto) between the Company and a Participant specifying the terms and
conditions of an Award granted to such Participant.
1.02. Award means an award of Options as provided for hereunder.
1.03. Bank means The Fauquier Bank, or its successors.
1.04. Board means the Board of Directors of the Company.
1.05. Code -means the Internal Revenue Code of 1986, as amended.
1.06. Common Stock means the common stock of the Company.
1.07. Company means Fauquier Bankshares, Inc. and its subsidiaries, or such
successors thereto.
1.08, Date of Grant means each April 1st during the term of the Plan.
1.09 Fair Market Value means the average of the five -most recent trades of the
Common Stock on the over-the-counter market during the period, not to exceed 30
calendar days, immediately preceding an Option's Date of Grant, or if there are
insufficient trades, then the Fair Market Value shall be determined as of the
Date of Grant in good faith by the Board of Directors.
1.10. Option means a stock option granted pursuant to Article IV, and that
entitles the holder to purchase from the Company stated number of shares of
Common Stock at the shares' Fair Market Value.
1.11. Participant means a member of the Board who is not an, employee of the
Company or the Bank on the applicable Date of Grant.
1.12. Plan means the Fauquier Bankshares, Inc. Non-Employee. Director Stock
option Plan.
ARTICLE II
PURPOSE
The Plan is intended to promote a greater identity of interest between
Participants and the Company's shareholders by
increasing the Participants' proprietary interest in the Company through the
receipt of Awards in the form of options.
ARTICLE III
ADMINISTRATION
The Plan shall be administered by the one or more persons who are employees of
the Company and directors of the Board (the "Employee Directors"), and such
additional employees as the Employee Directors shall appropriately designate,
who shall have complete authority to interpret all provisions of this Plan; to
prescribe the form of Agreements; to adopt, amend, and rescind rules and
regulations pertaining to the administration of the Plan; and to make all other
determinations necessary or advisable for the administration of this Plan. Any
decision made, or action taken, by the Employee Directors in connection with the
administration of this Plan shall be final and conclusive. All expenses of
administering this Plan shall be borne by the Company.
ARTICLE IV
GRANT OF OPTIONS
On each Date of Grant during the term of the Plan, each Participant
automatically will receive an Option for shares of Common Stock determined in
accordance with the following schedule:
Number of Shares
Date of Grant Subject to Option
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April 1, 1995 140
April 1, 1996 140
April 1, 1997 140
April 1, 1998 140
April 1, 1999 140
All Options shall be evidenced by Agreements which shall be subject to the
applicable provisions of the Plan and to such other provisions as the Employee
Directors may adopt.
ARTICLE V
STOCK SUBJECT TO OPTIONS
Upon the exercise of any Option, the Company may deliver to the Participant (or
the Participant's broker if the Participant so directs) authorized but unissued
Common Stock. The maximum aggregate number of shares of Common Stock that may be
issued pursuant to the exercise of Options under this Plan is 7,700, subject to
adjustment as provided in Article IX. If an Option is terminated, in whole or in
part, for any reason other than its
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exercise, the number of shares of Common Stock allocated to the option or
portion thereof may be reallocated to other options to be granted under this
Plan.
ARTICLE VI
OPTION PRICE
The price per share for Common Stock purchased on the exercise of an Option
shall be the share's Fair Market Value.
ARTICLE VII
EXERCISE OF OPTIONS
7.01. Maximum Option Period. No Option shall be exercisable after the expiration
of ten years from its Date of Grant.
7.02. Nontransferability. Options granted under this Plan shall be
nontransferable except by will or by the laws of descent and distribution.
During the lifetime of the Participant to whom the Option is granted, the Option
may be exercised only by the Participant. No right or interest of a Participant
in any Option shall be liable for, or subject to, any lien, obligation, or
liability of such Participant.
ARTICLE VIII
METHOD OF EXERCISE OF OPTIONS
8.01. Exercisability of Options. Subject to the provisions of Articles VII and
X, an Option becomes exercisable six months after its Date of Grant. However, an
Option granted to a Participant shall be immediately exercisable if the
Participant's membership on the Board terminates as a result of the
Participant's retirement in accordance with Company policy, death or permanent
and total disability (as such term is defined in Section 22(e)(3) of the Code).
An Option shall be forfeited if, as of thetermination of the Participants
membership on the Board, the Option is not then exercisable and such termination
occurs for any reason other than the Participant's retirement in accordance with
Company policy, death or disability (as defined above). Options that are
exercisable or that become exercisable upon the Participant's termination of
membership on the Board will remain exercisable until the tenth anniversary of
the Option's Date of Grant. An Option may be exercised with respect to any
number of whole shares less than the full number for which the Option could be
exercised. A partial exercise of an Option shall not affect the right to
exercise the Option from time to time in accordance with this Plan and the
applicable Agreement with respect to the shares remaining subject to the Option.
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8.02. Payment. Unless otherwise provided by the Agreement, payment of the Option
price shall be made in cash or a cash equivalent acceptable to the Board. In
addition, all or part of the Option price may be paid by surrendering shares of
Common Stock to the Company. If Common Stock is used to pay all or part of the
Option price, the shares surrendered must have a fair market value (determined
as of the day before the date of exercise and based on the average of the five
most recent trades of the Common Stock on the over-the-counter market during the
period, not to exceed 30 calendar days, preceding such date) that is not less
than such price or part thereof.
8.03. Shareholder Rights. No Participant shall have any rights as a stockholder
with respect to shares subject to his Option until the date of exercise Of such
Option.
ARTICLE IX
ADJUSTMENT UPON CHANGE IN COMMON STOCK
The maximum number of shares to which Awards may be granted under this Plan
shall be proportionately adjusted, and the terms of outstanding Awards shall be
adjusted, as the Employee Directors shall determine to be equitably required in
the event that the Company (a) effects one or more stock dividends, stock
split-ups, subdivisions or consolidations of shares or (b) engages in a
transaction to which Section 424 of the Code applies. Any determination made
under this Article IX by the Board shall be final and conclusive.
The issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or for
labor or services, either upon direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares of obligations of
the Company convertible into such shares or other securities, shall not affect,
and no adjustment by reason thereof shall be made with respect to, outstanding
Awards.
ARTICLE X
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
No Option shall be exercisable, no Common Stock shall be issued, no certificates
for shares of common Stock shall be delivered, and no payment shall be made
under this Plan except in compliance with all applicable federal and state laws
and regulations (including, without limitation, withholding tax requirements),
and applicable requirements of any exchange or other market having authority
over the trading of the Company's shares.
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ARTICLE XI
GENERAL PROVISIONS
12.01. Effect on Service. Neither the adOption of this Plan, its operation,
documents describing or referring to this Plan (or any part thereof) shall
confer on any Participant any right to continue service as a member of the
Board.
12.02. Unfunded Plan. Th Plan, insofar as it provides for grants, shall be
unfunded and the Company shall not be required to segregate any assets that may
be represented at any time by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon any contractual obligations that are created pursuant to this Plan.
No such obligation of the Company shall be deemed to be secured by any pledge
of, or other encumbrance on, any property of the Company.
12.03. Rules of Construction. Headings are given to the articles and sections of
the Plan solely as a convenience to facilitate reference. The reference to any
statute, regulation, or provision of law shall be construed to refer to any
amendment to or successor of such provision of law.
ARTICLE XII
AMENDMENT
The Board may amend this Plan from time to time; provided that, if the Board
determines that shareholder approval is required and the Plan is submitted for
such approval and adopted, then no subsequent amendment may become effective
until shareholder approval is obtained if the amendment (i) materially increases
the aggregate number of shares of Common Stock that may be issued under the
Plan, except in accordance with the provisions of Article IX, (ii) materially
changes the class of individuals eligible to become Participants or (iii)
materially increases the benefits that may accrue to Participants under the
Plan, and provided further that the Board may not amend the Plan more than once
in any six month period unless such amendment is required to comply with the
Code. No amendment shall, without a Participant's consent, adversely affect any
rights of such Participant under any Option outstanding at the time such
amendment is made.
ARTICLE XIII
TERMINATION
The Board may terminate this Plan at any time. This Plan will
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terminate automatically, without any action of the Board, if, on any Date of
Grant, there are insufficient shares available for the grant of Awards in
accordance with the terms of the Plan. The termination of this Plan shall not
affect any rights of a Participant under any Option outstanding at the time of
such termination.
ARTICLE XIV
DURATION OF PLAN
No Award may be granted under this Plan after ten years from the date of the
first grant of an Option tinder the Plan. Options granted on or before such date
shall remain valid in accordance with their terms.
ARTICLE XV
EFFECTIVE DATE OF PLAN
This Plan was approved by the Board of Directors of the Company on February 16,
1995. The Effective Date of the Plan shall be April 1, 1995 and no Awards may be
granted prior to the Effective Date.
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FAUQUIER BANKSHARES, INC.
DIRECTOR DEFERRED COMPENSATION PLAN
(As Adopted Effective May 1, 1995)
TABLE OF CONTENTS
Page
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ARTICLE I
Definition of Terms
1.1 Administrator .......................................................1
1.2 Affiliate ...........................................................1
1.3 Beneficiary .........................................................1
1.4 Benefits Committee ..................................................1
1.5 Board................................................................1
1-6 Code ................................................................1
1.7 Compensation ........................................................1
1.8 Corporation .........................................................2
1.9 Deferral Account ....................................................2
1.10 Deferral Contributions ..............................................2
1.11 Effective Date ......................................................2
1.14 Eligible Director ...................................................2
1.13 Participant .........................................................2
1.14 Plan ................................................................2
1.15 Plan Sponsor ........................................................2
1.16 Plan Year ...........................................................2
1.17 Rate of Return ......................................................2
1.18 Stock ...............................................................2
1 19 Valuation Date ......................................................3
1.20 Value ...............................................................3
ARTICLE II
Eligibility and Participation
2.1 Eligibility and Notice .............................................3
2.2 Election Required for Commencement of Active Participation..........3
2.3 Deferred Compensation Election .....................................4
2.4 Termination of Active Participation ................................5
2.5 Length of Participation ............................................5
ARTICLE, III
DETERMINATION of Deferral Accounts
3.1 Deferral Account and Subaccounts ...................................5
3.2 Crediting of Deferral Contributions to Deferral Account ............6
3.3 Subtractions from Deferral Account .................................6
3.4 Crediting of Deemed Earnings to Deferral Account ...................6
3.5 Equitable Adjustment in Case or Error or Omission ..................6
3.6 Statement of Benefits ..............................................6
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ARTICLE IV
Vesting
4.1 Vesting ............................................................6
ARTICLE V
Death Benefits
5.1 Death after Benefit Commencement ...................................7
5.2 Death before Benefit Commencement ..................................7
5.3 Beneficiary Designation.............................................7
ARTICLE VI
Payment of Benefits
6.1 Time and Form of Payment to a Participant ..........................7
6.2 Time and Form of Payment to a Beneficiary ..........................8
6.3 Lump Sum Payments and Periodic Installments ........................8
6.4 Benefit Determination and Payment Procedure........... .............9
6.5 Payments to Minors and Incompetents ................................9
6.6 Distribution of Benefit When Distributee Cannot be Located .........9
ARTICLE VII
Withdrawals
7.1 No Withdrawals Permitted ...........................................9
ARTICLE VIII
Funding
8.1 Funding ............................................................9
8.2 Use of Trust ......................................................10
ARTICLE IX
Plan Administrator
9.1 Plan Administrator ................................................10
9.2 Duties and Responsibilities of Plan Administrator .................10
9.3 Power and Authority ...............................................11
9.4 Availability of Records ...........................................11
ARTICLE X
AMENDMENT OR TERMINATION OF PLAN
10.1 Amendment or Termination of the Plan ..............................11
10.2 Effect of Corporate Merger, Consolidation or Liquidation ..........11
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Page
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ARTICLE XI
Miscellaneous
11.1 Non-assignability .................................................12
11.2 Right to Require Information and Reliance Thereon .................12
11.3 Notices and Elections .............................................12
11.4 Delegation of Authority ...........................................12
11.5 Service of Process ................................................12
11.6 Governing Law .....................................................12
11.7 Binding Effect ....................................................12
11.8 Severability ......................................................12
11.9 No Effect on Agreement ............................................12
11.10 Gender and Number .................................................12
11.11 Titles and Captions ...............................................12
ARTICLE XII
Adoption by Additional Corporations
12.1 Adoption by Additional Corporations ................................13
12.2 Termination Events with Respect to Corporations Other Than
the Plan Sponsor ................................................13
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Pursuant to action taken by the Board of Directors of Fauquier
Bankshares, Inc., a Virginia corporation, and The Fauquier Bank, a Virginia
corporation, (hereinafter collectively or individually called the
"Corporation"), the Fauquier Bankshares, Inc. Director Deferred Compensation
Plan (hereinafter referred to as the "Plan") is hereby adopted as follows;
WITNESSETH:
WHEREAS, the Corporations desire to adopt a plan for deferral of
directors compensation as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the covenants
herein contained, this Plan is adopted to provide benefits, as herein set forth:
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 "ADMINISTRATOR": The Plan Administrator provided for in ARTICLE IX
hereof.
1.2 "AFFILIATE": Any subsidiary, parent, affiliate, or other related
business entity to the Plan Sponsor, as determined by the Administrator.
1.3 "BENEFICIARY": The person or persons designated by a Participant or
otherwise entitled pursuant to paragraph 5.3 to receive benefits under the Plan
attributable to such Participant after the death of such Participant.
1.4 "BENEFITS COMMITTEE": The standing committee of the Board of
Directors of the Plan Sponsor having responsibility over the Plan; or if' no
such committee is so serving at any time, the Board of the Plan Sponsor.
1.5 "BOARD": The present and any succeeding Board of Directors of the
Plan Sponsor, unless such term is used with respect to a particular Corporation
and its Board of Directors, in which event it shall mean the present and any
succeeding Board of Directors of that Corporation.
1.6 "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,
1.7 "COMPENSATION": A Participant's (i) retainers (referred to as
"Retainers") for Board or committee service and (ii) fees for Board or committee
meetings (referred to as "Meeting Fees") paid by the Corporation to an Eligible
Director, but excluding any such compensation deferred from a prior period, any
such compensation attributable to a period during which a Deferred Compensation
Election with respect thereto is not in effect, any expense reimbursement or
allowance, any such compensation not normally paid in cash to the Participant,
and any such compensation attributable to service on the board of directors of
any Affiliate which is not a participating Corporation.
1.8 "CORPORATION ":
1.8(a) Fauquier Bankshares, Inc., a Virginia corporation, The Fauquier
Bank, a Virginia corporation, and any other Affiliate which adopts the Plan as a
participating Corporation, including any successor to any such Corporation. A
register of all such Corporations which have adopted the Plan and who are at any
time participating in the Plan shall be maintained by the Administrator.
1.8(b) Employment as a common law employee with an Affiliate shall be
considered employment as a common law employee with the Corporation for all
purposes of the Plan.
1.8(c) Service as a director of an Affiliate shall not be considered
service as a director of the Corporation unless the Affiliate is a participating
Corporation.
1.9 "DEFERRAL ACCOUNT": An unfunded, bookkeeping account maintained on
the books of the Corporation for a Participant which reflects his interest in
amounts attributable to his Deferral Contributions under the Plan,
(i) Separate subdivisions of the Deferral Account shall be
maintained to reflect Deferral Contributions made pursuant to separate
Deferred Compensation Elections.
(ii) Separate subaccounts of each Deferral Account shall be
maintained to reflect a Participant's interest in the Cash Account and
in the Share Account.
1.10 "DEFERRAL CONTRIBUTIONS": That portion of a Participant's
Compensation which is deferred under the Plan.
1.11 "EFFECTIVE DATE". The Effective Date of the Plan is May 1, 1995.
1.12 "ELIGIBLE DIRECTOR": An individual who is a member of the Board of
Directors of the Corporation but who is not a common law employee of the
Corporation.
1.13 "Participant": An Eligible Director who elects to participate in
the Plan for so long as he is considered a Participant as provided in ARTICLE II
hereof, and further differentiated as follows:
(i) "Active Participant"; A Participant who has an election
to make Deferral Contributions to the Plan in effect at the time in
question.
(ii) "Inactive Participant"; A Participant who does not have
an election to make Deferral Contributions to the Plan in effect at
the time in question.
1.14 "PLAN"; This document, as contained herein or duly amended, which
shall be known as the "Fauquier Bankshares, Inc. Director Deferred Compensation
Plan".
1.15 "PLAN SPONSOR": Fauquier Bankshares, Inc., a Virginia corporation,
or any successor thereto.
1.16 "PLAN YEAR": The calendar year.
1.17 "RATE OF RETURN": The annual rate equivalent to the highest
interest rate offered by The Fauquier Bank (or its successor) on any of its
deposits, determined at the end of each calendar quarter for the next calendar
quarter.
1.18 "STOCK": The common stock of Fauquier Bankshares, Inc., a Virginia
corporation, or any successor thereto.
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1.19 "VALUATION DATE": The last day of each Plan Year and such other
dates, if any, as the Administrator may designate. In the event of a
Participant's death where all or one or more subdivisions of his Deferral
Account is to be paid pursuant to paragraph 5.2, the last day of the calendar
month in the Participant dies shall also be a Valuation Date for such benefit to
be paid pursuant to paragraph 5.2.
1.20 "VALUE":
1.20(a) In the event there is a generally recognized market for Stock,
either (i) the average of the closing trading prices of Stock reported on a
national securities exchange which is registered under Section 6 of the
Securities Exchange Act of 1934 for the five (5) most recent days on which Stock
was traded during the last thirty (30) days ending on the determination date or
(ii) if Stock is not traded on a national securities exchange, the average of
the trading prices for the five (5) most recent trades in the over-the-counter
market during the last thirty (30) days ending on the determination date.
1.20(b) In the event there is no generally recognized market for Stock
or trades are insufficient to establish the Value, the fair market value of
Stock as determined in good faith by the Board or Benefits Committee.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
2.1 ELIGIBILITY AND NOTICE.
2.1(a) Each Eligible Director shall be eligible to participate in the
Plan by becoming an Active Participant as provided in paragraph 2.2.
2.1(b) The Administrator shall give notice of eligibility to each
Eligible Director who is anticipated to be eligible to make Deferral
Contributions within a reasonable period of time prior to the Effective Date of
the Plan and thereafter prior to the beginning of each Plan Year or any
subsequent commencement of status as an Eligible Director.
2.2 ELECTION REQUIRED FOR COMMENCEMENT OF ACTIVE PARTICIPATION.
2.2(a) An Eligible Director may elect to become an Active Participant
by executing a Deferred Compensation Election (as provided in paragraph 2.3) and
timely filing it with the Administrator at such time as the Administrator may
require prior to the first day of the Plan Year for which it is to become
effective or, in the case of an Eligible Director's commencement of eligibility
to participate as provided in clause (ii) of subparagraph 2.2(b), within thirty
(30) days after he is first eligible to become an Active Participant.
2.2(b) An Eligible Director shall become an Active Participant for a
Plan Year as of the beginning of a calendar month at any of the following times
for which he timely files a Deferred Compensation Election (as provided in
paragraph 2.3):
(i) On the first day or the Plan Year if he timely files his
election therefor, or
(ii) In the case of his first becoming eligible for the Plan
Year, on the first day of the calendar month after he timely files his
election therefor.
If a Corporation institutes payment of a particular type of Compensation during
a Plan Year, the Administrator may permit elections to be made solely with
respect to such newly instituted type of Compensation as though the period for
which such type of Compensation is first offered is the date an Eligible
director is first eligible.
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2.3 DEFERRED COMPENSATION ELECTION.
2.3(a) Subject to the restrictions and conditions hereinafter provided,
an Eligible Director shall be entitled to elect to defer, as a Deferral
Contribution with respect to a Plan Year or other period of active
participation, an amount or percentage of his Compensation which is specified by
and in accordance with his direction in his Deferred Compensation Election for
such Plan Year or period. Any such election must be filed with the Administrator
at the time required under paragraph 2.2.
2.3(b) Deferred Compensation Elections shall be subject to the
following rules:
(i) Active participation in the Plan is available on either
an annual basis, which requires an annual election for active
participation for each Plan Year, or a continuing basis, which permits
an election for continuing active participation from year to year.
(ii) Where a Participant has made a Deferred Compensation
Election for active participation on a continuing basis, the Participant
may modify such election on a prospective basis as of the beginning of
any Plan Year as though a new election were being made. Such
modification may include, but is not limited to, a change in the dollar
amount or percentage of his Compensation to be contributed as Deferral
Contributions, a change in the payment time or form, and a change in the
participation basis from participation on a continuing basis to
participation on annual basis.
(iii) Each Deferred Compensation Election (whether made on an
annual or continuing basis) must specify the following:
(A) The dollar amount or percentage of his Compensation
to be contributed as Deferral Contributions for the
applicable period;
(B) The Compensation from which the Deferral
Contribution shall be withheld;
(C) The Eligible Director's benefit commencement date
which date (I) shall be determined pursuant to subparagraph
6.1(b), (II) except where permitted by the Administrator,
shall be the same for the subdivision of his Deferral Account
attributable to the same Deferred Compensation Election, and
(III) shall be irrevocable;
(D) The form of payment of the Deferral Account to the
Participant which form (I) shall be determined pursuant to
subparagraph 6.1(b), (II) shall be the same for the
subdivision of his Deferral Account attributable to the same
Deferred Compensation Election, and (111) shall be
irrevocable-,
(E) The Plan Year or period to which it relates,
(F) The subaccount (that is, the Cash deferral Account
and/or the Share Account) in which the Deferral Contribution
will be considered invested; and
(G) Such other information as the Administrator may
require.
2.3(c) Each Deferral Contribution is intended to be an elective
compensation reduction amount which shall be deducted from a Participant's
Compensation otherwise payable to him for a Plan Year by way of Retainers or
Meeting Fees. Unless otherwise approved by the Administrator:
(i) Deferral Contributions of Retainers shall be withheld on
a pro rata basis if a percentage deferral is elected or on a first
dollar basis from the Retainers before any part of the designated
Retainers is paid to the Participant if a dollar amount deferral is
elected; and
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(ii) Deferral Contributions of Meeting Fees shall be withheld
on a pro rata basis.
2.4 TERMINATION OF ACTIVE PARTICIPATION. A Participant who is an Active
Participant for a Plan Year shall cease to be an Active Participant for the Plan
Year if and when he ceases to be an Eligible Director during the Plan Year or if
and when he files an election to cease being an Active Participant for the Plan
Year. If an Active Participant files an election to cease being an Active
Participant for a Plan Year, the election must be filed with the Administrator
prior to the first day of the calendar month it will become effective, and he
may not again become an Active Participant until a subsequent Plan Year.
2.5 LENGTH OF PARTICIPATION. AN Eligible Director who becomes a
Participant shall be or remain a Participant for so long as he is entitled to
future benefits under the terms of the Plan.
ARTICLE III
DETERMINATION OF DEFERRAL ACCOUNTS
3.1 DEFERRAL ACCOUNT AND SUBACCOUNTS.
3.1(a) The Corporation shall establish and maintain on its books a
Deferral Account (and appropriate subdivisions thereof to reflect the amount
attributable to each Deferred Compensation Election) for each Participant to
reflect the Participant's benefits under the Plan.
3.1(b) The balance in the Deferral Account of a Participant shall
consist of his Deferral Contributions made to the Plan pursuant to paragraph 2.3
and credited pursuant to paragraph 3.2, subtractions pursuant to paragraph 3.3,
and deemed earnings thereon determined pursuant to paragraph 3.4.
3.1(c) Each Deferral Account shall be subdivided into a Cash Account and
a Share Account based oil the Participant's Deferred Compensation Election.
(i) The Cash Account shall be considered invested in deposit
instrument offered by The Fauquier Bank, which shall be maintained on a
cash basis.
(ii) The Share Account shall be considered invested in Stock
and which shall be maintained on a share basis. Under the share basis of
accounting:
(A) Contributions and other amounts (including but not
limited to deemed dividends) credited to the subaccount shall
be converted to whole and fractional shares of Stock based on
the Value of a share of Stock on the day credited,
Notwithstanding the foregoing, if the Plan Sponsor maintains a
dividend reinvestment plan at any time, deemed dividends
credited to the subaccount shall be considered invested in
shares of Stock pursuant to the purchase price determination
under such plan.
(B) The value of the subaccount at any time is the
number of shares considered held in the account multiplied by
the Value of a share of Stock for the day in question.
(C) Fractional shares (calculated to the second, third
or fourth decimal place, as determined by the Administrator)
shall be maintained on such basis as the Administrator
determines from time to time.
(D) In the event of a Stock dividend or Stock split or a
change in the number of shares of Stock held by the Plan as a
result of a reorganization or other recapitalization of the
issuer of Stock, there shall be credited to each such
subaccount a proportionate number of full and fractional
shares of Stock which would have been received by the Plan if
the Stock considered held by the Plan were outstanding as a
result of such dividend, split or change based on the number
of
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shares and fractions thereof in such account as of the
Valuation Date. (or such other date as the Administrator may
direct) coinciding with or next following the ex-dividend or
record date as applicable.
3.1(d) As of any Valuation Date, a Participant (or if deceased, his
Beneficiary) may elect that all or any designated portion of the balance in his
Share Account be transferred to his Cash Account. Any such election shall be
made in writing and filed with the Administrator at least fifteen (15) days (or
shorter period as the Administrator may accept) prior to the Valuation Date as
of which the election is made.
3.2 CREDITING OF DEFERRAL CONTRIBUTIONS TO DEFERRAL ACCOUNT Deferral
Contributions made by a Participant shall be credited to his Deferral Account
and the applicable subaccount and subdivision thereof as of the date the
Compensation from which such contributions are deducted would otherwise have
been paid to him.
3.3 SUBTRACTIONS FROM DEFERRAL ACCOUNT. All distributions shall be
subtracted from a Participant's Deferral Account and the applicable subaccount
and subdivision thereof when made.
3.4 CREDITING OR DEEMED EARNINGS TO DEFERRAL ACCOUNT.
3.4(a) As of each Valuation Date, there shall be credited to each
Participant's Deferral Account and the applicable subaccount and subdivision
thereof an amount representing deemed earnings on the balance of such account or
subdivision since the last Valuation Date.
3.4(b) Such earnings shall be determined as follows:
(i) Such earnings for the Cash Account, shall be based on the
applicable Rate of Return for the period since the last Valuation Date
applied to the average daily balance in the subaccount and applicable
subdivision thereof for the valuation period or portion thereof ending
on the Valuation Date.
(ii) Such earnings for the Share Account shall consist of
dividends which would have been paid on the number of shares credited to
such subaccount on the applicable record date and changes in Value of
the shares of Stock considered held in the subaccount since the last
Valuation Date.
3.4(c) Normally, deemed earnings shall not be credited to benefit
payments made since the last Valuation Date. Notwithstanding the foregoing, in
the event that any payment of benefits under the Plan is made more than one
month after the most recent Valuation Date for which such benefits are adjusted
for deemed earnings, such payment shall be increased by additional deemed
earnings for each complete calendar month that has elapsed between such
Valuation Date and the date as of which the payment is made. Such additional
deemed earnings shall be determined and credited on the basis of the Rate of
Return as of such Valuation Date and as of any intervening Valuation Dates.
3.5 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.
3.6 STATEMENT OF BENEFITS. Within a reasonable time after the end of
each Plan Year and at the date a Participant's Deferral Account (or a
subdivision thereof) becomes payable under the Plan, the Administrator shall
provide to each Participant (or, if deceased, to his Beneficiary) a statement of
the Participant's Deferral Account balance (or applicable subaccount and
subdivision thereof) under the Plan
ARTICLE IV
VESTING
4.1 VESTING. A Participant's Deferral Account shall be fully vested and
non-forfeitable at all times.
- 6 -
ARTICLE V
DEATH BENEFITS
5.1 DEATH AFTER BENEFIT COMMENCEMENT. If a Participant dies after a
separately maintained subdivision of his Deferral Account has begun to be paid
to him, the benefits payable under the Plan after his death with respect to such
subdivision shall be the remainder of such subdivision, if any, payable as
provided under the form of payment being made to him at his death. Such benefits
shall be paid to his Beneficiary at the time and in the manner described in
ARTICLE VI.
5.2 DEATH BEFORE BENEFIT COMMENCEMENT. If a Participant dies before a
separately maintained subdivision of his Deferral Account has begun to be paid
to him, the benefits payable under the Plan after his death with respect to such
subdivision shall be paid to his Beneficiary at the time and in the manner
described in ARTICLE VI.
5.3 BENEFICIARY DESIGNATION
5.3(a) Each Participant shall have the right to notify the Administrator
in writing of any designation of a Beneficiary to receive, if alive, benefits
under the Plan in the event of his death. Such designation may be changed from
time to time by notice in writing to the Administrator.
5.3(b) If a Participant dies without having designated a Beneficiary, or
if the Beneficiary so designated has predeceased the Participant or, except when
his Beneficiary is his spouse, cannot be located by the Administrator within one
year after the date when the Administrator commenced making a reasonable effort
to locate such Beneficiary, then his surviving spouse, or if none, then the
executor or the administrator of his estate shall be deemed to be his
Beneficiary.
5.3(c) Any Beneficiary designation may include multiple, contingent or
successive Beneficiaries and may specify the proportionate distribution to each
Beneficiary. If a Beneficiary shall survive the Participant, but shall die
before the entire benefit payable to such Beneficiary has been distributed, then
absent any other provision by the Participant, the unpaid amount of such benefit
shall be distributed to the estate of the deceased Beneficiary. If multiple
Beneficiaries are designated, absent provisions by the Participant, those named
or the survivors of them shall share equally any benefits payable under the
Plan. Any Beneficiary, including the Participant's spouse, shall be entitled to
disclaim any benefit otherwise payable to him under the Plan.
ARTICLE VI
PAYMENT OF BENEFITS
6.1 TIME AND FORM OF PAYMENT TO A PARTICIPANT.
6.1 (a) Except as provided in subparagraph 6.1(c), the subdivision of a
Participant's Deferral Account attributable to his Deferral Contributions made
with respect to a Deferred Compensation Election shall be payable in cash to the
Participant, if then alive, at the time and in the form elected by the
Participant in his Deferred Compensation Election.
6.1 (b) The Participant shall have the following election choices for
the time, form and manner of payment for his Deferral Account. The choices apply
separately to each subdivision of his Deferral Account attributable to his
Deferral Contributions made with respect to a Deferred Compensation Election
(i) Time of Payment -
(A) At the January 15th of the calendar year following the
calendar year in which the Participant ceases to be a member of the
Board.
- 7 -
(B) At the January 15th of a calendar year specified by the
Participant,
(C) At the later of (A) or (B).
(D) At the earlier of (A) or (B).
(ii) Form of Payment -
(A) In a lump sum payment as provided in paragraph 6.3.
(B) In periodic installments as provided in paragraph 6.3.
(iii) Manner of Payment -
(A) Payments from the Cash Account shall be made in cash.
(B) Payments from the Share Account shall be made in whole
and fractional shares of Stock or, if fractional shares are not
permitted to be issued, in whole shares of Stock and cash in lieu of
fractional shares. Notwithstanding the foregoing, a participant (or if
deceased, his Beneficiary), may elect that all or any portion of a
payment from Share Account shall be made in cash at its Value on the
day before the date of payment. Any such election shall be made in
writing and filed with the Administrator at least Fifteen (15) days (or
shorter period as the Administrator may accept) prior to the date of
payment.
6.1(c) Notwithstanding the foregoing, payment of the Deferral Account or
a subdivision thereof may be delayed for a reasonable period in the event the
Participant cannot be located or is not competent to receive the benefit
payment, there is a dispute as to the proper recipient of such benefit payment,
additional time is needed to complete the Plan allocations, or additional time
is needed for other administrative reasons.
6.2 TIME OF AND FORM PAYMENT TO A BENEFICIARY.
6.2(a) Except as provided in subparagraph 6.2(c), each subdivision of
the Deferral Account with respect to a deceased Participant payable pursuant to
paragraph 5.1 shall continue to be paid in accordance with the form of payment
in effect at the Participant's death.
6.2(b) Except as provided in subparagraph 6.2(c), each subdivision of
the Deferral Account with respect to a deceased Participant payable pursuant to
paragraph 5.2 shall become payable in cash to his Beneficiary in the form of a
lump sum payment as soon as possible after the calendar month in which the
Participant dies.
6.2(c) Notwithstanding the foregoing, payment of the Deferral Account or
a subdivision thereof may be delayed for a reasonable period in the event the
recipient cannot be located or is not competent to receive the benefit payment,
there is a dispute as to the proper recipient of such benefit payment,
additional time is needed to complete the Plan allocations, or additional time
is needed for other administrative reasons.
6.3 LUMP SUM PAYMENTS AND PERIODIC INSTALLMENTS.
6.3(a) The term "lump sum payment" generally means a single payment of
the Deferral Account or applicable subaccount and subdivision thereof. The
amount of a lump sum payment shall be the balance in the Deferral Account or
applicable subaccount and subdivision thereof determined at the last Valuation
Date immediately preceding payment. In the event a Deferral Account or
subdivision thereof is to be paid in a lump sum payment and the amount thereof
has not been determined, the Administrator is authorized to make one or more
interim payments prior to the time the amount of such lump sum payment is
finally determined.
- 8 -
6.3(b) Periodic installments shall be paid in 2, 3, 4 or 5 annual
periodic installments. Under this form of payment, the Deferral Account or
applicable subaccount and subdivision thereof will be paid in annual
installments over the selected number of years, subject to the following rules:
(i) The amount of' each installment shall equal the balance
in the Deferral Account or applicable subaccount and subdivision thereof
determined at the last Valuation Date immediately preceding each
installment payment divided by the remaining number of payments to be
made therefrom.
(ii) Until paid out, each subdivision of the Participant's
Deferral Account remaining in the Plan shall continue to be adjusted for
deemed earnings thereon determined pursuant to paragraph 3.4.
(iii) If payment commences to the Participant, the balance of
any periodic installments remaining at the Participant's death shall
continue to his Beneficiary.
6.4 BENEFIT FIT 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 manner of payment to the
Participant or, in the. event of' the death of the Participant, the
Participant's Beneficiary. The Administrator shall promptly notify the
Corporation of' each such determination that benefit payments are due and
provide to the Corporation all other information necessary to allow the
Corporation to carry out said determination, whereupon the Corporation shall pay
such benefits in accordance with the Administrator's determination.
6.5 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 he 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,
6.6 DISTRIBUTION OF BENEFIT WHEN DISTRIBUTEE CANNOT BE LOCATED. The
Administrator shall make all reasonable attemps 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 Corporation's or the Administrator's
records. If the Administrator is unable to locate such a person entitled to
benefits hereunder, or if there has been no claim made for such benefits, the
Corporation shall continue to hold the benefit due such person, subject to any
applicable statute of escheats.
ARTICLE VII
WITHDRAWALS
7.1 NO WITHDRAWALS PERMITTED. No withdrawals or other distributions
shall be permitted from a Participant's Deferral Account except as provided in
ARTICLE VI.
ARTICLE VII
FUNDING
8.1 FUNDING.
8.1(a) The undertaking to pay benefits hereunder shall be an unfunded
obligation payable. solely from the general assets of the Corporation and
subject to the claims of the Corporation's creditors. The Deferral Account shall
be maintained as a book reserve account solely for accounting purposes,
- 9 -
8.1(b) Nothing contained in the Plan and no action taken pursuant to the
provisions of the Plan (including establishing a trust pursuant. to paragraph
8.2) shall create or be construed to give any Participant or Beneficiary any
right, title or interest in any specific asset or assets of the Corporations or
the assets of any trust established pursuant to paragraph 8.2 at any time or any
priority of payment. To the extent that any person acquires a right to receive
payments from the Corporation under the Plan, such rights shall be no greater
than the. right of any unsecured general creditor of the Corporation.
8.1(c) Where more than one Corporation participates in the Plan, the
funding and payment provisions hereof shall apply separately to each such
Corporation, except that the Plan Sponsor shall guarantee payment, of all
benefits due under the Plan.
8.1(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 Corporations,
Where the Plan Sponsor makes payments on behalf of other Corporations the Plan
Sponsor may require contributions by participating Corporations 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
8.2 USE OF TRUST
8.2(a) Notwithstanding any provision herein to the contrary, the Plan
Sponsor may in its sole discretion establish and cause certain of assets to be
held pursuant to a trust agreement for the, purpose of providing benefits under
the Plan.
8.2(b) The Corporations shall pay over Deferral Contributions to the
trustee of any such trust agreement as and when directed by the Plan Sponsor
8.2(c) The Corporations acknowledge that. any such trust agreement may
be established by the Plan Sponsor for the benefit of one or more of the
participating Corporations, that execution of the Plan or an adoption agreement
relating to the Plan by a participating Corporation automatically makes the
Corporation a participating Corporation for purposes of any such trust agreement
(if and to the extent so provided in the trust agreement), and that any such
trust agreement may be amended by appropriate action of the Plan Sponsor or the,
Benefits Committee (without any action required by the other participating
Corporations).
8.2(d) The trustee of any such trust shall promptly follow the
direction of the Administrator regarding any PAYMENTS which are to be made from
the trust.
ARTICLE IX
Plan Administrator
9.1 PLAN ADMINSTRATOR. The person serving as Treasurer of the Plan
Sponsor from time to time shall 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.
9.2 DUTIES AND RESPONSIBILITIES OF PLAN ADMINISTRATOR. The
Administrator shall have the following duties and responsibilities under the
Plan:
9.2(a) The Administrator shall be responsible for the fulfillment of all
relevant reporting and disclosure requirements set forth in the Plan and the
Code, the distribution thereof to Participants and their Beneficiaries, and the
filing thereof with the appropriate governmental officials and agencies.
9.2(b) The Administrator shall maintain and retain necessary records
regarding its administration of the Plan and matters upon which disclosure is
required under the Plan and the Code.
- 10 -
9.2(c) The Administrator shall make any elections for the Plan required
to be made by it under the Plan and the Code.
9.2(d) 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.
9.2(e) The Administrator may construe the Plan, correct defects, supply
omissions or reconcile inconsistencies to the extent necessary to effectuate the
Plan, and such action shall be conclusive.
9.3 POWER AND AUTHORITY. The Administrator is hereby vested with all
the power and authority necessary in order to carry out its duties and
responsibilities imposed hereunder in connection with the administration of the
Plan. For such purpose, the Administrator shall have the power to adopt rules
and regulations consistent with the terms of the Plan.
9.4 AVAILABILITY OF RECORDS. The Corporation shall, at the, request of
the. Administrator, make available necessary records or other information which
they possess which may be required by the Administrator in order to carry out
its duties hereunder.
ARTICLE X
AMENDMENT OR TERMINATION OF PLAN
10.1 AMENDMENT OR TERMINATION OF THE PLAN.
10.1(a) The Plan may be amended in whole. or in part from time to time
by the Board of the Plan Sponsor effective as of any date specified. Any such
amendment to the Plan shall be in writing. The Plan may be terminated at any
time by the Board of the Plan Sponsor. No amendment or termination shall operate
to decrease a Participant's Deferral Account balance determined as of the
earlier of the date on which the amendment or termination is approved by the
Board of the Plan Sponsor or the date on which an instrument of amendment or
termination is signed on behalf of the Board of the. Plan Sponsor. Any such
action to amend of, terminate the Plan shall be adopted pursuant to action by
the Board of the Plan Sponsor (including pursuant to any standing authorization
for any officer, director or committee to adopt amendments) taken in accordance
with its applicable procedures, including where applicable by majority vote or
consent in writing.
10.1(b) In addition, and as an alternative, to amendment of the Plan by
action of the Board of the Plan Sponsor, but subject to tile limitations on
amendment contained in subparagraph 10.1(a), the Board hereby delegates to tile
Benefits Committee the right to amend the Plan in whole or in part to make any
technical modification, alteration or amendment which in the opinion of counsel
for the Plan Sponsor is required by law and is deemed advisable by the Benefits
Committee, and to make any other modification, alteration or amendment which
does not, in the Benefits Committee's view, materially increase costs or the
Plan to the Corporation.
10.1 (c) Termination of the Plan shall mean termination of active
participation by Participants, but shall not mean immediate payment of all
Deferral Accounts unless the Board of the Plan Sponsor or the Benefits Committee
so directs.
10.2 EFFECT OF CORPORATE MERGER. CONSOLIDATION OR LIQUIDATION.
Notwithstanding any other provision of the Plan, the merger or liquidation of
any Corporation into any other Corporation or Affiliate or the consolidation of
two (2) or more of the Corporations and/or Affiliate shall not cause the Plan to
terminate with respect to the merging, liquidating or consolidating
Corporation(s), provided that the Plan has been adopted or is continued by and
has not terminated with respect to the surviving or continuing corporation.
- 11 -
ARTICLE XI
MISCELLANEOUS
11.1 NON-ASSIGNABILITY. The 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, 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 non-transferable.
11.2 RIGHT TO REQUIRE INFORMATION AND RELIANCE THEREON. The Corporation
and the 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. The Administrator may rely on such information 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 a provision of 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.
11.3 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.
11.4 DELEGATION OF AUTHORITY. Whenever the Corporation 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, its Board or the Benefits Committee.
11.5 SERVICE OF PROCESS. The Administrator shall be the agent for
service of process on the Plan
11.6 GOVERNING LAW. The Plan shall be construed, enforced and
administered in accordance with the laws of the State of Virginia.
11.7 BINDING EFFECT. The Plan shall be binding upon and inure to the
benefit of the Corporation, its successors and assigns, and each Participant and
his heirs, executors, administrators and legal representatives.
11.8 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.
11.9 NO EFFECT ON AGREEMENT. The Plan shall not be considered or
construed to modify, amend or supersede any agreement between the Corporation
and the Participant relating to the Participant's services as a member of the
Board heretofore or hereafter entered into unless so specifically provided.
11.10 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.
11.11 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.
- 12 -
ARTICLE XII
PARTICIPATION BY ADDITIONAL CORPORATIONS
12.1 ADOPTION BY ADDITIONAL CORPORATION .
12.1(a) Any Affiliate may adopt the Plan with the consent of the Board
of the Plan Sponsor and its Board.
12.1(b) In addition, and as alternative to the consent, authorization
and approval by the Board required under subparagraph 12. 1(a) with respect to
the adoption of the Plan by an Affiliate, the Board of the Plan Sponsor hereby
delegates to the Benefits Committee the authority to consent to, authorize and
approve any such adoption of the Plan.S
12.2 TERMINATION EVENTS WITH RESPECT TO CORPORATIONS OTHER THAN THE PLAN
SPONSOR. The Plan shall terminate with respect to any Corporation other than the
Plan Sponsor, and such Corporation shall automatically cease to be a
participating Corporation in the Plan, upon the happening of any of the
following events:
(i) Action by the Corporation's Board terminating its
participation in the Plan and specifying the date of such termination.
Notice of such termination shall be delivered to the Administrator and
the, Plan Sponsor
(ii) The Corporation's ceasing to be an Affiliate.
(iii) Action by the Board of the Plan Sponsor or the Benefits
Committee terminating the, Corporation's participation in the Plan and
specifying the date of such termination. Notice or such termination
shall be delivered to the Administrator and the former participating
Corporation.
Termination of the Plan with respect to any Corporation shall mean termination
of active participation of the Participants employed by such Corporation, but
shall not mean immediate payment of Deferral Account balances with respect to
the Participant, of such Corporation unless the Board of the Plan Sponsor or the
Benefits Committee so directs.
- 13 -
IN WITNESS WHEREOF, each Corporation has caused the Plan to be signed on
its behalf by its duly authorized officer on the 27th of April, 1995.
FAUQUIER BANKSHARES, INC.
By:
-----------------------------
Its
-----------------------------
Attest:
-----------------------------
Its
--------------------------
THE FAUQUIER BANK
By:
-----------------------------
Its
-----------------------------
Attest:
-----------------------------
Its
--------------------------
- 14 -
FAUQUIER BANKSHARES, INC.
OMNIBUS STOCK OWNERSHIP AND
LONG TERM INCENTIVE PLAN
THIS IS THE OMNIBUS STOCK OWNERSHIP AND LONG TERM INCENTIVE PLAN ("Plan")
of FAUQUIER BANKSHARES, INC. (the "Corporation" or "Company"), a Virginia
corporation with its principal office in Warrenton, Virginia, under which
Incentive Stock Options and Non-Qualified Options to acquire shares of the
Stock, Restricted Stock, Stock Appreciation Rights, and/or Units may be granted
from time to time to Eligible Employees of the Corporation and of any of its
Subsidiaries (the "Subsidiaries"), subject to the following provisions:
ARTICLE I
DEFINITIONS
The following terms shall have the meanings set forth below. Additional
terms defined in this Plan shall have the meanings ascribed to them when first
used herein.
1.1 BOARD. The Board of Directors of FAUQUIER BANKSHARES, INC.
1.2 CHANGE IN CONTROL TRANSACTION.
(a) Any person, including a "group" as defined in Section 13(d)(3) of the
1934 Act becomes the owner or beneficial owner of securities of the Company or
of the Fauquier Bank (the "Bank") having 20% or more of the combined voting
power of the then outstanding Bank of Company securities that may be cast for
the election of the Bank or Company directors other than a result of an issuance
of securities initiated by the Bank or 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
(b) 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 Company before such events cease to constitute a
majority of the Bank's or Company's Board, or any successor's board, within two
years of the last of such transactions.
For purposes of this Agreement, the date of the Change in Control
Transaction is the date on which an event described in (a) or (b) occurs. If a
Change in Control Transaction occurs on
account of a series of transactions, the date of the Change in Control
Transaction is the date of the last of such transactions.
1.3 CODE. The Internal Revenue Code of 1986, as amended.
1.4 COMMITTEE. The Compensation Committee of the Board.
1.5 COMMON STOCK. The common stock, $3.13 par value per share, of the
Corporation.
1.6 DEATH. The date of death as established by the relevant death
certificate.
1.7 DISABILITY. For purposes of Incentive Stock Options, the date on which
an Eligible Employee becomes permanently and totally disabled within the meaning
of Section 22 (e) (3) of the Code, which shall be determined by the Committee on
the basis of such medical or other evidence as it may reasonably require or deem
appropriate. For purposes of other Rights, the date on which an Eligible
Employee becomes disabled as determined by the Committee in its sole discretion
on the basis of such medical or other evidence as it may reasonably require or
deem appropriate
1.8 EFFECTIVE DATE. The date on which this Plan is adopted by the Board.
1.9 ELIGIBLE EMPLOYEES. Those individuals who meet the following
eligibility requirements:
(i) Such individual must be a full time employee of the Corporation or
a Subsidiary. For this purpose, an individual shall be considered to be an
"employee" only if there exists between the Corporation or a Subsidiary and
the individual the legal and bona fide relationship of employer and
employee. In determining whether such relationship exists, the regulations
of the United States Treasury Department relating to the determination of
such relationship for the purpose of collection of income tax at the source
on wages shall be applied.
(ii) Such individual falls within the job grade classifications set
forth in Schedule 1. Such job grade classification may be amended,
expanded, restricted or otherwise modified by the Committee, subject to
ratification of such action by the Board.
(iii) Such individual, being otherwise an Eligible Employee under the
foregoing items, shall have been selected by the Committee as a person to
whom a Right or Rights shall be granted under the Plan.
1.10 FAIR MARKET VALUE. With respect to the Corporation's Common Stock, the
market price per share of such Common Stock determined by the Committee,
consistent with the requirements of Section 422 of the Code and to the extent
consistent therewith, as follows, as of the date specified in the context within
which such term is used:
2
(i) if the Common Stock was traded on a stock exchange on the date in
question, then the Fair Market Value will be equal to the closing price
reported by the applicable composite-transactions report on the last
trading day prior to such date;
(ii) if the Common Stock was traded over-the-counter on the date in
question and was classified as a national market issue, then the Fair
Market Value will be equal to the last transaction price quoted by the
Nasdaq National Market System ("NMS") on the last trading day prior to such
date;
(iii) if the Common Stock was traded over-the-counter on the date in
question but was not classified as a national market issue, then the Fair
Market Value will be equal to the average of the last reported
representative bid and asked prices quoted by Nasdaq on the last trading
day prior to such date; and
(iv) if none of the foregoing provisions is applicable, then the Fair
Market Value will be determined by the Committee in good faith on such
basis as it deems appropriate. In such case, the Committee shall maintain a
written record of its method of determining Fair Market Value.
1.11 ISO. An "incentive stock option" as defined in Section 422 of the
Code.
1.12 JUST CAUSE TERMINATION. A termination by the Corporation or a
Subsidiary of an Eligible Employee's employment by the Corporation or the
Subsidiary in connection with the good faith determination of the Board or the
Board of Directors of the Subsidiary, as applicable, that the Eligible Employee
is incompetent or otherwise has engaged in any acts involving dishonesty or
moral turpitude or in any acts that materially and adversely affect the
business, affairs or reputation of the Corporation or the Subsidiary.
1.13 NON-QUALIFIED OPTION. Any Option granted under III whether designated
by the Committee as a Non-Qualified Option or otherwise, other than an Option
designated by the Committee as an ISO, or any Option so designated but which,
for any reason, fails to qualify as an ISO pursuant to Section 422 of the Code
and the rules and regulations thereunder.
1.14 OPTION AGREEMENT. The agreement between the Corporation and an
Optionee with respect to Options granted to such Optionee, including such terms
and provisions as are necessary or appropriate under III.
1.15 OPTIONS. ISOs and Non-Qualified Options are collectively referred to
herein as "Options;" provided, however, whenever reference is specifically made
only to ISOs or Non-Qualified Options, such reference shall be deemed to be made
to the exclusion of the other.
1.16 PLAN POOL. A total of two hundred thousand (200,000) shares of
authorized, but unissued, Common Stock, as adjusted pursuant to Section 2.3(b),
which shall be available as Stock under this Plan.
3
1.17 REGISTRATION. The registration by the Corporation under the 1933 Act
and applicable state "Blue Sky" and securities laws of this Plan, the offering
of Rights under this Plan, the offering of Stock under this Plan, and/or the
Stock acquirable under this Plan.
1.18 RESTRICTED STOCK. The Stock which a Holder shall be awarded with
restrictions when, as, in the amounts and with the restrictions described in IV.
1.19 RESTRICTED STOCK GRANT AGREEMENT. The agreement between the
Corporation and a Holder with respect to Rights to Restricted Stock, including
such terms and provisions as are necessary or appropriate under IV.
1.20 RETIREMENT. "Retirement" shall mean
(i) the termination of an Eligible Employee's employment under
conditions which would constitute "normal retirement" or "early retirement"
under any tax qualified retirement plan maintained by the Corporation or a
Subsidiary, or
(ii) termination of employment after attaining age 65 (except in the
case of a Just Cause Termination).
1.21 RIGHTS. The rights to exercise or receive the Options, Restricted
Stock, Units and SARs described herein.
1.22 RIGHTS AGREEMENT. An Option Agreement, a Restricted Stock Grant
Agreement, a Unit Agreement or an SAR Agreement.
1.23 SAR. The Right of an SAR Recipient to receive cash when, as and in the
amounts described in VI.
1.24 SAR AGREEMENT. The agreement between the Corporation and an SAR
Recipient with respect to the SAR awarded to the SAR Recipient, including such
terms and conditions as are necessary or appropriate under VI.
1.25 SEC. The Securities and Exchange Commission.
1.26 STOCK. The shares of Common Stock in the Plan Pool available for
issuance pursuant to the valid exercise of a Right.
1.27 TAX WITHHOLDING LIABILITY. All federal and state income taxes, social
security tax, and any other taxes applicable to the compensation income arising
from the transaction required by applicable law to be withheld by the
Corporation.
1.28 TRANSFER. The sale, assignment, transfer, conveyance, pledge,
hypothecation, encumbrance, loan, gift, attachment, levy upon, assignment for
the benefit of creditors, by operation of law (by will or descent and
distribution), transfer by a qualified domestic relations order, a property
settlement or maintenance agreement, transfer by result of the bankruptcy laws
or otherwise of a share of Stock or of a Right.
4
1.29 UNITS. The Right of a Unit Recipient to receive a combination of cash
and Stock when, as and in the amounts described in V.
1.30 UNIT AGREEMENT. The agreement between the Corporation and Unit
Recipient with respect to the award of Units to the Unit Recipient, including
such terms and conditions as are necessary or appropriate under V.
1.31 1933 ACT. The Securities Act of 1933, as amended.
1.32 1934 ACT. The Securities Exchange Act of 1934, as amended.
ARTICLE II
GENERAL
2.1 PURPOSE. The purposes of this Plan are to encourage and motivate
employees within specified job grade classifications to contribute to the
successful performance of the Corporation and its Subsidiaries and the growth of
the market value of the Corporation's Common Stock; to achieve a unity of
purpose between such employees and shareholders by providing ownership
opportunities, and, when viewed in conjunction with potential benefit plans for
members of the Board and the Boards of Directors of some or all of the
Subsidiaries, to achieve a unity of purpose between such employees and directors
in the achievement of the Corporation's primary long term performance
objectives; and to retain such employees by rewarding them with potentially
tax-advantageous future compensation. These objectives will be promoted through
the granting of Rights to designated Eligible Employees pursuant to the terms of
this Plan.
2.2 ADMINISTRATION.
(a) The Plan shall be administered by the Committee which shall consist of
two or more Non-Employee Directors as defined in Rule 16b-3(b)(3)(i) promulgated
by the SEC under the 1934 Act. The Committee may designate any officers or
employees of the Corporation or any Subsidiary to assist in the administration
of the Plan, to execute documents on behalf of the Committee and to perform such
other ministerial duties as may be delegated to them by the Committee.
(b) Subject to the provisions of the Plan, the determinations and the
interpretation and construction of any provision of the Plan by the Committee
shall be final and conclusive upon persons affected thereby. By way of
illustration and not of limitation, the Committee shall have the discretion:
(i) to construe and interpret the Plan and all Rights granted
hereunder and to determine the terms and provisions (and amendments
thereof) of the Rights granted under the Plan (which need not be
identical);
5
(ii) to define the terms used in the Plan and in the Rights granted
hereunder;
(iii) to prescribe, amend and rescind the rules and regulations
relating to the Plan;
(iv) to determine the Eligible Employees to whom and the time or times
at which such Rights shall be granted, the number of shares of Stock, as
and when applicable, to be subject to each Right, the exercise price or,
other relevant purchase price or value pertaining to a Right, and the
determination of leaves of absence which may be granted to Eligible
Employees without constituting a termination of their employment for the
purposes of the Plan; and
(v) to make all other determinations and interpretations necessary or
advisable for the administration of the Plan.
(c) It shall be in the discretion of the Committee to grant Options to
purchase shares of Stock which qualify as ISOs under the Code or which will be
given tax treatment as Non-Qualified Options. Any Options granted which fail to
satisfy the requirements for ISOs shall become Non-Qualified Options.
(d) In determining the Eligible Employees to whom Rights may be granted and
the number of shares of Stock to be covered by each Right, the Committee shall
take into account such factors as the Committee shall deem relevant. An Eligible
Employee who has been granted a Right under this Plan may be granted an
additional Right or Rights under this Plan if the Committee shall so determine.
If, pursuant to the terms of this Plan, or otherwise in connection with this
Plan, it is necessary that the percentage of stock ownership of an Eligible
Employee be determined, the ownership attribution provisions set forth in
Section 424(d) of the Code shall be controlling.
(e) The granting of Rights pursuant to this Plan is in the exclusive
discretion of the Committee, and until the Committee acts, no individual shall
have any rights under this Plan. The terms of this Plan shall be interpreted in
accordance with this intent. The grant of Rights shall not obligate the Company
to pay an Eligible Employee any particular amount of remuneration, to continue
the employment of the Eligible Employee after the grant or to make further
grants to the Eligible Employee at any time thereafter.
6
2.3 STOCK AVAILABLE FOR RIGHTS.
(a) Shares of the Stock shall be subject to, or underlying, grants of
Options, Restricted Stock and Units under this Plan. The total number of shares
of Stock for which, or with respect to which, Rights may be granted (including
the number of shares of Stock in respect of which Units may be granted) under
this Plan shall be those designated in the Plan Pool. In the event that a Right
granted under this Plan to any Eligible Employee expires or is terminated
unexercised as to any shares of Stock covered thereby, such shares thereafter
shall be deemed available in the Plan Pool for the granting of Rights under this
Plan; provided, however, if the expiration or termination date of a Right is
beyond the term of existence of this Plan as described in Section 7.3, then any
shares of Stock covered by unexercised or terminated Rights shall not reactivate
the existence of this Plan and therefore shall not be available for additional
grants of Rights under this Plan.
(b) In the event the outstanding shares of Common Stock are increased,
decreased, changed into or exchanged for a different number or kind of
securities as a result of a stock split, reverse stock split, stock dividend,
recapitalization, merger, share exchange acquisition, combination or
reclassification appropriate proportionate adjustments will be made in: (i) the
aggregate number and/or kind of shares of Stock in the Plan Pool that may be
issued pursuant to the exercise of, or that are underlying, Rights granted
hereunder; (ii) the exercise or other purchase price or value pertaining to, and
the number and/or kind of shares of Stock called for with respect to, or
underlying, each outstanding Right granted hereunder; and (iii) other rights and
matters determined on a per share basis under this Plan or any Rights Agreement.
Any such adjustments will be made only by the Committee, subject to ratification
by the Board, and when so made will be effective, conclusive and binding for all
purposes with respect to this Plan and all Rights then outstanding. No such
adjustments will be required by reason of (i) the issuance or sale by the
Corporation for cash of additional shares of its Common Stock or securities
convertible into or exchangeable for shares of its Common Stock, or (ii) the
issuance of shares of Common Stock in exchange for shares of the capital stock
of any corporation, financial institution or other organization acquired by the
Corporation or any Subsidiary in connection therewith.
(c) The grant of a Right pursuant to this Plan shall not affect in any way
the right or power of the Corporation to make adjustments, reclassification,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.
(d) No fractional shares of Stock shall be issued under this Plan for any
adjustment under Section 2.3(b).
2.4 SEVERABLE PROVISIONS. The Corporation intends that the provisions of
each of Articles III, IV, V and VI, in each case together with Articles I, II
and VII, shall each be deemed to be effective on an independent basis, and that
if one or more of such Articles, or the operative provisions thereof, shall be
deemed invalid, void or voidable, the remainder of such Articles shall continue
in full force and effect.
7
ARTICLE III
OPTIONS
3.1 GRANT OF OPTIONS.
(a) Options may be granted to Eligible Employees as provided in this
Article III. Options will be deemed granted pursuant to this Article III only
upon (i) authorization by the Committee, and (ii) the execution and delivery of
an Option Agreement by the Eligible Employee optionee ("the "Optionee") and a
duly authorized officer of the Company. Options will not be deemed granted
hereunder merely upon authorization of such grant by the Committee. The
aggregate number of shares of Stock potentially acquirable under all Options
granted shall not exceed the total number of shares of Stock remaining in the
Plan Pool, less all shares of Stock potentially acquired under, or underlying,
all other Rights outstanding under this Plan.
(b) The Committee shall designate Options at the time a grant is authorized
as either ISOs or Non-Qualified Options. In accordance with Section 422 (d) of
the Code, the aggregate Fair Market Value (determined as of the date an ISO is
granted) of the shares of Stock as to which an ISO may first become exercisable
by an Optionee in a particular calendar year (pursuant to Article III and all
other plans of the Company and/or its Subsidiaries) may not exceed $100,000 (the
"$100,000 Limitation"). If an Optionee is granted Options in excess of the
$100,000 Limitation, or if such Options otherwise become exercisable with
respect to a number of shares of Stock which would exceed the $100,000
Limitation, such excess Options shall be Non-Qualified Options.
3.2 EXERCISE PRICE.
(a) The initial exercise price of each Option granted under this Plan (the
"Exercise Price")shall be determined by the Committee in its discretion;
provided, however, that the Exercise Price of an ISO shall not be less than (i)
the Fair Market Value of the Common Stock on the date of grant of the Option, in
the case of any Eligible Employee who does not own stock possessing more than
ten percent (10%) of the total combined voting power of all classes of the
capital stock of the Company (within the meaning of Section 422 (b) (6) of the
Code), or (ii) one hundred ten percent (110%) of such Fair Market Value in the
case of any Eligible Employee who owns stock in excess of such amount.
(b) In its discretion and subject to the provisions of Section 3.2(a) (as
to the establishment of the Exercise Price of an Option on the date of grant),
the Committee may establish that the Exercise Price of an Option shall be
adjusted based on subsequent events. The adjustments may include adjustments,
upward or downward, on a quarterly basis, based upon the market value
performance of the Common Stock in comparison with the aggregate market value
performance of one or more indices composed of publicly-traded financial
institutions and financial institution holding companies deemed by the Committee
to be similar (in terms of asset size, capitalization, trading volumes and other
factors deemed relevant by the Committee) to the Company (an "Index" and the
"Indices"). The Exercise Price of an ISO shall not be adjustable if, under the
Code, such adjustable Exercise Price would disqualify the ISO as an ISO. The
Committee may utilize Indices published by third parties and/or may construct
one or more Indices meeting the characteristics described above or other
characteristics.
8
The Indices utilized may be recalculated quarterly, including in such
quarterly recalculation such adjustments for stock splits, reverse stock splits
and stock dividends of the companies in the indices and of the Company as are
appropriate. If more than one Index is utilized by the Committee, it may give
such weighting to each Index utilized as the Committee may determine in its sole
discretion, consistent with the provisions of this Article III.
3.3 TERMS AND CONDITIONS OF OPTIONS.
(a) All Options must be granted within ten (10) years of the Effective
Date.
(b) The Committee may grant ISOs and Non-Qualified Options, either
separately or jointly, to an Eligible Employee.
(c) Each grant of Options shall be evidenced by an Option Agreement in form
and substance satisfactory to the Committee in its discretion, consistent with
the provisions of this Article III.
(d) At the discretion of the Committee, an Optionee, as a condition to the
granting of an Option, may be required to execute and deliver to the Company a
confidential information agreement or other employment-related agreements
approved by the Committee.
(e) Except as otherwise provided herein, each Option Agreement may specify
the period or periods of time within which each Option or portion thereof will
first become exercisable (the "Vesting Period") with respect to the total number
of shares of Stock acquirable thereunder. Such Vesting Periods will be fixed by
the Committee in its discretion, and may be accelerated or shortened by the
Committee in its discretion.
(f) An Optionee shall have no rights as a shareholder of the Company with
respect to any shares of Stock covered by Options granted to the Optionee until
payment in full of the Exercise Price by such Optionee for the shares being
purchased. No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distributions or other rights
for which the record date is prior to the date such Stock is fully paid for,
except as provided in Sections 2.3(b) and 3.2(b).
(g) To the extent provided in an Option Agreement, shares of Stock obtained
pursuant to an Option which qualifies as an ISO may be held in escrow for a
period which ends on the later of (i) two (2) years from the date of the
granting of the ISO or (ii) one (1) year after the issuance of such shares
pursuant to the exercise of the ISO. Such shares of Stock shall be held by the
Company or its designee. The Optionee who has exercised the ISO shall have all
rights of a shareholder, including, but not limited to, the rights to vote,
receive dividends and sell such shares. The sole purpose of the escrow is to
inform the Company of a disqualifying disposition of the shares of Stock
acquired within the meaning of Section 422 of the Code, and it shall be
administered solely for this purpose.
9
3.4. EXERCISE OF OPTIONS.
(a) An Optionee must be an Eligible Employee at all times from the date of
grant until the exercise of the Options granted, except as provided in Section
3.5(b) or in the Option Agreement.
(b) An Option may be exercised to the extent exercisable (i) by giving
written notice of exercise to the Company, specifying the number of full shares
of Stock to be purchased and, if applicable, accompanied by full payment of the
Exercise Price thereof and the amount of the Tax Withholding Liability pursuant
to Section 3.4(c) below; and (ii) by giving assurances satisfactory to the
Company that the shares of Stock to be purchased upon such exercise are being
purchased for investment and not with a view to resale in connection with any
distribution of such shares in violation of the 1933 Act; provided, however,
that in the event the prior occurrence of the Registration or in the event
resale of such Stock without such Registration would otherwise be permissible,
this second condition will be inoperative if, in the opinion of counsel for the
Company, such condition is not required under the 1933 Act or any other
applicable law, regulation or rule of any governmental agency.
(c) As a condition to the issuance of the shares of Stock upon full or
partial exercise of a Non-Qualified Option, the Optionee will pay to the Company
in cash, or in such other form as the Committee may determine in its discretion
(including the withholding of shares of Stock as to which the Option is then
being exercised), the amount of the Company's Tax Withholding Liability required
in connection with such exercise.
(d) The Exercise Price of an Option shall be payable to the Company either
(i) in United States dollars, in cash or by check, Corporation draft or money
order payable to the order of the Company, or (ii) at the discretion of the
Committee, through the delivery of shares of the Stock owned by the Optionee
(including, if the Committee so permits, a portion of the shares of stock as to
which the Option is then being exercised) with a Fair Market Value as of the
date of delivery equal to the Exercise Price, or (iii) at the discretion of the
Committee by a combination of (i) and (ii) above. No shares of Stock shall be
delivered until full payment has been made.
3.5 TERM AND TERMINATION OF OPTION.
(a) The Committee shall determine, and each Option Agreement shall state,
the expiration date or dates of each Option, but such expiration date shall be
not later than ten (10) years after the date such Option was granted (the
"Option Period"). In the event an ISO is granted to a 10% Shareholder, the
expiration date or dates of each Option Period shall be not later than five (5)
years after the date such Option is granted. The Committee, in its discretion,
may extend the expiration date or dates of an Option Period of any Non-Qualified
Option after such date was originally set; provided, however such expiration
date may not exceed the maximum expiration date described in this Section
3.5(a).
(b) To the extent not previously exercised, each Option will terminate upon
the expiration of the Option Period specified in the Option Agreement; provided,
however, that, subject to the provisions of Section 3.5(a), each ISO will
terminate upon the earlier of: (i) ninety (90) days after the date that the
Optionee ceases to be an Eligible Employee for any reason, other than by reason
of Death, Disability, or a Just Cause Termination; (ii) twelve (12) months after
the date that the Optionee ceases to be an Eligible Employee by reason of
Disability. The Committee
10
may, in its discretion, specify other events that will result in the termination
of an ISO (including, without limitation, termination of employment by reason of
Death, or a Just Cause Termination). In the case of Non-Qualified Options, the
Committee shall have full discretion to specify what, if any, events will
terminate the Option prior to the expiration of the Option Period.
3.6 CHANGE IN CONTROL TRANSACTION. At any time prior to the date of
consummation of a Change in Control Transaction, the Committee may, in its
absolute discretion, determine that all or any part of the Options theretofore
granted under this Article III shall become immediately exercisable in full and
may thereafter be exercised at any time before the date of consummation of the
Change in Control Transaction (except as otherwise provided in Article II
hereof. Any Option that has not been fully exercised before the date of
consummation of the Change in Control Transaction shall terminate on such date,
unless a provision has been made in writing in connection with such transaction
for the assumption of all Options theretofore granted, or the substitution for
such Options of options to acquire the voting stock of a successor employer
corporation, or a parent or a subsidiary thereof, with appropriate adjustments
as to the number and kind of shares and prices, in which event the Options
theretofore granted shall continue in the manner and under the terms so
provided.
3.7 RESTRICTIONS ON TRANSFER. An Incentive Stock Option may not be
Transferred except by will or the laws of descent and distribution and, during
the lifetime of the Optionee to whom it was granted, may be exercised only by
such Optionee. A Non-Qualified Stock Option may not be Transferred except by
will or the laws of descent and distribution, unless otherwise provided in the
Option Agreement.
3.8 STOCK CERTIFICATES. Certificates representing the Stock issued pursuant
to the exercise of Options will bear all legends required by law and necessary
to effectuate the provisions hereof. The Company may place a "stop transfer"
order against such shares of Stock until all restrictions and conditions set
forth in this Article III, the applicable Option Agreement, and in the legends
referred to in this Section 3.8 have been complied with.
3.9 AMENDMENT AND DISCONTINUANCE. The Board may amend, suspend or
discontinue the provisions of this Article III at any time or from time to time;
provided that no action of the Board will cause ISOs granted under this Plan not
to comply with Section 422 of the Code unless the Board specifically declares
such action to be made for that purpose; and, provided, further, that no such
action may, without the approval of the shareholders of the Company, materially
increase (other than by reason of an adjustment pursuant to Section 2.3(b)
hereof) the maximum aggregate number of shares of Stock in the Plan Pool,
materially increase the benefits accruing to Eligible Employees or materially
modify eligibility requirements for participation under this Article III.
Moreover, no such action may alter or impair any Option previously granted under
this Article III without the consent of the applicable Optionee.
3.10 COMPLIANCE WITH RULE 16B-3. With respect to persons subject to Section
16 of the 1934 Act, transactions under this Article III are intended to comply
with all applicable conditions of Rule 16b-3 or its successors under the 1934
Act. To the extent any provision of this Article III or action by the Board or
the Committee fails so to comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee
11
ARTICLE IV
RESTRICTED STOCK GRANTS
4.1 GRANTS OF RESTRICTED STOCK.
(a) Restricted Stock may be issued to Eligible Employees as provided in
this Article IV. Restricted Stock will be deemed issued only upon (i)
authorization by the Committee and (ii) the execution and delivery of a
Restricted Stock Grant Agreement by the Eligible Employee to whom such
Restricted Stock is to be issued (the "Holder") and a duly authorized officer of
the Company. Restricted Stock will not be deemed to have been issued merely upon
authorization by the Committee.
(b) Each issuance of Restricted Stock pursuant to this Article IV will be
evidenced by a Restricted Stock Grant Agreement between the Company and the
Holder in form and substance satisfactory to the Committee in its sole
discretion, consistent with this Article IV. Each Restricted Stock Grant
Agreement will specify the purchase price per share, if any, paid by the Holder
for the Restricted Stock, such amount to be fixed by the Committee in its
discretion.
(c) Without limiting the foregoing, each Restricted Stock Grant Agreement
shall set forth the terms and conditions of any forfeiture provisions regarding
the Restricted Stock, (including any provisions for accelerated vesting in the
event of a change in Control Transaction) as determined by the Committee in its
discretion.
(d) At the discretion of the Committee, the Holder, as a condition to the
issuance of shares, may be required (i) to execute and deliver to the Company a
confidential information agreement approved by the Committee, and/or (ii) to
agree to pay to the Corporation in cash, or in such other form as the Committee
may determine in its discretion (including the withholding of shares of Stock as
to which the Option is then being exercised), the amount of the Corporation's
Tax Withholding Liability required in connection with lapse of restrictions on
such Restricted Stock.
4.2 RESTRICTIONS ON TRANSFER OF RESTRICTED STOCK.
(a) Shares of Restricted Stock acquired by a Holder may be Transferred only
in accordance with the specific limitations on the Transfer of Restricted Stock
imposed by applicable state or federal securities laws or set forth below, and
subject to certain undertakings of the transferee set forth in Section 4.2(c).
All Transfers of Restricted Stock not meeting the conditions set forth in this
Section 4.2(a) are expressly prohibited.
(b) Any prohibited Transfer of Restricted Stock is void and of no effect.
Should such a Transfer purport to occur, the Company may refuse to carry out the
Transfer on its books, attempt to set aside the Transfer, enforce any
undertaking or right under this Section 4.2(b), and/or exercise any other legal
or equitable remedy.
12
(c) Any Transfer of Restricted Stock that would otherwise be permitted
under the terms of this Plan is prohibited unless the transferee executes such
documents as the Company may reasonably require to ensure the Company's rights
under a Restricted Stock Grant Agreement and this Article IV are adequately
protected with respect to the Restricted Stock so Transferred. Such documents
may include, without limitation, an agreement by the transferee to be bound by
all of the terms of this Plan applicable to Restricted Stock and of the
applicable Restricted Stock Grant Agreement, as if the transferee were the
original Holder of such Restricted Stock.
(d) To facilitate the enforcement of the restrictions on Transfer set forth
in this Article IV, the Committee may, at its discretion, require the Holder of
shares of Restricted Stock to deliver the certificate(s) for such shares with a
stock power executed in blank by the Holder and the Holder's spouse, to the
Secretary of the Company or his or her designee, and the Company may hold said
certificate(s) and stock power(s) in escrow and take all such actions as are
necessary to insure that all Transfers and/or releases are made in accordance
with the terms of this Plan. The certificates may be held in escrow so long as
the shares of Restricted Stock whose ownership they evidence are subject to any
restriction on Transfer under this Article IV or under a Restricted Stock Grant
Agreement. Each Holder shall acknowledge that the Secretary of the Company (or
his or her designee) is so appointed as the escrow holder with the foregoing
authorities as a material inducement to the issuance of shares of Restricted
Stock under this Article IV, that the appointment is coupled with an interest,
and that it accordingly will be irrevocable. The escrow holder will not be
liable to any party to a Restricted Stock Grant Agreement (or to any other
party) for any actions or omissions unless the escrow holder is grossly
negligent relative thereto. The escrow holder may rely upon any letter, notice
or other document executed by any signature purported to be genuine.
4.3 COMPLIANCE WITH LAW. Notwithstanding any other provision of this
Article IV, Restricted Stock may be issued pursuant to this Article IV only
after there has been compliance with all applicable federal and state securities
laws, and such issuance will be subject to this overriding condition. The
Company may include shares of Restricted Stock in a Registration, but will not
be required to register or qualify Restricted Stock with the SEC or any state
agency.
4.4 STOCK CERTIFICATES. Certificates representing the Restricted Stock
issued pursuant to this Article IV will bear all legends required by law and
necessary to effectuate the provisions hereof. The Company may place a "stop
transfer" order against shares of Restricted Stock until all restrictions and
conditions set forth in this Article IV, the applicable Restricted Stock Grant
Agreement and the legends referred to in this Section 4.4 have been complied
with.
4.5 MARKET STANDOFF. To the extent requested by the Company and any
underwriter of securities of the Company in connection with a firm commitment
underwriting, no Holder of any shares of Restricted Stock will Transfer any such
shares not included in such underwriting, or not previously registered in a
Registration, during the one hundred twenty (120) day period following the
effective date of the registration statement filed with the SEC under the 1933
Act in connection with such offering.
4.6 AMENDMENT AND DISCONTINUANCE. The Board may amend, suspend or
discontinue this Article IV at any time or from time to time; provided, that no
such action of the
13
Board shall alter or impair any rights previously granted to Holders under this
Article IV without the consent of such affected Holders.
4.7 COMPLIANCE WITH RULE 16B-3. With respect to persons subject to Section
16 of the 1934 Act, transactions under this Article IV are intended to comply
with all applicable conditions of Rule 16b-3 or its successors under the 1934
Act. To the extent any provision of this Article IV or action by the Board or
the Committee fails so to comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee.
ARTICLE V
LONG-TERM INCENTIVE COMPENSATION UNITS
5.1 AWARDS OF UNITS.
(a) Units may be granted to Eligible Employees as provided in this Article
V. Units will be deemed granted only upon (i) authorization by the Committee and
(ii) the execution and delivery of a Unit Agreement by the Eligible Employee to
whom Units are to be granted (a "Unit Recipient") and an authorized officer of
the Company. Units will not be deemed granted merely upon authorization by the
Committee. Units may be granted in each of the years 1997 through 2004 in such
amounts and to such Unit Recipients as the Committee may determine in its sole
discretion subject to the limitation in Section 5.2 below.
(b) Each grant of Units pursuant to this Article V will be evidenced by a
Unit Award Agreement between the Company and the Unit Recipient in form and
substance satisfactory to the Committee in its sole discretion, consistent with
this Article V.
(c) Except as otherwise provided herein, Units will be distributed only
after the end of a performance period of two or more years ("Performance
Period") beginning with the year in which such Units were awarded. The
Performance Period shall be set by the Committee for each award of Units.
(d) The percentage of the Units awarded under this Section 5.1 or credited
pursuant to Section 5.5 that will be distributed to Unit Recipients shall depend
on the levels performance objectives achieved during each year of the
Performance Period. The Committee may adopt one or more performance categories,
including financial performance. Financial performance shall be based on the
consolidated results of the Company and its Subsidiaries prepared on the same
basis as the financial statements published for financial reporting purposes and
determined in accordance with Section 5.1(e) below. Other performance categories
adopted by the Committee shall be based on such measurements of performance as
the Committee shall deem appropriate.
(e) Distributions of Units awarded will be based on the Company's
performance as compared to the performance objectives. The Committee may provide
for annual or longer performance measurement periods. The performance results
will be translated into percentage factors according to graduated criteria
established by the Committee for the entire Performance Period. The resulting
percentage factors shall determine the percentage of Units to be
14
distributed. The Committee may provide that to distributions of Units, based on
financial performance and other performance, shall be made if a minimum average
percentage of the applicable measurement of performance, to be established by
the Committee, is not achieved for the Performance Period. The performance
levels achieved for each Performance Period and percentage of Units to be
distributed shall be conclusively determined by the Committee.
(f) The percentage of Units awarded which Unit Recipients become entitled
to receive based on the levels of performance (including those Units credited
under Section 5.5) will be determined as soon as practicable after each
Performance Period and are called "Retained Units."
(g) As soon as practical after determination of the number of Retained
Units, such Retained Units shall be distributed in the form of a combination of
shares and cash in the relative percentages as between the two as determined by
the Committee in its sole discretion. The Units awarded, but which Unit
Recipients do not become entitled to receive, shall be canceled.
(h) Notwithstanding any other provision in this Article V, the Committee,
if it determines in its sole discretion that it is necessary or advisable under
the circumstances, may adopt rules pursuant to which Eligible Employees by
virtue of hire, or promotion or upgrade to a higher job grade classification, or
special individual circumstances, may be granted the total award of Units or any
portion thereof, with respect to one or more Performance Periods that began in
prior years and that at the time of the awards have not yet been completed.
5.2 LIMITATIONS.
The aggregate number of shares of Stock potentially distributable under all
Units granted, including those Units credited pursuant to Section 5.5, shall not
exceed the total number of shares of Stock remaining in the Plan Pool, less all
shares of Stock potentially acquirable under, or underlying, all other Rights
outstanding under this Plan.
5.3 TERMS AND CONDITIONS.
(a) All awards of Units must be made within ten (10) years of the Effective
Date.
(b) The award of Units shall be evidenced by a Unit Award Agreement in form
and substance satisfactory to the Committee in its discretion, consistent with
the provisions of this Article V.
(c) At the discretion of the Committee, a Unit Recipient, as a condition to
the award of Units, may be required to execute and deliver to the Company a
confidential information agreement approved by the Committee.
(d) A Unit Recipient shall have no rights as a shareholder of the Company
with respect to any Units until the distribution of shares of Stock in
connection therewith. No adjustment shall be made in the number of Units for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record
15
date is prior to the date such Stock is distributed, except as provided in
Sections 2.3(b) and 5.6(a).
5.4 SPECIAL DISTRIBUTION RULES.
(a) Except as otherwise provided in this Section 5.4 or in an Option
Agreement, a Unit Recipient must be an Eligible Employee from the date a Unit is
awarded to him or her continuously through and including the date of
distribution of such Unit.
(b) In case of the Death or Disability of a Unit Recipient prior to the end
of any Performance Period, the number of Units awarded to the Unit Recipient for
such Performance Period shall be reduced pro rata based on the number of months
remaining in the Performance Period after the month of Death or Disability. The
remaining Units, reduced in the discretion of the Committee to the percentage
indicated by the levels of performance achieved prior to the date of Death or
Disability, if any, shall be distributed within a reasonable time after Death or
Disability. All other Units awarded to the Unit Recipient for such Performance
Period shall be canceled.
(c) If a Unit Recipient enters into Retirement prior to the end of any
Performance Period, the Units awarded to such Unit Recipient under this Article
V and not yet distributed shall be prorated to the end of the year in which such
Retirement occurs and distributed at the end of the Performance Period based
upon the Company's performance for such period.
(d) In the event of the termination of the Unit Recipient's status as an
Eligible Employee prior to the end of any Performance Period for any reason
other than Death, Disability or Retirement, all Units awarded to the Unit
Recipient with respect to any such Performance Period shall be immediately
forfeited and canceled.
(e) Upon a Unit Recipient's promotion to a higher job grade classification,
the Committee may award to the Unit Recipient the total Units, or any portion
thereof, which are associated with the higher job grade classification for the
then current Performance Period.
(f) Notwithstanding any other provision of this Plan, the Committee may
reduce or eliminate awards to a Unit Recipient who has been demoted to a lower
job grade classification, and where circumstances warrant, may permit continued
participation, proration or early distribution, or a combination thereof, of
awards which would otherwise be canceled.
5.5 DIVIDEND EQUIVALENT UNITS. On each record date for dividends on the
Common Stock, an amount equal to the dividend payable on one share of Common
Stock will be determined and credited (the "Dividend Equivalent Credit") on the
payment date to each Unit Recipient's account for each Unit which has been
awarded to the Unit Recipient and not distributed or canceled. Such amount will
be converted within the account to an additional number of Units equal to the
number of shares of Common Stock that could be purchased at Fair Market Value on
such dividend payment date. These Units will be treated for purposes of this
Article V in the same manner as those Units granted pursuant to Section 5.1.
16
5.6 ADJUSTMENTS.
(a) In addition to the provisions of Section 2.3(b), if an extraordinary
change occurs during a Performance Period which significantly alters the basis
upon which the performance levels were established under Section 5.1 for that
Performance Period, to avoid distortion in the operation of this Article V, but
subject to Section 5.2, the Committee may make adjustments in such performance
levels to preserve the incentive features of this Article V, whether before or
after the end of the Performance Period, to the extent it deems appropriate in
its sole discretion, which adjustments shall be conclusive and binding upon all
parties concerned. Such changes may include, without limitation, adoption of, or
changes in, accounting practices, tax laws and regulatory or other laws or
regulations; economic changes not in the ordinary course of business cycles; or
compliance with judicial decrees or other legal authorities.
(b) At any time prior to the date of consummation of a Change in Control
Transaction, the Committee may, in its absolute discretion, determine that all
or any part of the Units theretofore awarded under this Article V shall become
immediately distributable (reduced pro rata based on the number of months
remaining in the Performance Period after the consummation of the Change in
Control Transaction) and may thereafter be distributed at any time before the
date of consummation of the Change in Control Transaction (except as otherwise
provided in Article II hereof). Except as otherwise provided in a Unit Award
Agreement, any Units that have not been distributed before the date of
consummation of the Change in Control Transaction shall terminate on such date,
unless a provision has been made in writing in connection with such transaction
for the assumption of all awards of Units theretofore made, or the substitution
for such units of awards of compensation units having comparable characteristics
under a long term incentive award plan of a successor employer corporation, or a
parent or a subsidiary thereof, with appropriate adjustments, in which event the
awards of Units theretofore made shall continue in the manner and under the
terms so provided.
5.7 OTHER CONDITIONS.
(a) No person shall have any claim to be granted an award of Units under
this Article V and there is no obligation for uniformity of treatment of
Eligible Employees or Unit Recipients under this Article IV.
(b) The Company shall have the right to deduct from any distribution or
payment in cash under this Article V, and the Unit Recipient or other person
receiving shares of Stock under this Article V shall be required to pay to the
Company, any Tax Withholding Liability. The number of shares of Stock to be
distributed to any individual Unit Recipient may be reduced by the number of
shares of Stock, the Fair Market Value of which on the Distribution Date (as
defined in Section 5.7(d) below) is equivalent to the cash necessary to pay any
Tax Withholding Liability, where the cash to be distributed is not sufficient to
pay such Tax Withholding Liability, or the Unit Recipient may deliver to the
Company cash sufficient to pay such Tax Withholding Liability.
(c) Any distribution of shares of Stock under this Article V may be delayed
until the requirements of any applicable laws or regulations, and any stock
exchange or Nasdaq-NMS requirements, are satisfied. The shares of Stock
distributed under this Article V shall be subject
17
to such restrictions and conditions on disposition as counsel for the Company
shall determine to be desirable or necessary under applicable law.
(d) For the purpose of distribution of Units in cash, the value of a Unit
shall be the Fair Market Value on the Distribution Date. Except as otherwise
determined by the Committee, the "Distribution Date" shall be March 15th in the
year of distribution, (or the first business day thereafter) except that in the
case of special distributions the Distribution Date shall be the first business
day of the month in which the Committee determines the amount and form of the
distribution.
(e) Notwithstanding any other provision of this Article V, no Dividend
Equivalent Credits shall be made and no distributions of Units shall be made if
at the time a Dividend Equivalent Credit or distribution would otherwise have
been made:
(i) The regular quarterly dividend on the Common Stock has been
omitted and not subsequently paid or there exists any default in payment of
dividends on any such outstanding shares of capital stock of the
Corporation.
(ii) The rate of dividends on the Common Stock is lower than at the
time the Units to which the Dividend Equivalent Credit relates were
awarded, adjusted for any change of the type referred to in Section 2.3(b).
(iii) Estimated consolidated net income of the Corporation for the
twelve month period preceding the month the Dividend Equivalent Credit or
distribution would otherwise have been made is less than the sum of the
amount of the Dividend Equivalent Credits and Units eligible for
distribution under this Article V in that month plus all dividends
applicable to such period on an accrual basis, either paid, declared or
accrued at the most recently paid rate, on all outstanding shares of Common
Stock; or
(iv) The Dividend Equivalent Credit or distribution would result in a
default in any agreement by which the Corporation is bound.
(f) In the event net income available under Section 5.7(e) above for
Dividend Equivalent Credits and awards eligible for distribution under this
Article V is sufficient to cover part but not all of such amounts, the following
order shall be applied in making payments: (i) Dividend Equivalent Credits, and
then (ii) Units eligible for distribution under this Article V.
5.8 DESIGNATION OF BENEFICIARIES. A Unit Recipient may designate a
beneficiary or beneficiaries to receive all or part of the Stock and/or cash to
be distributed to the Unit Recipient under this Article V in case of Death. A
designation of beneficiary may be replaced by a new designation or may be
revoked by the Unit Recipient at any time. A designation or revocation shall be
on a form to be provided for that purpose and shall be signed by the Unit
Recipient and delivered to the Corporation prior to the Unit Recipient's Death.
In case of the Unit Recipient's Death, any amounts to be distributed to the Unit
Recipient under this Article V with respect to which a designation of
beneficiary has been made (to the extent it is valid and enforceable under
applicable law) shall be distributed in accordance with this Article V to the
designated beneficiary or beneficiaries. The amount distributable to a Unit
Recipient upon Death and not
18
subject to such a designation shall be distributed to the Unit recipient estate.
If there shall be any question as to the legal right of any beneficiary to
receive a distribution under this Article V, the amount in question may be paid
to the estate of the Unit Recipient, in which event the Corporation shall have
no further liability to anyone with respect to such amount.
5.9 RESTRICTIONS ON TRANSFER. Units granted under Article V may not be
Transferred, except as provided in Section 5.8, and, during the lifetime of the
Unit Recipient to whom it was awarded, cash and stock receivable with respect to
Units may be received only by such Unit Recipient.
5.10 AMENDMENT AND DISCONTINUANCE. No award of Units may be granted under
this Article V after December 31, 2004. The Board may amend, suspend or
discontinue the provisions of this Article V at any time or from time to time.
5.11 COMPLIANCE WITH RULE 16B-3. With respect to persons subject to Section
16 of the 1934 Act, transactions under this Article V are intended to comply
with all applicable conditions of Rule 16b-3 or its successors under the 1934
Act. To the extent any provision of this Article V or action by the Board or the
Committee fails so to comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Committee.
ARTICLE VI
STOCK APPRECIATION RIGHTS
6.1 GRANTS OF SARS.
(a) Eligible Employees may be granted SARs under this Article VI. SARs will
be deemed granted only upon (i) authorization by the Committee and (ii) the
execution and delivery of a SAR Agreement by the Eligible Employee to whom the
SARs are to be granted (the "SAR Recipient") and a duly authorized officer of
the Corporation. SARs will not be deemed granted merely upon authorization by
the Committee. The aggregate number of SARs granted hereunder shall not exceed
the total number of shares of Stock provided in the Plan Pool.
(b) Each grant of SARs pursuant to this Article VI shall be evidenced by a
SAR Agreement between the Corporation and the SAR Recipient, in form and
substance satisfactory to the Committee in its sole discretion, consistent with
this Article VI.
6.2 TERMS AND CONDITIONS OF SARS.
(a) All SARs must be granted within ten (10) years of the Effective Date.
(b) Each SAR issued pursuant to this Article VI shall have an initial base
value (the "Base Value") equal to the Fair Market Value of a share of Common
Stock on the date of issuance of the SAR.
19
(c) In its discretion and subject to the provisions of Section 6.2(b) (as
to the establishment of the initial Base Value of a SAR), the Committee may
establish that the Base Value of a SAR shall be adjusted, upward or downward, on
a quarterly basis, based upon the market value performance of the Common Stock
in comparison with the aggregate market value performance of the Index or
Indices utilized under Section 3.2(b).
(d) At the discretion of the Committee, a SAR Recipient, as a condition to
the granting of a SAR, must execute and deliver to the Corporation a
confidential information agreement approved by the Committee.
(e) Except as otherwise provided herein, each SAR Agreement may specify the
period or periods of time within which each SAR or portion thereof will first
become exercisable (the "SAR Vesting Period"). Such SAR Vesting Periods will be
fixed by the Committee in its discretion, and may be accelerated or shortened by
the Committee in its discretion.
(f) A SAR Recipient shall have no rights as a shareholder of the
Corporation with respect to any shares of Stock underlying such SAR. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such Stock is fully paid for, except as
provided in Sections 2.3(b) and 6.2(c).
6.3 RESTRICTIONS ON TRANSFER OF SARS. SARs granted under this Article VI
may not be Transferred, except as provided in Section 6.7, and during the
lifetime of the SAR Recipient to whom it was granted, may be exercised only by
such SAR Recipient.
6.4 EXERCISE OF SARS.
(a) A SAR Recipient (or his or her executors or administrators, or heirs or
legatees) shall exercise a SAR by giving written notice of such exercise to the
Corporation. SARs may be exercised only upon the completion of the SAR Vesting
Period, if any, applicable to such SAR (the date such notice is received by the
Corporation being referred to herein as the "SAR Exercise Date").
(b) Within ten (10) business days of the SAR Exercise Date applicable to a
SAR exercised in accordance with Section 6.4(a), the SAR Recipient shall be paid
in cash the difference between the Base Value of such SAR (as adjusted, if
applicable under Section 6.2(c), as of the most recently preceding quarterly
period) and the Fair Market Value of the Common Stock as of the SAR Exercise
Date, as such difference is reduced by the Company's Tax Withholding Liability
arising from such exercise.
6.5 TERMINATION OF SARS. The Committee shall determine in its discretion,
and each SAR Agreement shall state, the expiration date or dates of each SAR,
but such expiration date shall be not later than ten (10) years after the date
such SAR is granted (the "SAR Period"). The Committee, in its discretion, may
extend the expiration date or dates of a SAR Period after such date was
originally set; provided, however, such expiration date may not exceed the
maximum expiration date described in this Section 6.5(a).
20
6.6 CHANGE IN CONTROL TRANSACTION. At any time prior to the date of
consummation of a Change in Control Transaction, the Committee may, in its
absolute discretion, determine that all or any part of the SARs theretofore
granted under this Article VI shall become immediately exercisable in full and
may thereafter be exercised at any time before the date of consummation of the
Change in Control Transaction (except as otherwise provided in Article II
hereof). Except as provided in an SAR Agreement, any SAR that has not been fully
exercised before the date of consummation of the Change in Control Transaction
shall terminate on such date, unless a provision has been made in writing in
connection with such transaction for the assumption of all SARs theretofore
granted, or the substitution for such SARs of grants of stock appreciation
rights having comparable characteristics under a stock appreciation rights plan
of a successor employer corporation or bank, or a parent or a subsidiary
thereof, with appropriate adjustments, in which event the SARs theretofore
granted shall continue in the manner and under the terms so provided.
6.7 DESIGNATION OF BENEFICIARIES. A SAR Recipient may designate a
beneficiary or beneficiaries to receive all or part of the cash to be paid to
the SAR Recipient under this Article VI in case of Death. A designation of
beneficiary may be replaced by a new designation or may be revoked by the SAR
Recipient at any time. A designation or revocation shall be on a form to be
provided for that purpose and shall be signed by the SAR Recipient and delivered
to the Corporation prior to the SAR Recipient's Death. In case of the SAR
Recipient's Death, the amounts to be distributed to the SAR Recipient under this
Article VI with respect to which a designation of beneficiary has been made (to
the extent it is valid and enforceable under applicable law) shall be
distributed in accordance with this Article VI to the designated beneficiary or
beneficiaries. The amount distributable to a SAR Recipient upon Death and not
subject to such a designation shall be distributed to the SAR Recipient's
estate. If there shall be any question as to the legal right of any beneficiary
to receive a distribution under this Article VI, the amount in question may be
paid to the estate of the SAR Recipient in which event the Corporation shall
have no further liability to anyone with respect to such amount.
6.8 AMENDMENT AND DISCONTINUANCE. The Board may amend, suspend or
discontinue the provisions of this Article VI at any time or from time to time.
No such action may alter or impair any SAR previously granted under this Article
VI without the consent of the applicable SAR Recipient.
6.9 COMPLIANCE WITH RULE 16B-3. With respect to persons subject to Section
16 of the 1934 Act, transactions under this Article VI are intended to comply
with all applicable conditions of Rule 16b-3 or its successors under the 1934
Act. To the extent any provision of this Article VI or action by the Board or
the Committee fails so to comply, it shall be deemed null and void, is the
extent permitted by law and deemed advisable by the Committee.
ARTICLE VII
MISCELLANEOUS
7.1 APPLICATION OF FUNDS. The proceeds received by the Corporation from the
sale of Stock pursuant to the exercise of Rights will be used for general
corporate purposes.
21
7.2 NO OBLIGATION TO EXERCISE RIGHT. The granting of a Right shall impose
no obligation upon the recipient to exercise such Right.
7.3 TERM OF PLAN. Except as otherwise specifically provide herein, Rights
may be granted pursuant to this Plan from time to time within ten (10) years
from the Effective Date.
7.4 CAPTIONS AND HEADINGS; GENDER AND NUMBER. Captions and paragraph
headings used herein are for convenience only, do not modify or affect the
meaning of any provision herein, are not a part of, and shall not serve as a
basis for, interpretation or construction of this Plan. As used herein, the
masculine gender shall include the feminine and neuter, and the singular number
shall include the plural, and vice versa, whenever such meanings are
appropriate.
7.5 EXPENSES OF ADMINISTRATION OF PLAN. All costs and expenses incurred in
the operation and administration of this Plan shall be borne by the Corporation
or by one or more Subsidiaries. The Corporation shall also indemnify, defend and
hold each member of the Committee harmless against all claims, expenses and
liabilities arising out of or related to the exercise of the Committee's powers
and the discharge of the Committee's duties hereunder.
7.6 GOVERNING LAW. Without regard to the principles of conflicts of laws,
the laws of the Commonwealth of Virginia shall govern and control the validity,
interpretation, performance and enforcement of this Plan.
7.7 INSPECTION OF PLAN. A copy of this Plan, and any amendments thereto,
shall be maintained by the Secretary of the Corporation and shall be shown to
any Eligible Employee or other proper person making inquiry about it.
22
AMENDMENT TO AGREEMENT
This Amendment to Agreement entered into as of the 13th day of June, 1997
by and between THE FAUQUIER BANK, a Virginia banking corporation (the "Bank"),
and C. Xxxxxx Xxxxxxx, (the "Executive").
RECITALS
1. The Bank and Executive entered into an Agreement dated as of the 16th
day of November, 1994, the ('Original Agreement) which provides for compensation
and other benefits to the Executive in certain events, a copy of which is
attached hereto as Exhibit A; and
2. The parties desire to amend such Agreement;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. Paragraph 1 of the Original Agreement is hereby amended to read as
follows:
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 an
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 safe 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 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 an account of a series of transactions, the Control Change Date is the
date of the last of such transactions.
2. Paragraph 3(ii)(b) of the original Agreement is hereby deleted and
Paragraph 3(ii)(c) is hereby redesignated as Paragraph 3(ii)(b).
THE FAUQUIER BANK
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
/s/ C. Xxxxxx Xxxxxxx
--------------------------------
Executive
AGREEMENT
THIS AGREEMENT, entered into as of the 16th day of November, 1994, by and
between THE FAUQUIER BANK, a Virginia banking corporation (the "Bank"), and C.
XXXXXX XXXXXXX (the "Executive").
WITNESSETH:
WHEREAS , the Board of Directors of the Bank has approved this Agreement
and authorized its execution and delivery on the Bank's behalf to the Executive;
and
WHEREAS, the Executive is presently a key executive officer of the Bank
whose continued dedication, availability, advice and counsel to the Bank is
deemed important to the Board of Directors of the Bank, the Bank and its
shareholders; and
WHEREAS, the services of the Executive, his experience and knowledge of the
affairs of the Bank, and his reputation and contacts in the industry are
extremely valuable to the bank; and
WHEREAS, the Bank wishes to attract and retain such well-qualified
Executives, and it is in the best interest of the Bank and of the Executive; and
WHEREAS, the Bank considers the establishment and maintenance of a sound
and vital management to be part of its overall corporate strategy and to be
essential to protecting and enhancing the best interests of the Bank and its
shareholders;
NOW, THEREFORE, to assure the Bank of the Executive's continued dedication,
the availability of his advice and counsel to the Board of Directors of the
Bank, and to induce the Executive to remain and continue in the employ of the
Bank and for other good and valuable consideration, the receipt and adequacy
whereof each party hereby acknowledges, the Bank and the Executive hereby agree
that the following terms and conditions of employment shall control and take
effect only in the event there is a change of control:
1. CHANGE OF CONTROL: For purposes of this Agreement, a Change of Control
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 Bank securities having 20% or more of the combined voting
power of the then outstanding Bank securities that may be cast for the election
of the Bank's directors other than a result of an issuance of securities
initiated by the Bank, or open market purchases approved by the Board of
Directors, 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
before such events cease to constitute a majority of the Bank's Board, or any
successor's board, within two years of the last 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.
2. TERMINATION AFTER CHANGE OF CONTROL: If, after such a Change of Control
shall have occurred, the Executive's employment is terminated, then the
Executive shall be entitled to receive the payments specified in this Agreement
unless such termination is for Cause or the Executive terminates employment
without Good Reason.
(i) 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
an 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 shall not be deemed to he willful.
Notwithstanding the foregoing, the Executive shall not he 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.
(ii) The Executive may terminate his employment for Good Reason. For
purposes of this Agreement, "Good Reason" shall mean:
(a) The assignment of duties to the Executive by the Bank which are
materially different from the Executive's duties immediately prior to the Change
of Control, or (ii) result in the Executive having significantly less authority
and/or responsibility than he had prior to the Change of Control, without his
express written consent;
2
(b) The removal of the Executive from or any failure to re-elect him
to the aforesaid position(s), except in connection with a termination of his
employment by the Bank for Cause;
(c) A reduction by the Bank of the Executive's base salary as in
effect on the date of the Change of Control or as the same may be increased from
time to time thereafter, or a failure by the Bank to increase such as salary
each year after such Change of Control by an amount which at least equals, on a
percentage basis, the percentage increase, if any, in the cost of living as set
forth in the Consumer Price index for the area in which the principal office of
the Bank is located (1967=100) published by the Bureau of Labor Statistics ot
the United States Department of Labor over the preceding year, unless the
failure to so increase the Executive's salary is waived in writing by the
Executive;
(d) The failure of the Bank to provide the Executive with
substantially the same fringe benefits that were provided to him immediately
prior to the Change of Control, or with a package of fringe benefits that,
though one or more of such benefits may vary from those in effect immediately
prior to such Change of Control, is substantially comparable in all material
respects to such fringe benefits taken as a whole;
(e) The failure of the Bank to obtain the assumption of and agreement
to perform this Agreement by any successor as contemplated in paragraph 5(iii)
hereof; or
(f) The relocation of the Bank's principal executive offices outside
of Warrenton, Virginia, without the consent of Executive.
(iii) Notwithstanding the provisions of paragraph 2(i) and 2(ii), following
a Change of Control the Bank may terminate the Executive's employment without
cause at any time in any otherwise lawful manner, subject to the Bank's
providing to the Executive the payments and benefits specified in paragraph
3(ii).
(iv) Termination by either party shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision(s) in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of employment under the provision so indicated.
(v) "Date of Termination" shall mean the date specified in the Notice of
Termination, which shall be not less than thirty (30) nor more than ninety (90)
days after such Notice of
3
Termination is given; provided, that if within thirty (30) days after any Notice
of Termination is given pursuant to paragraph 2(i) or 2(ii) the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then pending the resolution of any such dispute the
Bank shall continue to pay the Executive the same base salary as and when due
and payable, and provide him the same or substantially comparable fringe
benefits that he was paid and provided immediately prior to the delivery of the
Notice of Termination. If a termination by the Bank pursuant to paragraph 2(i)
above is challenged by the Executive and the termination is ultimately
determined to be justified, then all sums paid by the Bank to the Executive
pursuant to this paragraph 2(v), plus the cost to the Bank of providing the
Executive such fringe benefits from the date of such termination to the date of
the resolution of such dispute, shall be promptly repaid by the Executive to the
Bank with interest at the rate charged from time to time by The Fauquier Bank,
to its most substantial customers for unsecured parties of credit. Should it
ultimately be determined that a termination by the Bank pursuant to paragraph
2(i) above was not justified, or that a termination by the Executive pursuant to
paragraph 2(ii) above was for Good Reason, then the Executive shall be entitled
to retain all sums paid to him pending the resolution of such dispute and he
shall be entitled to receive in addition the payments and other benefits
provided for in paragraph 3(ii), and the Date of Termination shall be the date
on which the dispute is finally settled, either by mutual written agreement of
the parties, or by a final judgment.
3. TERMINATION PROVISIONS. (i) If the Executive's employment shall be
terminated for Cause pursuant to paragraph 2(i), and if such termination is
challenged by the Executive and the challenge is resolved in favor of the Bank,
the Bank shall have no further obligation to the Executive.
(ii) If within (3) years after a Change of Control of the Bank, (1) the
Bank shall terminate the Executive's employment in accordance with the
provisions of paragraph 2(i) hereof, and if such termination is challenged by
the Executive and the challenge is resolved in favor of the Executive, or (2)
the Executive shall terminate his employment pursuant to paragraph 2(ii) hereof
at any time during the period beginning with a Change of Control and ending
three (3) years after the Change of Control, then, except as provided in Section
6 of this Agreement,
(a) On or before the Executive's last day of employment with the Bank,
the Bank shall pay to the Executive as compensation for services rendered to the
Bank a cash amount (subject to any applicable payroll or other taxes required to
be withheld) equal to 2.99 times the highest annual compensation paid to the
Executive by the Bank for any six months ending with the Executive's
termination, provided that, at the option of the
4
Executive, the cash amount required to be paid hereby shall be paid by the Bank
in equal monthly installments over the six (6) months succeeding the Date of
Termination, payable on the first day of each such month. For purposes of this
paragraph 3(ii), highest annual compensation shall include only base salary and
cash bonuses paid to Executive.
(b) In addition to the benefits to which the Executive is entitled
under the retirement plans or programs of the Bank in effect as of the date
first above written or any successor plans or programs in effect on the Date of
Termination of the Executive's employment, the Bank shall pay the Executive a
cash amount equal to the actuarial equivalent of the retirement pension to which
the Executive would have been entitled under the terms of such retirement plan
or programs, without regard to "vesting" thereunder, had the Executive
accumulated three (3) additional years of continuous service (after any
termination pursuant to this Agreement) at the Executive's base salary rate in
effect on the Date of Termination under such retirement plans or programs
reduced by the single sum actuarial equivalent of any amounts to which the
Executive is entitled pursuant to the provisions of said retirement plans and
programs. For purposes of this paragraph 3(ii)(b), "actuarial equivalent" shall
be determined using the same methods and assumptions utilized under the Bank's
retirement plans and programs immediately prior to the Change of Control. The
Bank's obligation under this paragraph 3(ii)(b) may be satisfied by a lump sum
payment in cash or by the purchase of an annuity owned by and payable to the
Executive, which annuity shall provide for payment comparable to payments which
the Executive would receive pursuant to the aforementioned retirement plans or
programs. The payment shall be made or the annuity shall be purchased and
delivered to the Executive within thirty (30) days following termination;
provided, however, that at the Executive's option, payment may be deferred until
a later time if in the Executive's opinion, a deferral would result in a more
advantageous income or estate tax treatment.
(c) The Bank shall maintain in full force and effect, for the
continued benefit of the Executive for a three-year period after the Date of
Termination, all employee benefit plans and programs or arrangements in which
the Executive was entitled to participate immediately prior to the Date of
Termination, provided that the Executive's continued participation is possible
under the general terms and provisions of such plans and programs. In the event
that the Executive's participation in any such plan or program is barred, the
Bank shall arrange to provide the Executive with benefits substantially similar
to those which the Executive was entitled to receive under such plans and
programs.
(iii) In the event that the Executive terminates his employment at any time
after a Change of Control for other than
5
Good Reason, or Good Reason is alleged but ultimately determined pursuant to
paragraph 2(v) to be not justifiable, then the Bank shall have no further
obligation to the Executive.
4. STOCK OPTIQNS: Upon a Change of Control, all stock options granted to
the Executive under any of the Bank's Stock Option Plans, or any successor
thereto, shall become immediately exercisable with respect to all or any portion
of the shares covered thereby regardless of whether such options are otherwise
exercisable. The Bank shall reimburse the Executive for any federal income tax
liability incurred by the Executive in connection with the exercise of such
options which would not have otherwise been incurred by the Executive in the
absence of such options becoming immediately available upon a Change of Control,
such reimbursement to be submitted to the Executive within ten (10) days of
written notification to the Bank by the Executive of the exact amount of such
additional tax liability.
At any time subsequent to seven (7) days after the public announcement of a
Change of Control, any or all stock options granted to the Executive under the
Bank's Stock Option Plans, or any successor thereto, held by the Executive for
more than six months ("Cancelable Options") may, upon the written approval of a
majority of disinterested, non-employee members of the Board of Directors, be
cancelled by the Bank in exchange for the payment to the Executive of cash in an
amount equal to the aggregate spread between the average exercise price of the
Cancelable Options and the higher of: (a) the average of the closing prices of
the Bank's shares as reported in the daily newspaper for the thirty (30)
business days immediately preceding the public announcement of the Change of
Control, or (b) the highest price per share actually paid in connection with the
Change of Control of the Bank.
5. LITIGATION - OBLIGATIONS - SUCCESSORS: Notwithstanding the requirements
of paragraph 13 hereof, if litigation shall be brought to challenge, enforce or
interpret any provision contained in this Agreement, and such litigation does
not end with judgment in favor of the Bank, the Bank hereby agrees to indemnify
the Executive for his reasonable attorney's fees and disbursements incurred in
such litigation, and hereby agrees to pay post-judgement interest on any money
judgment obtained by the Executive calculated at the rate charged from time to
time by The Fauquier Bank, to its most substantial customers for unsecured lines
of credit from the date that payment(s) to him should have been made under the
judgment to date of payment.
(ii) The Bank's obligation to pay the Executive the compensation and
benefits and to make the arrangements provided in this Agreement shall be
absolute and unconditional and shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense or
6
other right which the Bank may have against him or anyone else, All amounts
payable by the Bank under this Agreement shall be paid without notice or demand
except as provided in paragraph 4 hereof. Except as expressly provided in
paragraph 2(v), each and every payment made hereunder by the Bank shall be final
and the Bank will not seek to recover all or any part of such payment from the
Executive or from whosoever may be entitled thereto, for any reason whatsoever.
The Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise.
(iii) 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, or either one of them, by agreement in form
and substance satisfactory to the Executive, to expressly assume and agree to
perform this Agreement in its entirety. Failure of the Bank to obtain such
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle the Executive to compensation from the Bank in
the same amount and on the same terms as he would be entitled if he had
terminated his employment for Good Reason pursuant to subparagraph 2(ii) above,
except that for purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of Termination. As
used in this Agreement, "Bank" shall mean the Bank as hereinabove defined and
any successor to its respective business and/or assets as aforesaid which
executes and delivers the Agreement provided for in this paragraph 5 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.
6. LIMITATION OF BENEFITS: It is the intention of the parties that no
payment be made or benefit provided to the Executive pursuant to this Agreement
that would constitute an "excess parachute payment" within the meaning of
Section 28OG of the Internal Revenue Code of 1986, as amended (the "Code") and
any regulations thereunder, thereby resulting in a loss of an income tax
deduction by the Bank or the imposition of an excise tax on the Executive under
Section 4999 of the Code. If the independent accounts serving as auditors for
the Bank on the date of a Change of Control (or any other accounting firm
designated by the Bank) determine that some or all of the payments or benefits
scheduled under this Agreement, as well as any other payments or benefits on a
Change of Control, would be nondeductible by the Company under Section 28OG of
the code, then the payments scheduled under this Agreement will be reduced to
one dollar less than the maximum amount which may be paid without causing any
such payment or benefit to be nondeductible. The determination made as to the
reduction of benefits or payments required hereunder by the independent
accountants shall be binding on the parties. The Executive shall have the right
to
7
designate within a reasonable period, which payments or benefits will be
reduced; provided, however, that if no direction is received from the Executive,
the Bank shall implement the reductions in its discretion.
7. NOTICES: For the purposes of this Agreement, notices or other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive: C. Xxxxxx Xxxxxxx
Post Xxxxxx Xxx 000
Xxxxxxxxx, XX 00000
If to the Bank: The Fauquier Bank
00 Xxxxxxxxxx Xxxxxx
P. 0. Drawer 561
Xxxxxxxxx, Xxxxxxxx 00000
or at such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
8. MODIFICATION - WAIVERS - APPLICABLE LAW: No provisions of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing, signed by the Executive and on behalf of the
Bank by such officer as may be specifically designated by the Board of Directors
of the Bank. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provision or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the Commonwealth of Virginia.
9. INVALIDITY - ENFORCEABILITY: The invalidity or enforceability of any
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect. Any provision in this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating or affecting
the remaining provisions hereof, and any such prohibition or unenforceability
8
in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction.
10. CHANGE OF CONTROL TERM: The terms of this Agreement shall automatically
renew and be extended for three (3) years following the date of the Change of
Control.
11. SUCCESSOR RIGHTS: This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive should die while any amounts would still be payable to him under this
Agreement, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to his devisee, legatee or other
designee or, if there is not such designee, to his estate.
12. HEADINGS: Descriptive headings contained in this Agreement are for
convenience only and shall not control or affect the meaning of construction of
any provision hereof.
13. ARBITRATION: Any dispute, controversy or claim arising under or in
connection with this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators, in Richmond, Virginia in
accordance with the rules of the American Arbitration Association then in
effect. Judgement may be entered on the arbitrator's award in any court having
jurisdiction. Unless otherwise provided in the rules of the American Arbitration
Association, the arbitrators shall, in their award, allocate between the parties
the costs of arbitration, which shall include reasonable attorneys' fees and
expenses of the parties, as well as the arbitrator's fees and expenses, in such
proportions as the arbitrators deem just.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first above written.
"EXECUTIVE"
/s/ C. Xxxxxx Xxxxxxx
------------------------------------
C. XXXXXX XXXXXXX
THE FAUQUIER BANK
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------
9
STATE OF VIRGINIA }
} To-Wit
County of Fauquier }
Sworn and subscribed before me on this 16th day of November, 1994, by C.
Xxxxxx Xxxxxxx.
/s/ Xxxxxxx Xxxxxxxxxxxx
----------------------------------------
Notary Public
My commission expires: May 31, 1995
STATE OF VIRGINIA }
} To-Wit
County of Fauquier }
Sworn and subscribed before me on this 16th day of November, 1994, by Xxxxx
X. Xxxxxxx, Senior Vice President of The Fauquier Bank.
/s/ Xxxxxxx Xxxxxxxxxxxx
----------------------------------------
Notary Public
My commission expires: May 31, 1995
10
STATE OF VIRGINIA }
} To-Wit
County of Fauquier }
Sworn and subscribed before me on this 16th day of November, 1994, by C.
Xxxxxx Xxxxxxx.
/s/ Xxxxxxx Xxxxxxxxxxxx
----------------------------------------
Notary Public
My commission expires: May 31, 1995
STATE OF VIRGINIA }
} To-Wit
County of Fauquier }
Sworn and subscribed before me on this 16th day of November, 1994, by Xxxxx
X. Xxxxxxx, Senior Vice President of The Fauquier Bank.
/s/ Xxxxxxx Xxxxxxxxxxxx
----------------------------------------
Notary Public
My commission expires: May 31, 1995
11
