Document:

exv10w14

 

Exhibit 10.14

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT, dated as of this 19th day of January, 2005, by and between Fauquier
Bankshares, Inc., a Virginia corporation (the “Company”), The Fauquier Bank, a Virginia banking
corporation (the “Bank”), and Randy K. Ferrell (the “Executive”).

     In consideration of the mutual covenants and agreements set forth herein, the parties agree as
follows:

Part I: General Employment Terms

     1. Employment and Duties. The Executive shall be employed by each of the Company and
the Bank as their Chief Executive Officer. The Executive accepts such employment and agrees to
perform the managerial duties and responsibilities of Chief Executive Officer. The Executive
agrees to devote his time and attention on a full-time basis to the discharge of such duties and
responsibilities of an executive nature as may be assigned him by the Company’s Board of Directors,
provided, that the Executive may accept any elective or appointed positions or offices with any
duly recognized associations or organizations whose activities or purposes are closely related to
the banking business or service to which would generate good will for the Company and its
subsidiaries and affiliates.

     2. Term. The term of this Agreement (which term, together with any extension
hereunder, is referred to as the “Term”) shall commence on January 15, 2005 (the “Effective Date”)
and shall continue through December 31, 2008, unless terminated or extended as hereinafter
provided. This Agreement shall be extended for successive one-year periods at December 31, 2005
and at each December 31 thereafter during the Term unless either party notifies the other in
writing at least 90 days prior to such December 31 that the Agreement shall not be extended or
further extended as the case may be.

     3. Compensation.

          (a) Base Salary. For the remainder of 2005, the Company shall pay the Executive an
annual base salary not less than $206,000. Such base salary shall be paid to the Executive in
accordance with established payroll practices of the Company. For 2006 and for each remaining year
of the Term, the Compensation Committee (“Compensation Committee”) of the Board of Directors of the
Company agrees to review the Executive’s base salary and to consider implementing changes to such
base salary as it may deem appropriate; however, such base salary shall not be reduced at any time
during the Term.

          (b) Annual Bonus. The Executive will be eligible to participate in an annual
incentive plan that will establish measurable criteria and incentive compensation levels payable to
the Executive for corporate performance in relation to defined benchmarks. The Compensation
Committee or the Board of Directors of the Company, as the case may be, will consult with
management to establish the targeted corporate performance levels for the Company on an annual
basis consistent with the Company’s business plan and objectives. Achievement of the targeted
corporate performance levels will normally result in an annual cash bonus payment equal to 40% of
the Executive’s then current annual base salary. Any bonus payments due hereunder shall be paid
to the Executive no later than 75 days after the end of the year.

 

 

          (c) Stock Compensation. Subject to the annual approval of the Compensation Committee
or the Board of Directors of the Company, as the case may be, the Executive will receive during the
Term an annual stock award under the Company’s Omnibus Stock Ownership and Long Term Incentive Plan
or any successor plan (the “Stock Compensation Plan”), with a value up to 90% of his then current
annual base salary. The stock award, which will consist of stock options, restricted stock grants
or other equity compensation grants, or any combination thereof, will include such vesting and
other terms and conditions as required herein and as otherwise determined in the sole discretion of
the Compensation Committee or the Board of Directors in accordance with the Stock Compensation
Plan, or any successor plan. The valuation of a stock option award will be determined using the
Black-Scholes or similar methodology as determined by the Compensation Committee or the Board of
Directors of the Company.

     4. Benefits and Perquisites.

          (a) During the Term, the Executive shall be eligible to participate in any plans, programs or
forms of compensation or benefits that the Company or its subsidiaries and affiliates provide to
the class of employees that includes the Executive, on a basis not less favorable than that
provided to such class of employees, including, without limitation, group medical, disability and
life insurance, paid time off, and a retirement plan; provided, however, a reasonable transition
period following any change in control, merger, statutory share exchange, consolidation,
acquisition or transaction involving the Company or any of its subsidiaries and affiliates shall be
permitted in order to make appropriate adjustments in compliance with this Section 4(a). Unless
prior notice to the contrary is provided, the Executive will be eligible to participate in the
Company’s other incentive programs, dependent on the rules and goals established for such programs.

          (b) The Executive shall be entitled such paid time off and perquisites as are provided by the
Compensation Committee.

     5. Reimbursement of Expenses. The Company shall reimburse the Executive promptly,
upon presentation of adequate substantiation, including receipts, for the reasonable travel,
entertainment, lodging and other business expenses incurred by the Executive, including, without
limitation, those expenses incurred by the Executive and his spouse in attending approved trade and
professional association conventions, meetings and other related functions. However, the
Compensation Committee and the Board of Directors of the Company reserves the right to review these
expenses periodically and determine, in its sole discretion, whether future reimbursement of such
expenses to the Executive will continue without prior approval of the expenses by the Compensation
Committee or the Board of Directors of the Company.

     6. Termination of Employment.

          (a) Death. The Executive’s employment under this Agreement shall terminate
automatically upon the Executive’s death.

          (b) Incapacity. If the Company determines that the Incapacity, as hereinafter
defined, of the Executive has occurred, it may terminate the Executive’s employment and this
Agreement upon 30 days’ written notice provided that, within 30 days after receipt of such notice,
the Executive shall not have returned to full-time performance of his assigned duties.
“Incapacity”
shall mean the failure of the Executive to perform his assigned duties with the Company on a
full-time basis as a result of mental or physical illness or injury as determined by a physician
selected by the Compensation Committee or the Board of Directors of the Company for the greater of 90

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consecutive calendar days or the longest waiting period under any long term disability insurance
contract or program provided to him as an employee.

          (c) Termination by the Company with or without Cause. The Company may terminate the
Executives employment during the Term, with or without Cause. For purposes of this Agreement,
“Cause” shall mean:

               (i) continual or deliberate neglect by the Executive in the performance of his material
duties and responsibilities as established from time to time by the Board of Directors of
the Company, or the Executive’s willful failure to follow reasonable instructions or
policies of the Company after being advised in writing of such failure and being given a
reasonable opportunity and period to remedy such failure;

               (ii) conviction of, indictment for (or its procedural equivalent), entering of a guilty
plea or plea of no contest with respect to a felony, a crime of moral turpitude or any other
crime with respect to which imprisonment is a possible punishment, or the commission of an
act of embezzlement or fraud against the Company or any subsidiary or affiliate thereof;

               (iii) any breach by the Executive of a material term of this Agreement, or violation in
any material respect of any code or standard of behavior generally applicable to officers of
the Company and its subsidiaries and affiliates, after being advised in writing of such
breach or violation and being given a reasonable opportunity and period to remedy such
breach or violation;

               (iv) dishonesty of the Executive with respect to the Company or any subsidiary or
affiliate thereof, or breach of a fiduciary duty owed to the Company or any subsidiary or
affiliate thereof; or

               (v) the willful engaging by the Executive in conduct that is reasonably likely to
result, in the good faith judgment of a majority of the outside members of the Board of
Directors of the Company, in material injury to the Company or any subsidiary or affiliate,
monetarily or otherwise.

For purposes hereof, no act, or failure to act, on the Executive’s part shall be considered
“willful” unless done, or omitted to be done, by him not in good faith and without reasonable
belief that his act or omission was in the best interest of the Company; provided that any act or
omission to act on the Executive’s behalf in reliance upon an opinion of counsel to the Company or
counsel to the Executive shall not be deemed to be willful. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause unless and until there shall have
been delivered to him a copy of a certification by a majority of the outside members of the Board
of Directors of the Company 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 hereof 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.

          (d) Termination by Executive for Good Reason. The Executive may terminate his
employment for Good Reason. For purposes of this Agreement, “Good Reason” shall mean any
of the following not occurring in connection with a termination of the Executive’s employment
for Cause:

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               (i) the continued assignment to the Executive of duties inconsistent with the
Executive’s position, authority, duties or responsibilities as contemplated by Section 1
hereof or, in the event of a Change in Control (as hereinafter defined), Section 10(a);

               (ii) any action taken by the Compensation Committee or the Board of Directors of the
Company which results in a substantial reduction in the status of the Executive, including a
diminution in his position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and/or inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice thereof given by the
Executive;

               (iii) the relocation of the Executive to any other primary place of employment which
might require him to move his residence which, for this purpose, includes any reassignment
to a place of employment located within the current market area of the Company or any of its
subsidiaries or affiliates at the Effective Date, as such market area is defined for
Community Reinvestment Act purposes, without the Executive’s express written consent to such
relocation; or

               (iv) any failure by the Company, or any successor entity following a Change in Control,
to comply with the provisions of Sections 3 and 4 or Section 10(b) hereof or to honor any
other term or provision of this Agreement, other than an isolated, insubstantial or
inadvertent failure not occurring in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Executive.

     7. Obligations upon Termination.

          (a) Death. If the Executive’s employment is terminated by reason of death in
accordance with Section 6(a) hereof, this Agreement shall terminate without further obligation to
the Executive or his legal representatives under this Agreement, except that his survivors,
designees or estate shall continue to receive, in addition to all other benefits to which they may
be entitled pursuant to the terms of any plan, program or arrangement of the Company and its
subsidiaries or affiliates, his base salary hereunder for a period of three months following the
month in which his death occurred.

          (b) Incapacity. If the Executive’s employment is terminated by reason of Incapacity
in accordance with Section 6(a) hereof, this Agreement shall terminate without further obligation
to the Executive under this Agreement except that the Executive shall receive any benefits to which
he may be entitled pursuant to the terms of any plan, program or arrangement of the Company and its
subsidiaries or affiliates.

          (c) Without Cause; Good Reason. Except as set forth in Section 7(e), if, during the
Term, the Company shall terminate the Executive’s employment without Cause and other than for death
or Incapacity or the Executive shall terminate employment for Good Reason, the Company will pay or
provide the following to the Executive:

               (i) Within 30 days after the termination of employment, the Company will pay to the
Executive in a lump sum the sum of (A) the Executive’s base salary through the date
of termination, (B) the amount, if any, of any incentive or bonus compensation
theretofore earned which has not yet been paid, (C) the product of the Executive’s annual
bonus paid or payable, including by reason of deferral, for the most recently completed year
and a fraction,

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the numerator of which is the number of days in the current year through the
date of termination and the denominator of which is 365, and (D) an amount equal to two
times the average of the Executive’s annual bonuses paid for the last two calendars years
preceding the calendar year of his termination of employment.

               (ii) Commencing within 30 days after the termination of employment, the Company shall
continue to pay to the Executive at regular payroll intervals Executive’s annual base salary
for a period of 24 months from the date of termination of employment.

               (iii) The Company shall also maintain in full force and effect for the Executive’s
continued benefit, until 24 months from the date of termination of employment, all health
and welfare plan and program coverage for the Executive, his spouse and dependents then in
effect, and provided that the Executive’s continued participation is possible under the
general terms and provisions of such plans and programs. If the Company reasonably
determines that maintaining any such health and welfare plan and program coverage in full
force and effect until 24 months from the Executive’s date of termination of employment is
not feasible, the Company either shall provide substantially identical benefits directly or
through an insurance arrangement or shall pay the Executive a lump sum equal to 1.4 times
the estimated cost of maintaining such coverage. If the Executive dies while receiving such
health and welfare benefit continuation, the Executive’s spouse and other dependents will
continue to be provided such benefits during the remainder of the 24-month period. The
Executive, his spouse and his dependents will become eligible for COBRA continuation
coverage as of the date health benefits cease.

               (iv) Vesting in all equity compensation awards granted to the Executive evidencing the
grant of a stock option or other award under the Company’s Stock Compensation Plan, or any
predecessor plan thereto, will automatically be accelerated and such equity compensation
awards shall be immediately exercisable and fully vested as of the date of termination of
employment. In the case of stock options, stock appreciation rights or similar awards, the
Executive will have at least 90 days after termination of employment, or such longer period
as may be provided for in the separate award agreement, to exercise his rights thereunder,
provided that such extended exercise period shall not extend beyond the maximum term of such
awards determined without regard to the Executive’s termination of employment.

In addition, the Executive shall receive any benefits to which he may be entitled pursuant to the
terms of any plan, program or arrangement of the Company and its subsidiaries or affiliates.

          (d) Cause; other than for Good Reason. If the Executive’s employment shall be
terminated for Cause or for other than death, Incapacity or Good Reason, this Agreement shall
terminate without any further obligation of the Company to the Executive other than to pay to the
Executive his annual base salary through the date of termination and to provide any benefits to
which he may be entitled pursuant to the terms of any plan, program or arrangement of the Company
and its subsidiaries or affiliates. The Executive will still be required to comply with the
non-competition and confidentiality covenants set forth in Section 7(e).

          (e) Non-Competition. Notwithstanding the foregoing, all such payments and benefits
under Section 7(c) otherwise continuing for periods after the Executive’s termination of employment
shall cease to be paid, and the Company shall have no further obligation due with respect thereto,
in the event the Executive engages in “Competition” or makes any “Unauthorized

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Disclosure of Confidential Information.” In addition, in exchange for the payments on termination as provided
herein, other provisions of this Agreement and other valuable consideration hereby acknowledged,
the Executive agrees that he will not engage in competition for a period of 24 months after his
employment ceases for any reason, including the expiration or nonrenewal of this Agreement. For
purposes hereof:

               (i) “Competition” means the Executive’s engaging without the written consent of the
Board of Directors of the Company or a person authorized thereby, in an activity as an
officer, a director, an employee, a partner, a more than one percent shareholder or other
owner, an agent, a consultant, or in any other individual or representative capacity within
the market area of the Company or any of its subsidiaries or affiliates at the relevant
time, as such market area is defined for Community Reinvestment Act purposes, (unless the
Executive’s duties, responsibilities and activities, including supervisory activities, for
or on behalf of such activity, are not related in any way to such competitive activity) if
it involves:

                    (A) engaging in or entering into the business of banking, lending or any other business
activity in which the Company or any of its affiliates is actively engaged at the time the
Executive’s employment ceases, or

                    (B) soliciting or contacting, either directly or indirectly, any of the customers or
clients of the Company or any of its affiliates for the purpose of competing with the
products or services provided by the Company or any of its affiliates, or

                    (C) employing or soliciting for employment any employees of the Company or any of its
affiliates for the purpose of competing with the Company or any of its affiliates.

               (ii) “Unauthorized Disclosure of Confidential Information” means the use or disclosure
of information in violation of Section 8 of this Agreement.

               (iii) For purposes of this Agreement, “customers” or “clients” of the Company or any of
its subsidiaries or affiliates means individuals or entities to whom the Company or any of
its affiliates has provided products or services at any time from the Effective Date through
the date the Executive’s employment ceases.

          (f) Remedies. The Executive acknowledges that the restrictions set forth in paragraph
7(e) of this Agreement are just, reasonable, and necessary to protect the legitimate business
interests of the Company. The Executive further acknowledges that if he breaches or threatens to
breach any provision of paragraph 7(e), the Company’s remedies at law will be inadequate, and the
Company will be irreparably harmed. Accordingly, the Company shall be entitled to an injunction,
both preliminary and permanent, restraining the Executive from such breach or threatened breach,
such injunctive relief not to preclude the Company from pursuing all available legal and equitable
remedies. In addition to all other available remedies, if the Executive violates the provisions of
paragraph 7(e), the Executive shall pay all costs and fees, including attorneys’ fees, incurred by
the Company in enforcing the provisions of that paragraph. If, on the other hand, it is finally
determined by a court of competent jurisdiction that a breach or threatened
breach did not occur under paragraph 7(e) of this Agreement, the Company shall reimburse the
Executive for reasonable legal fees incurred to defend that claim.

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     8. Confidentiality. The Executive recognizes that as an employee of the Company and
the Bank he will have access to and may participate in the origination of non-public, proprietary
and confidential information and that he owes a fiduciary duty to the Company and its subsidiaries
and affiliates. Confidential information may include, but is not limited to, trade secrets,
customer lists and information, internal corporate planning, methods of marketing and operation,
and other data or information of or concerning the Company and its subsidiaries and affiliates or
any of their customers that is not generally known to the public. The Executive agrees that he
will never use or disclose to any third party any such confidential information, either directly or
indirectly, except as may be authorized in writing specifically by the Company or required by law.

Part II: Change in Control

     9. Change in Control and Changes in Employment Terms and Conditions. Notwithstanding
any other term or provision of this Agreement, in the event of a Change in Control (as defined in
Section 14), this Part II shall become effective and govern the terms and conditions of the
Executive’s employment.

          (a) Continued Employment. If a Change in Control occurs during the Term, and the
Executive is employed by the Company on the Change in Control Date, the Company will continue to
employ the Executive in accordance with the terms and conditions of this Agreement for the period
beginning on the Change in Control Date (as defined in Section 14) and ending on the third
anniversary of such date (the “Change in Control Employment Period”).

          (b) Vesting of Equity Compensation Awards. Upon a Change in Control, all equity
compensation awards granted to the Executive under the Stock Compensation Plan, or any predecessor
thereto, prior to the Change in Control Date, shall become immediately vested and exercisable with
respect to all or any portion of the shares covered thereby and not previously forfeited or lapsed
regardless of whether such awards are otherwise vested and exercisable. The Company shall reimburse
the Executive for any federal income tax liability incurred by the Executive in connection with the
exercise of such awards which would not have otherwise been incurred by the Executive in the
absence of such awards becoming immediately available upon a Change in Control, such reimbursement
to be submitted to the Executive within ten days of written notification to the Company by the
Executive of the exact amount of such additional tax liability.

          (c) Cancellation and Cash Payment for Stock Options, Stock Appreciation Rights and Similar
Equity Compensation Awards. At any time subsequent to seven days after the public announcement
of a Change in Control, any or all stock options, stock appreciation rights and similar equity
compensation awards granted to the Executive under the Stock Compensation Plan held by the
Executive for more than six months (“Cancelable Awards”) may, upon the written approval of a
majority of disinterested, non-employee members of the Board of Directors of the Company, be
cancelled by the Company 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 Awards and the higher of:
(i) the average of the closing prices of the Company’s shares as reported in the daily newspaper
for the 30 business days immediately preceding the public announcement of the Change in Control, or
(ii) the highest price per share actually paid in connection with the Change in Control of the
Company.

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     10. Terms of Employment following a Change in Control.

          (a) Position and Duties. During the Change in Control Employment Period, (i) the
Executive’s position, authority, duties and responsibilities will be at least commensurate in all
material respects with the most significant of those held, exercised and assigned at any time
during the 90-day period immediately preceding the Change in Control Date, and (ii) the Executive’s
services will be performed at the location where the Executive was employed immediately preceding
the Change in Control Date or any office that is the headquarters of the Company and is less than
10 miles from such location; it being understood and agreed that this subsection (ii) shall
supercede the provisions of Section 6(c)(iii) dealing with the relocation of the Executive
following a Change in Control.

          (b) Compensation and Benefits following a Change in Control.

               (i) Annual Base Salary. During the Change in Control Employment Period, the
Executive will receive an annual base salary (the “Annual Base Salary”) at least equal to
the highest base salary paid or payable to the Executive by the Company and its affiliated
companies during the 12-month period immediately preceding the Change in Control Date.
During the Change in Control Employment Period, the Annual Base Salary will be reviewed at
least annually and will be increased each year after such Change in 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 Company is located (1967=100) published by the Bureau of Labor Statistics of
the United States Department of Labor over the preceding year, unless the failure to so
increase the Executive’s Annual Base Salary is waived in writing by the Executive. Any
increase in the Annual Base Salary will not serve to limit or reduce any other obligation to
the Executive under this Agreement. The Annual Base Salary will not be reduced after any
such increase, and the term Annual Base Salary as used in this Agreement will refer to the
Annual Base Salary as so increased. The term “affiliated companies” includes any company
controlled by, controlling or under common control with the Company.

               (ii) Annual Bonus. During the Change in Control Employment Period, the
Executive will be entitled to participate in an annual incentive plan generally applicable
to other peer executives of the Company and its affiliated companies, but in no event will
such incentive plan provide the Executive with a less favorable opportunity to earn an
annual bonus that is similarly structured to the annual incentive plan as in effect at any
time during the 12-month period immediately preceding the Change in Control Date.

               (iii) Incentive, Savings and Retirement Plans. During the Change in Control
Employment Period, the Executive will be entitled to participate in all incentive (including
stock incentive), savings and retirement, health and welfare plans, policies and programs
applicable generally to other peer executives of the Company and its affiliated companies,
but in no event will such plans, policies and programs provide the Executive with incentive
opportunities, savings opportunities and retirement benefit opportunities, in each case,
less favorable, in the aggregate, than those provided by the Company and its affiliated
companies for the Executive under such plans, policies and programs as in effect at any time
during the 12-month period immediately preceding the Change in Control Date.

               (iv) Health and Welfare Benefit Plans. During the Change in Control Employment
Period, the Executive and/or the Executive’s family, as the case may be, will be

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eligible for participation in and will receive all benefits under health and welfare benefit plans,
policies and programs provided by the Company and its affiliated companies to the extent
applicable generally to other peer executives of the Company and its affiliated companies,
but in no event will such plans, policies and programs provide the Executive with benefits
that are less favorable, in the aggregate, than the most favorable of such plans, policies
and programs in effect at any time during the 12-month period immediately preceding the
Change in Control Date.

               (v) Fringe Benefits. During the Change in Control Employment Period, the
Executive will be entitled to fringe benefits in accordance with the comparable plans,
policies and programs of the Company and its affiliated companies in effect for the
Executive at any time during the 12-month period immediately preceding the Change in Control
Date or, if more favorable to the Executive, as in effect generally from time to time after
the Change in Control Date with respect to other peer executives of the Company and its
affiliated companies.

               (vi) Vacation. During the Change in Control Employment Period, the Executive
will be entitled to paid vacation in accordance with the comparable plans, policies and
programs of the Company and its affiliated companies in effect for the Executive at any time
during the 12-month period immediately preceding the Change in Control Date or, if more
favorable to the Executive, as in effect generally from time to time after the Change in
Control Date with respect to other peer executives of the Company and its affiliated
companies.

     11. Termination of Employment following a Change in Control.

          (a) Death or Incapacity. The Executive’s employment will terminate automatically upon
the Executive’s death or Incapacity during the Change in Control Employment Period.

          (b) Cause. The Company may terminate the Executive’s employment during the Change in
Control Employment Period for Cause (as defined in Section 6(b)).

          (c) Good Reason. The Executive’s employment may be terminated during the Change in
Control Employment Period by the Executive for Good Reason (as defined in Section 6(c)), provided,
however, that Good Reason for this purpose shall also include the Executive’s voluntary resignation
in his discretion at any time during the 90 day period beginning on the Change in Control Date or
at any time during the 90 day period beginning on the first anniversary of the Change in Control
Date.

          (d) Notice of Termination. Any termination during the Change in Control Employment
Period by the Company or by the Executive for Good Reason 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(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.

          (e) Date of Termination. “Date of Termination” means the date specified in the Notice
of Termination, which shall be not less than 30 nor more than 90 days after such Notice of
Termination is given; provided, that if within 30 days after any Notice of Termination is given in
connection with a termination by the Company for Cause or by the Executive for Good Reason,
the party receiving such Notice of Termination notifies the other party that a dispute exists concerning

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the termination, then pending the resolution of any such dispute the Executive shall
continue to be paid the same base salary as and when due and payable, and shall be provided with
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 Company for Cause is
challenged by the Executive and the termination is ultimately determined to be justified, then all
sums paid by the Company to the Executive pursuant to this Section 11(e), plus the cost to the
Company 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 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 Company
for Cause above was not justified, or that a termination by the Executive 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 herein, 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.

     12. Obligations upon Termination following a Change in Control.

          (a) Death. If the Executive dies during the Change in Control Employment Period, this
Agreement will terminate without any further obligation on the part of the Company under this
Agreement, other than for (i) payment of the Accrued Obligations and three months of the
Executive’s Annual Base Salary (which shall be paid to the Executive’s beneficiary designated in
writing or his estate, as applicable, in a lump sum cash payment within 30 days of the date of
death); (ii) the timely payment or provision of the Welfare Continuance Benefit (as defined in
Section 12(c)) to the Executive’s spouse and other dependents for 36 months following the date of
death; and (iii) any other benefits to which the Executive may be entitled pursuant to the terms of
any plan, program or arrangement of the Company and its affiliated companies.

          (b) Incapacity. If the Executive’s employment is terminated because of the
Executive’s Incapacity during the Change in Control Employment Period, this Agreement will
terminate without any further obligation on the part of the Company under this Agreement, other
than for (i) payment of the Accrued Obligations and three months of the Executive’s Annual Base
Salary (which shall be paid to the Executive in a lump sum cash payment within 30 days of the Date
of Termination); (ii) the timely payment or provision of the Welfare Continuance Benefit in Section
12(c)) for 36 months following the Date of Termination; and (iii) any other benefits to which the
Executive may be entitled pursuant to the terms of any plan, program or arrangement of the Company
and its affiliated companies.

          (c) Termination without Cause or for Good Reason. The Executive will be entitled to
the following benefits if, during the Change in Control Employment Period, the Company terminates
his employment without Cause or the Executive terminates his employment with the Company or any
affiliated company for Good Reason.

               (i) Accrued Obligations. The Accrued Obligations are the sum of: (A) the
Executive’s Annual Base Salary through the Date of Termination at the rate in effect just
prior to the time a Notice of Termination is given; (B) the amount, if any, of any incentive
or bonus compensation theretofore earned which has not yet been paid; (C) the product of the
Annual Bonus paid or payable, including by reason of deferral, for the most recently
completed year
and a fraction, the numerator of which is the number of days in the current year
through the Date of Termination and the denominator of which is 365; and (D) any benefits or
awards

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(including both the cash and stock components) which pursuant to the terms of any
plans, policies or programs have been earned or become payable, but which have not yet been
paid to the Executive (but not including amounts that previously had been deferred at the
Executive’s request, which amounts will be paid in accordance with the Executive’s existing
directions). The Accrued Obligations will be paid to the Executive in a lump sum cash
payment within ten days after the Date of Termination;

               (ii) Salary Continuance Benefit. The Salary Continuance Benefit is an amount
equal to 2.99 times the Executive’s Highest Annual Compensation. For purposes of this
Agreement, “Highest Annual Compensation” means the highest annual compensation consisting
only of base salary and cash bonuses paid to the Executive by the Company and its affiliated
companies for any six months ending with the Executive’s termination. The Salary
Continuance Benefit will be paid to the Executive in a lump sum cash payment not later than
the 45th day following the Date of Termination, provided that, at the option of
the Executive, the amount required to be paid hereby shall be paid in equal monthly
installments over the six months succeeding the Date of Termination, payable on the first
day of each such month;

               (iii) Continuance of Health and Welfare Benefits. For 36 months following the
Date of Termination (the “Welfare Continuance Benefit Period”), the Executive, his spouse
and his dependents will continue to be covered under all health and welfare plans and
programs (“Welfare Plans”) in which the Executive, his spouse or his dependents were
participating immediately prior to the Date of Termination (the “Welfare Continuance
Benefit”). The Company will pay all or a portion of the cost of the Welfare Continuance
Benefit for the Executive, his spouse and his dependents under the Welfare Plans on the same
basis as applicable, from time to time, to active employees covered under the Welfare Plans
and the Executive will pay any additional costs. If participation in any one or more of the
Welfare Plans included in the Welfare Continuance Benefit is not possible under the terms of
the Welfare Plan or any provision of law would create an adverse tax effect for the
Executive or the Company due to such participation, the Company either shall provide
substantially identical benefits directly or through an insurance arrangement or shall pay
the Executive a lump sum equal to 1.4 times the estimated cost of maintaining such coverage.
If the Executive dies while receiving a Welfare Continuation Benefit, the Executive’s
spouse and other dependents will continue to be covered under all applicable Welfare Plans
during the remainder of the applicable Welfare Continuance Benefit Period. The Executive,
his spouse and his dependents will become eligible for COBRA continuation coverage as of the
date the Welfare Continuance Benefit ceases for health benefits.

               (iv) Continuance of Retirement Benefits. For 36 months following the Date of
Termination, the Executive will continue to be covered and accrue benefits under all
employee retirement benefit plans and programs (“Retirement Plans”) in which the Executive
was participating immediately prior to the Date of Termination based on the rate of accrual
immediately prior to the Date of Termination (the “Retirement Continuance Benefit”). If
participation in any Retirement Plan included in the Retirement Continuance Benefit is not
possible under the terms of the Retirement Plan or any provision of law would create an
adverse tax effect for the Company due to such participation, the Company will annually pay
in cash to the Executive at the end of each year in the 36-month period following the Date
of Termination the value of the Retirement Continuance Benefit accrual which is not
provided through the Retirement Plans.

- 11 -

 

               (v) Acceleration of Vesting of Equity Compensation Awards and Exercisability
thereof. Except as may be otherwise agreed to by the Executive, all equity compensation
awards granted to the Executive under the Stock Compensation Plan, or any predecessor
thereto, at or after the Change in Control Date, shall become immediately vested and
exercisable with respect to all or any portion of the shares covered thereby and not
previously forfeited or lapsed regardless of whether such awards are otherwise vested and
exercisable. In additional, the Executive will have at least 90 days after Termination of
Employment to exercise all stock options, stock appreciation rights and similar awards, or
such longer period as may be provided for in the separate stock option agreement, to
exercise such awards, provided that such extended exercise period shall not extend beyond
the maximum term of such awards determined without regard to the Executive’s Termination of
Employment.

          (d) Cause; other than for Good Reason. If the Executive’s employment is terminated
for Cause during the Change in Control Employment Period, this Agreement will terminate without
further obligation to the Executive other than the payment to the Executive of the Annual Base
Salary through the Date of Termination, plus the amount of any compensation previously deferred by
the Executive, and any other benefits to which the Executive may be entitled pursuant to the terms
of any plan, program or arrangement of the Company and its affiliated companies. If the Executive
terminates employment during the Change in Control Employment Period, excluding a termination
either due to death or Incapacity or for Good Reason (or Good Reason is alleged but ultimately
determined pursuant to Section 11(e) to be not justifiable), this Agreement will terminate without
further obligation to the Executive other than for the Accrued Obligations (which will be paid in a
lump sum in cash within 30 days of the Date of Termination or later determination that alleged Good
Reason is not justifiable) and any other benefits to which the Executive may be entitled pursuant
to the terms of any plan, program or arrangement of the Company and its affiliated companies.

          (e) Possible Reduction in Payments and Benefits.

               (i) Excess Parachute Payments. Notwithstanding the foregoing, in the event
that the payments and benefits provided to the Executive, or for the Executive’s benefit,
under this Agreement or under any other plan or agreement which become payable or are taken
into account as “parachute payments” within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the “Code”), as a result of a Change in Control or the
Executive’s termination of employment relating thereto (the “Total Parachute Payments”)
would result in the Executive’s being entitled to “excess parachute payments” as defined in
Section 280G of the Code, the payments and benefits provided to the Executive, or for the
Executive’s benefit, under this Agreement shall be reduced (but not below zero) to the
extent necessary so that no payment to be made, or benefit to be provided, to the Executive
or for the Executive’s benefit under this Agreement or any other plan or agreement would
result in “excess parachute payments” as defined in Section 280G of the Code and there would
consequently be no loss of an income tax deduction by the Company or the imposition of an
excise tax on the Executive under Section 4999 of the Code, provided, however that such
reduction shall not apply unless the Executive’s Net After-tax Benefit if such reduction
were made shall exceed the Executive’s Net After-tax Benefit if such reduction were not made
by at least $25,000. In connection with the foregoing:

- 12 -

 

                    (A) “Net After-tax Benefit” shall mean the sum of (1) the Total Parachute Payments
which the Executive receives or is then entitled to receive, less (2) the amount of federal,
state and local income and employment taxes payable by the Executive with respect to the
Total Parachute Payments, less (3) the amount of excise taxes imposed with respect to the
Total Parachute Payments by Section 4999 of the Code.

                    (B) All determinations regarding such reduction shall be made by the registered public
accounting firm under Section 102 of the Sarbanes-Oxley Act serving as auditors for the
Company on the date of a Change in Control (or any other registered public accounting firm
designated by the Company) and shall be based on the maximum applicable marginal tax rates
for each year in which such payments and benefits shall be paid or provided to the Executive
or for the Executive’s benefit (based upon the rate in effect for such year at the time of
the first payment of the foregoing and, as appropriate as determined by such tax counsel,
the taxable wage base for employment tax purposes). The determination made as to the
reduction of benefits or payments required hereunder by such registered public accounting
firm shall be binding on the parties, absent a determination by the Internal Revenue Service
which is agreed to by both the Company and the Executive or a final decision by a court of
competent jurisdiction over the tax issue in which case such determination or decision shall
control.

                    (C) The Executive shall have the right to designate within a reasonable period, which
payments or benefits will be reduced; provided, however, that if no direction is received
from the Executive, the Company shall implement the reductions in its discretion.

               (ii) Banking Payment Limitation. Notwithstanding anything contained in this
Agreement or any other agreement or plan to the contrary, the payments and benefits provided
to, or for the benefit of, the Executive under this Agreement or under any other plan or
agreement shall be reduced (but not below zero) to the extent necessary so that no payment
to be made, or benefit to be provided, to the Executive or for his benefit under this
Agreement or any other plan or agreement shall be in violation of the golden parachute and
indemnification payment limitations and prohibitions of 12 CFR Section 359.

     13. Company Obligations; Non-competition.

          (a) The Company’s obligation to pay the Executive the compensation and benefits and to make
the arrangements provided in this Part II of 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 other right which the Company may have against him or anyone
else. Except as expressly provided in Section 11(e), each and every payment made hereunder by the
Company pursuant to Part II of this Agreement shall be final and the Company 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.

          (c) The Executive will not be required to comply with the non-competition covenant in Section
7(e) if his employment is terminated during the Change in Control Employment Period without Cause
or he terminates for Good Reason.

     14. Change in Control Definitions. For purposes of this Agreement, the following
terms have the following meanings.

- 13 -

 

     (a) Change in Control. A “Change in Control” shall mean the occurrence of ether of
the following after the Effective 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 Company or the Bank having 20% or more of
the combined voting power of the then outstanding Company or Bank securities that may be
cast for the election of the Company or Bank directors other than a result of an issuance of
securities initiated by the Company or Bank, 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 Company or Bank before
such events cease to constitute a majority of the Company’s or Bank’s Board, or any
successor’s board, within two years of the last of such transactions

          (b) Change in Control Date. The “Change in Control Date” is the date on which an
event constituting a Change in Control occurs. If a Change in Control occurs on account of a series
of transactions, the Control Change Date is the date of the last of such transactions.

Part III: Miscellaneous

     15. Documents. All documents, record, tapes and other media of any kind or
description relating to the business of the Company or any of its subsidiaries and affiliates (the
“Documents”), whether or not prepared by the Executive, shall be the sole and exclusive property of
the Company. The Documents (and any copies) shall be returned to the Company upon the Executive’s
termination of employment for any reason or at such earlier time or times as the Board of Directors
or its designee may specify.

     16. Severability. If any provision of this Agreement, or part thereof, is determined
to be invalid or unenforceable for any reason whatsoever, it shall be severable from the remainder
of this Agreement and shall not invalidate or affect the other provisions of this Agreement, which
shall remain in full force and effect and shall be enforceable according to their terms. No
covenant shall be dependent upon any other covenant or provision herein, each of which stands
independently.

     17. Modification. The parties expressly agree that should a court find any provision
of this Agreement, or part thereof, to be unenforceable or unreasonable, the court may modify the
provision, or part thereof, in a manner which renders that provision reasonable, enforceable, and
in conformity with the public policy of Virginia.

     18. Governing Law. This agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Virginia.

     19. Notices. All written notices required by this Agreement shall be deemed given
when delivered personally or sent by registered or certified mail, return receipt requested, to the
parties at their addresses set forth below:

- 14 -

 

	 	 	 	 	 
	

	 	If to the Executive:
	 	Randy K. Ferrell
	

	 	 	 	7138 Norwich Ct.
	

	 	 	 	Warrenton, VA 20187
	 
	 	 	 	 
	

	 	If to the Bank:
	 	The Fauquier Bank
	

	 	 	 	10 Courthouse Square
	

	 	 	 	P. 0. Drawer 561

Warrenton, Virginia 22186
	 
	 	 	 	 
	

	 	If to the Company:
	 	Fauquier Bankshares, Inc.
	

	 	 	 	10 Courthouse Square
	

	 	 	 	P. 0. Drawer 561

Warrenton, Virginia 22186

Each party may, from time to time, designate a different address to which notices should be sent by
providing the same in writing to the other parties .

     20. Amendment. This Agreement may not be varied, altered, modified or in any way
amended except by an instrument in writing executed by the parties hereto or their legal
representatives.

     21. Binding Effect; No Mitigation; Notice and Demand Not Required.

     (a) This Agreement shall be binding upon the Executive and on the Company, its successors and
assigns effective on the date first above written subject to the approval by the Compensation
Committee or the Board of Directors of the Company. The Company will require any successor to all
or substantially all of the business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the Company would be required
to perform it if no such succession had taken place.

     (b) The Executive shall not be required to mitigate the amount of any payment or benefit the
Company becomes obligated to make or provide to the Executive in connection with this Agreement, by
seeking other employment or otherwise.

     (c) All amounts payable by the Company under this Agreement shall be paid without notice or
demand except as expressly provided herein .

     22. No Construction against Any Party. This Agreement is the product of informed
negotiations between the Executive and the Company. If any part of this Agreement is deemed to be
unclear or ambiguous, it shall be construed as if it were drafted jointly by all parties. The
Executive and the Company agree that neither party was in a superior bargaining position regarding
the substantive terms of this Agreement.

     23. Entire Agreement. This Agreement constitutes the entire agreement of the parties
with respect to the matters addressed herein and it supersedes all other prior agreements and
understandings, both written and oral, express or implied, with respect to the subject matter
of this Agreement.

     24. Arbitration. Any dispute, controversy or claim arising under or in connection
with this Agreement shall be settled exclusively by arbitration, arbitrators, conducted before a panel of

- 15 -

 

three in Richmond, Virginia in accordance with the rules of the American Arbitration
Association then in effect. Judgment 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.

     25. Litigation. Notwithstanding the requirements of Section 24 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 Company, the Company hereby agrees to
indemnify the Executive for his reasonable attorney’s fees and disbursements incurred in such
litigation, and hereby agrees to pay post-judgment 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.

     25. Nonqualified Deferred Compensation Plan Omnibus Provision. The parties to this
Agreement recognize and acknowledge that compensation, benefits or other remuneration provided or
available to the Executive pursuant to or in connection with this Agreement may be considered to be
provided under a nonqualified deferred compensation plan subject to Section 409A of the Code. The
parties hereby agree that any such compensation, benefit or other remuneration that is subject to
the provisions of Section 409A of the Code shall be paid in a manner, and at such time and in such
form, as complies with the applicable requirements of Section 409A of the Code to avoid a plan
failure described in Section 409A(a)(1) of the Code, including without limitation, deferring
payment until the occurrence of a specified payment event described in Section 409A(a)(2) of the
Code, that, notwithstanding any other provision thereof or document pertaining to any such
compensation, benefit or other remuneration subject to the provisions of Section 409A of the Code,
each provision of any plan, program or arrangement (including without limitation this Agreement)
relating to the provision of such compensation, benefit or other remuneration to or with respect to
the Executive, shall be so construed and interpreted, and that the Executive hereby consents to the
amendment of any such plan, program or arrangement as may be determined by the Company to be
necessary or appropriate to evidence or further evidence required compliance with Section 409A of
the Code.

- 16 -

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written herein.

	 	 	 	 	 	 	 
	 	 	Fauquier Bankshares, Inc.	 	 
	 	 	 	 	 
	

	 	By
	 	/s/ C. Hunton Tiffany

	 	 
	

	 	 	 	 

	 	 
	

	 	Its
	 	Chairman	 	 
	

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	The Fauquier Bank	 	 
	 
	 	 	 	 	 	 
	

	 	By
	 	/s/ C. Hunton Tiffany	 	 
	

	 	 	 	 	 	 
	

	 	Its
	 	Chairman	 	 
	

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Randy K. Ferrell	 	 
	 	 	 	 	 
	 	 	Randy K. Ferrell	 	 

- 17 -exv10w15

 

Exhibit 10.15

FAUQUIER BANKSHARES, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(As Adopted Effective January 1, 2005)

 

 

TABLE OF CONTENTS

ARTICLE I

Definition of Terms

	 	 	 	 	 
	 	 	 	 	Page
	1.1
	 	Accrued Benefit 	 	1
	1.2
	 	Act 	 	1
	1.3
	 	Active Participant 	 	1
	1.4
	 	Actuarial Equivalent or Actuarial Value 	 	1
	1.5
	 	Administrator 	 	1
	1.6
	 	Affiliate 	 	1
	1.7
	 	Annuity Starting Date 	 	1
	1.8
	 	Average Compensation 	 	2
	1.9
	 	Beneficiary 	 	2
	1.10
	 	Benefit Service 	 	2
	1.11
	 	Board 	 	2
	1.12
	 	Change in Control 	 	2
	1.13
	 	Code 	 	2
	1.14
	 	Continuous Service 	 	2
	1.15
	 	Committee 	 	3
	1.16
	 	Compensation 	 	3
	1.17
	 	Death Benefit 	 	3
	1.18
	 	Defined Contribution Plan 	 	3
	1.19
	 	Defined Benefit Plan 	 	3
	1.20
	 	Disability or Disabled 	 	3
	1.21
	 	Effective Date 	 	3
	1.22
	 	Eligible Employee 	 	4
	1.23
	 	Employee 	 	4
	1.24
	 	Employer 	 	4
	1.25
	 	Inactive Participant 	 	4
	1.26
	 	Normal Retirement Age 	 	4
	1.27
	 	Participant 	 	4
	1.28
	 	Plan 	 	5
	1.29
	 	Plan Sponsor 	 	5
	1.30
	 	Plan Year 	 	5
	1.31
	 	Rabbi Trust 	 	5
	1.32
	 	Retirement or Retired 	 	5
	1.33
	 	Vesting Service 	 	5

ARTICLE II

Eligibility and Participation

	 	 	 	 	 
	2.1
	 	Eligibility and Date of Participation 	 	5
	2.2
	 	Length of Participation 	 	5

ARTICLE III

Funding

	 	 	 	 	 
	3.1
	 	Plan Is Unfunded 	 	5
	3.2
	 	Plan Costs and Expenses 	 	5
	3.3
	 	No Interest or Right Other Than Plan Benefit 	 	5

 - i -  

 

	 	 	 	 	 
	 	 	 	 	Page
	3.4
	 	Use of Rabbi Trust Permitted 	 	5

ARTICLE IV

Determination of Accrued Benefit

	 	 	 	 	 
	4.1
	 	Accrued Benefit 	 	6
	4.2
	 	No Duplication of Benefits 	 	9

ARTICLE V

Retirement Dates

	 	 	 	 	 
	5.1
	 	Normal Retirement Date 	 	9
	5.2
	 	Delayed Retirement Date 	 	9
	5.3
	 	Early Retirement Date 	 	9
	5.4
	 	Disability Retirement Date 	 	9

ARTICLE VI

Vesting

	 	 	 	 	 
	6.1
	 	General Vesting and Forfeiture Rules 	 	9
	6.2
	 	Forfeiture in Other Cases 	 	10
	6.3
	 	No Reduction in Certain Vested Accrued Benefit by Reason of Re-Employment 	 	12
	6.4
	 	Vesting upon Change in Control 	 	12

ARTICLE VII

Death Benefits

	 	 	 	 	 
	7.1
	 	Death after Annuity Starting Date 	 	12
	7.2
	 	Death before Annuity Starting Date 	 	12
	7.3
	 	Death Benefit 	 	12
	7.4
	 	Beneficiary Designation 	 	13

ARTICLE VIII

Payment of Benefits

	 	 	 	 	 
	8.1
	 	Time of Payment 	 	13
	8.2
	 	Form and Amount of Accrued Benefit Payment 	 	14
	8.3
	 	Form and Amount of Death Benefit Payment 	 	15
	8.4
	 	Cashout of Benefit 	 	15
	8.5
	 	Suspension or Deferral of Benefits upon Re-Employment 	 	15
	8.6
	 	Benefit Determination and Payment Procedure 	 	15
	8.7
	 	Claims Procedure 	 	16
	8.8
	 	Payments to Minors and Incompetents 	 	19
	8.9
	 	Distribution of Benefit When Participant Cannot Be Located 	 	20
	8.10
	 	Minimum Amount Paid Monthly 	 	20
	8.11
	 	Limitations on Benefits 	 	20

ARTICLE IX

Fiduciaries

	 	 	 	 	 
	9.1
	 	Named Fiduciaries and Duties and Responsibilities 	 	21
	9.2
	 	Limitation of Duties and Responsibilities of Named Fiduciaries 	 	21

 - ii -  

 

	 	 	 	 	 
	 	 	 	 	Page
	9.3
	 	Service by Named Fiduciaries in More Than One Capacity 	 	21
	9.4
	 	Allocation or Delegation of Duties and Responsibilities by Named Fiduciaries 	 	21
	9.5
	 	Assistance and Consultation 	 	21
	9.6
	 	Indemnification 	 	22

ARTICLE XIII

Plan Administration

	 	 	 	 	 
	10.1
	 	Appointment of Plan Administrator 	 	22
	10.2
	 	Plan Sponsor as Plan Administrator 	 	22
	10.3
	 	Duties and Responsibilities of Plan Administrator 	 	22
	10.4
	 	Availability to Plan Administrator of Records 	 	22
	10.5
	 	No Action by Plan Administrator with Respect to Own Benefit 	 	22
	10.6
	 	Limitations on Plan Administrator’s Discretion 	 	22
	10.7
	 	Makeup of Administrative Committee 	 	23
	10.8
	 	Power and Authority of Administrative Committee 	 	23
	10.9
	 	No Action by Administrative Member with Respect to Own Benefit 	 	23
	10.10
	 	Action by Administrative Committee by Majority Vote 	 	23
	10.11
	 	Provision to Administrative Committee of Necessary Information 	 	23
	10.12
	 	Limitation on Powers and Authority of Administrative Committee 	 	23

ARTICLE XIV

Amendment and Termination of Plan

	 	 	 	 	 
	11.1
	 	Amendment and Termination 	 	23
	11.2
	 	Termination Events with Respect to Employers Other Than the Plan Sponsor 	 	24
	11.3
	 	Effect of Employer Merger, Consolidation or Liquidation 	 	24

ARTICLE XV

Miscellaneous

	 	 	 	 	 
	12.1
	 	Headings 	 	24
	12.2
	 	Gender and Number 	 	24
	12.3
	 	Governing Law 	 	24
	12.4
	 	Employment Rights 	 	25
	12.5
	 	Conclusiveness of Employer Records 	 	25
	12.6
	 	Right to Require Information and Reliance Thereon 	 	25
	12.7
	 	Alienation and Assignment 	 	25
	12.8
	 	Notices and Elections 	 	25
	12.9
	 	Delegation of Authority 	 	25
	12.10
	 	Service of Process 	 	25
	12.11
	 	Construction 	 	25
	12.12
	 	Nonqualified Deferred Compensation Plan Omnibus Provision 	 	25

 - iii -  

 

     THIS PLAN is adopted as of the date stated below by Fauquier Bankshares, Inc., a Virginia
corporation (the “Plan Sponsor”), for itself and for other participating employers who may
participate in the Plan as provided herein (collectively or individually hereinafter called the
“Employer”).

 WITNESSETH:

     WHEREAS, the Plan Sponsor deems it desirable to provide certain nonqualified retirement
benefits for such of its employees and those of its participating subsidiaries as its Board of
Directors (or any authorized committee thereof) determines; and

     WHEREAS, the Plan Sponsor deems it desirable state the terms and conditions for accrual,
vesting and payment of such nonqualified retirement benefits in this Plan;

     WHEREAS, the Plan Sponsor by due corporate action has approved and authorized the execution of
this Plan;

     NOW, THEREFORE, in consideration of the premises, this Plan provides as follows:

ARTICLE I

Definition of Terms

     The following words and terms as used herein shall have the meaning set forth below, unless a
different meaning is clearly required by the context:

     1.1
“Accrued Benefit”: That benefit determined under the provisions of paragraph 4.1 to which
a Participant is entitled.

     1.2
“Act”: The Employee Retirement Income Security Act of 1974, as the same may be amended
from time to time, or the corresponding sections of any subsequent legislation which replaces it,
and, to the extent not inconsistent therewith, the regulations issued thereunder.

     1.3
“Active Participant”: A Participant (i) who is an Eligible Employee or (ii) who Retired
on Disability Retirement, is still Disabled and is not receiving benefit payments from the Plan.

     1.4
“Actuarial Equivalent” or “Actuarial Value”: An amount or benefit of equivalent value to
another benefit or amount, based on the form(s) (which term is intended to include the time(s)) of
payment involved and based on such interest factor(s) and mortality table(s) as the Committee
determines for such purpose from time to time or, if the Committee does not specific an interest
factor or mortality table, based on interest at an assumed rate of six percent (6%), compounded
annually, and the 1984 Unisex Pension Table.

     1.5
“Administrator”: The Plan Administrator provided for in ARTICLE X hereof.

     1.6
“Affiliate”: Any corporation or business organization that is under common control with
the Plan Sponsor (as described in Section 414(b) and (c) of the Code, except as provided pursuant
to guidance issued under Section 409A(d)(6) of the Code).

     1.7
“Annuity Starting Date”: The first day of the first period for which a benefit is paid as
an annuity or in any other form (as opposed to the actual date of payment). Notwithstanding the
foregoing, the Annuity Starting Date shall not be considered delayed because actual benefit payment
is delayed for reasonable administrative reasons as long as all benefits due are actually made.
Further, the Administrator may consider the Annuity Starting Date delayed for notice, election and
consent purposes but not for payment purposes (which means that payment may be made retroactively
to the Annuity Starting Date once the notice, election and consent requirements are satisfied).

 - 1 -

 

     1.8
“Average Compensation”: The average of an Employee’s Compensation for the five (5)
consecutive Plan Years (or all consecutive Plan Years if there are not five (5)) during which he
had Compensation and was credited with a year of Benefit Service and which produce the highest
average, computed as of the end of any Plan Year during the ten (10) Plan Years immediately
preceding the date as of which his Accrued Benefit or Death Benefit is being determined. If a
Participant does not have a Plan Year for which he is credited with a full year of Benefit Service,
his Average Compensation shall be his annual rate of Compensation at the date he last is an
Eligible Employee.

     1.9
“Beneficiary”: The person or persons designated by a Participant or otherwise entitled
pursuant to paragraph 7.4 to receive benefits under the Plan attributable to such Participant after
the death of such Participant.

     1.10
“Benefit Service”: Continuous Service credited during or before the Participant last was
an Eligible Employee. The Board may, however, grant deemed service credit for any Participant for
one or more Benefit Service purposes on such basis as it considers advisable.

     1.11
“Board”: The present and any succeeding Board of Directors of the Plan Sponsor, unless
such term is used with respect to a particular Employer and its Employees, in which event it shall
mean the present and any succeeding Board of Directors of that Employer. Any Compensation
Committee or other committee of the Board may act on the Board’s behalf in any matter pertaining to
the Plan where such committee is duly empowered to do so.

     1.12
“Change in Control”: The occurrence of ether of the following after the Effective Date:

     (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 Participant in question is a
member), becomes the owner or beneficial owner of securities of the Plan Sponsor or its
subsidiary The Fauquier Bank, a Virginia banking corporation (the “Bank”), having 20% or more
of the combined voting power of the then outstanding Plan Sponsor or Bank securities that may
be cast for the election of the Plan Sponsor or Bank directors other than a result of an
issuance of securities initiated by the Plan Sponsor or Bank, as long as the majority of the
Board of the Plan Sponsor 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 Plan Sponsor or Bank before
such events cease to constitute a majority of the Plan Sponsor’s or Bank’s Board, or any
successor’s board, within two years of the last of such transactions.

     1.13
“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.

     1.14
“Continuous Service”: The uninterrupted service as an Employee of the Employer (but not
of any Affiliate which is not a participating Employer), including such time as the Employee may be
absent on leave of absence granted by the Employer. The following rules shall apply in determining
Continuous Service:

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     (i) A temporary absence from work of less than thirty (30) days without a leave of
absence granted by the Employer shall not be considered a break in continuous employment for
this purpose, but any greater period of such unauthorized absence shall be considered a break
in employment;

     (ii) Continuous Service shall be measured in years and months completed;

     (iii) For purposes hereof a “leave of absence” shall mean a paid or unpaid absence
authorized by the Employer without loss of employment status or rights, including but not
limited to, absence on account of injury, illness, Disability in the case of a Participant who
Retires on Disability Retirement, vacation or service in the Armed Forces of the United States
provided in the case of service in the Armed Forces of the United States the Employee returns
to the employment of the Employer within the period during which his re-employment rights as a
veteran are protected by law; and

     (iv) Notwithstanding the foregoing, an Employee’s Continuous Service prior to the time he
last commenced Continuous Service shall be disregarded for all purposes under the Plan unless
otherwise determined by the Board.

     1.15
“Committee”: The Administrative Committee provided for in ARTICLE X hereof.

     1.16
“Compensation”: An Employee’s total base salary and wages (including guaranteed
commissions) and incentive pay received by or made available to him in cash directly from the
Employer (but not of any Affiliate which is not a participating Employer) for a Plan Year.
Compensation shall be determined for each Employee prior to any withholding or deductions and prior
to any reduction for employee elective contributions to a cafeteria or flexible benefits plan
described in Section 125 of the Code, a program to provide a qualified transportation fringe
described in Section 132(f) of the Code or a qualified cash or deferred arrangement described in
Section 401(k) of the Code. Compensation shall exclude such items of compensation as expense
reimbursement and allowances, amounts contributed for the Employee pursuant to and benefits under
the Plan or any other employee benefit plan or program of the Employer, or any other similar fringe
benefit or extraordinary remuneration. For purposes of determining the Accrued Benefit or Death
Benefit of a Participant who retires on Disability Retirement, such Participant shall be deemed to
have received Compensation at his most recent actual or equivalent hourly rate in effect prior to
his becoming Disabled during periods for which he is considered to be Disabled.

     1.17
“Death Benefit”: That benefit determined under the provisions of paragraph 7.3 to which
a Participant’s Beneficiary is entitled.

     1.18
“Defined Contribution Plan”: The Virginia Bankers Association Master Defined
Contribution Plan for The Fauquier Bank, a defined contribution pension plan maintained by The
Fauquier Bank, or any transferee or successor defined contribution plan thereto.

     1.19
“Defined Benefit Plan”: The Virginia Bankers Association Master Defined Benefit Pension
Plan for The Fauquier Bank, a defined benefit pension plan maintained by The Fauquier Bank, or any
transferee or successor pension plan thereto.

     1.20
“Disability” or “Disabled”: That disability or state of being disabled described in
paragraph 5.4.

     1.21 “Effective Date”:

     (i) The Effective Date of the Plan is January 1, 2005.

     (ii) With respect to any employer becoming an Affiliate as of a date after the Effective
Date of the Plan, the Effective Date of the Plan as to such Employer is the date such employer
becomes an Affiliate (unless or to the extent otherwise specified by resolution of the Board
or in a merger or acquisition agreement or plan approved by the Board or in any applicable
asset transfer, plan merger or consolidation or adoption agreement).

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The Administrator shall maintain a list of the Effective Dates of participation of all Employers
participating in the Plan.

     1.22
“Eligible Employee”: An Employee who is employed by an Employer and who is designated by
the Board as an Eligible Employees (either by name or position) for the purpose of determining
Participants in the Plan. Unless otherwise determined by the Board, a person who is designated as
an Eligible Employee shall be deemed to be an Eligible Employee for purposes of determining his
Benefit Service and Vesting Service since his last date of hire as an Employee. The Board may,
however, designate that a person shall be considered to be an Eligible Employee for purposes of
determining his Benefit Service and/or Vesting Service since a date which is before or after his
last date of hire as an Employee. If a person is designated as an Eligible Employee, the Board may
terminate such designation prospectively at any time.

     1.23
“Employee”: Any person who is or shall be regularly employed by the Employer on a
permanent full-time basis (including an officer, but not including a director who is not an officer
or who is not so employed), but in any event excluding any person who is or shall be employed for a
definite temporary period or purpose. A full-time employee for the purpose of this Plan is one who
is employed for more than thirty (30) hours per week and more than five (5) months per year.

     1.24
“Employer”:

     1.24(a) The Plan Sponsor and each Affiliate (but only while the entity is an Affiliate unless
or to the extent otherwise specified by resolution of the Board or in a merger or acquisition
agreement or plan approved by the Board or in any applicable asset transfer, plan merger or
consolidation or adoption agreement), collectively unless the context otherwise indicates; and with
respect to any Employee, any one or more of such Employers by which he is at any time employed
(unless or to the extent otherwise specified by resolution of the Board or in a merger or
acquisition agreement or plan approved by the Board or in any applicable asset transfer, plan
merger or consolidation or adoption agreement).

     1.24(b) For purposes of determining Compensation and Continuous Service with any business
entity, or predecessor thereto, which is merged into a Employer, or a predecessor thereto, or all
or substantially all the assets or the operating assets are acquired by a Employer, or a
predecessor thereto, compensation from and service with such business entity and predecessor
thereto shall be treated as compensation from and service with an Employer to the extent provided
by resolution of the Board or in any corporate or plan merger, consolidation or asset transfer
agreement or any adoption agreement approved by the Board.

     1.25
“Inactive Participant”: A Participant who is not an Active Participant.

     1.26
“Normal Retirement Age”: The later of:

     (i) The age of sixty-five (65), or

     (ii) If the Participant last became an Employee on or after his attainment of the age of
sixty (60), the first day of the calendar month of the fifth anniversary of the Participant’s
last becoming an Employee.

     1.27
“Participant”: An Eligible Employee selected to participate in the Plan for so long as
he is considered a Participant as provided in ARTICLE II hereof. Participants are either Active
Participants or Inactive Participants depending on their status.

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     1.28 “Plan”: The Plan as contained herein or duly amended which shall be known as the
“Fauquier Bankshares, Inc. Supplemental Executive Retirement Plan”.

     1.29 “Plan Sponsor”: Fauquier Bankshares, Inc., a Virginia corporation (or its corporate
successor).

     1.30 “Plan Year”: A year commencing upon the first day of January of each year.

     1.31 “Rabbi Trust”: A trust fund described in Paragraph 3.4 and established or maintained for
the Plan.

     1.32 “Retirement” or “Retired”: The retirement from the employment of the Employer or the
state of being retired described in ARTICLE V.

     1.33 “Vesting Service”: Continuous Service credited during or before the Participant last was
an Eligible Employee. The Board may, however, grant deemed service credit for any Participant for
one or more Vesting Service purposes on such basis as it considers advisable.

ARTICLE II

Eligibility and Participation

     2.1 Eligibility and Date of Participation. Each person who is designated as an
Eligible Employee shall become a Participant as of the date the Board selects him to be a
Participant.

     2.2 Length of Participation. Any Employee who becomes a Participant shall remain a
Participant for so long as he or his Beneficiary is entitled to future benefits under the terms of
the Plan.

ARTICLE III

Funding

     3.1 Plan Is Unfunded. The Employer’s obligation to pay benefits under the Plan is
unfunded and all benefit payments under the Plan shall be made from the general assets by the
Employer. Each Participant, his Beneficiary and any other person having or claiming a right to
payment hereunder or to any interest under this Plan shall rely solely on the unsecured promise of
the Employer to make payments due hereunder. Each Participant, his Beneficiary, and any other
person having or claiming a right to payments under the Plan shall have the right to enforce such
claim against the Employer in the same manner as an unsecured creditor of the Employer. Nothing
contained in the Plan shall be deemed to create a trust of any kind.

     3.2 Plan Costs and Expenses. All costs of benefits under and expenses of the Plan,
including reasonable legal, accounting, and other fees and expenses incurred in the establishment,
amendment, administration and termination of the Plan and the compensation of the fiduciaries of
the Plan to the extent provided under the Plan, shall be paid by the Employer in such manner and
proportions as the Plan Sponsor shall determine.

     3.3 No Interest or Right Other than Plan Benefit. Nothing contained herein shall be
deemed to give any Participant or Beneficiary any interest in any specific part of the assets of
the Employer or any legal or equitable rights other than his right to receive benefits in
accordance with the provisions of the Plan.

     3.4 Use of Rabbi Trust Permitted.

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     3.4(a) Notwithstanding any provision herein to the contrary, the Plan Sponsor may, in its sole
discretion, elect to establish, and cause each Participating Employer to fund, a Rabbi Trust for
the purpose of providing benefits under the Plan. Any Rabbi Trust shall not contain provisions
which allow its assets to be located outside of the United States in violation of Section
409A(b)(1) of the Code or which provide that its assets will be restricted to the provision of Plan
benefits in connection with a change in the Employer’s financial health or which otherwise makes
its assets so restricted as described in Section 409A(b)(2)(A) or (B) of the Code.

     3.4(b) The Employers acknowledge that any Rabbi Trust, if established, will be established by
the Plan Sponsor for the benefit of all participating Employers (unless the trust agreement
otherwise provides), that being a participating Employer in the Plan automatically makes the
Employer an Employer for purposes of any Rabbi Trust (unless the trust agreement otherwise
provides), that any trust agreement may be amended by appropriate action of the Plan Sponsor
(without any action required by the other participating Employers), and that no Participant shall
have any interest (whether equitable, legal or otherwise) in the assets held pursuant to any Rabbi
Trust.

     3.4(c) The undertaking to pay benefits hereunder shall be an unfunded obligation payable
solely from the general assets of the Employer and, subject to the claims of the Employer’s
creditors, from each Employer’s portion of any Rabbi Trust.

ARTICLE IV

Determination of Accrued Benefit

     4.1 Accrued Benefit.

     4.1(a) The Accrued Benefit of a Participant shall be an amount, expressed in the form of a
term certain annuity with no life contingencies payable monthly for one hundred eighty (180)
months, commencing upon his Normal Retirement Date or as otherwise provided in this paragraph, and
equal to the amount determined under the Benefit Formula, calculated as follows:

     (i) A Participant who retires on his Normal Retirement Date shall be entitled to his
Accrued Benefit calculated to his Normal Retirement Date.

     (ii) A Participant whose employment with the Employer terminates after his Normal
Retirement Date due to Retirement shall be entitled to an Accrued Benefit commencing on his
Delayed Retirement Date and equal to his Accrued Benefit calculated to his Delayed Retirement
Date.

     (iii) A Participant who retires on his Early Retirement Date shall be entitled to his
Accrued Benefit calculated to his Early Retirement Date.

     (iv) A Participant who retires on his Disability Retirement Date shall be entitled to his
Accrued Benefit calculated to the earlier of:

     (A) The date as of which his Accrued Benefit commences to be paid,

     (B) The date he ceases to be Disabled, unless he returns to the employment of
the Employer within thirty (30) days after he ceases to be Disabled, in which case
his Accrued Benefit shall be determined under the other applicable clause of this
paragraph at his subsequent termination of employment with the Employer, or

     (C) His Normal Retirement Date.

     (v) The Accrued Benefit of each other Participant shall be calculated on the basis of his
Average Compensation and, where applicable, Benefit Service as of the date on which he ceases
to be an Eligible Employee.

 - 6 -

 

     4.1(b) For purposes hereof, the following terms have the following meanings:

     (i) “Benefit Formula” is one-twelfth (1/12) of the product obtained by multiplying the
Participant’s Service Fraction by the excess of (A) over (B) below:

     (A) The product obtained by multiplying (I) seventy percent (70%), reduced by
seven percent (7%) for each of his projected years and months of Benefit Service to
his Normal Retirement Date less than ten (10) (or if he has reached his Normal
Retirement Date, reduced by seven percent (7%) for each of his actual years and
months of Benefit Service less than ten (10)), and (II) the Participant’s Average
Compensation, over

     (B) The sum of the following amounts:

     (I) The Participant’s Defined Benefit Accrued Benefit,

     (II) The Participant’s Defined Contribution Offset Amount, and

     (III) The Participant’s Primary Social Security Benefit.

     (ii) A Participant’s “Defined Benefit Accrued Benefit” means the accrued benefit payable
annually (whether or not payments actually have actually begin) under the Defined Benefit Plan
and stated as a single life annuity beginning at the Participant’s Normal Retirement Date (or
if he continues to be an Employee after his Normal Retirement Date, at his Delayed Retirement
Date) and determined assuming the Participant continues to accrue benefits until his Normal
Retirement Date based on his continuing to receive Compensation at his most recent actual or
equivalent hourly rate in effect at the date of determination.

     (iii) A Participant’s “Defined Contribution Offset Amount” means the annual amount
payable for the Participant’s lifetime, commencing on the Participant’s Normal Retirement Date
(or if his employment with the Employer terminates after his Normal Retirement Date,
commencing on the first day of the calendar month coinciding with or next following his
cessation of employment) on account of the Participant’s “deemed balance” in the Defined
Contribution Plan held in his “Employer Account” (which is intended to exclude any balance attributable to the Participant’s after-tax, before-tax or
rollover contributions). The Defined Contribution Offset Amount shall be calculated assuming:

     (A) The “deemed balance” consists of (I) the Participant’s balance, if any, in
his Employer Account as of December 31, 2004 (calculated to include any Employer
contributions allocated as of a date on or before December 31, 2004 but not actually
contributed to the Defined Contribution Plan until after December 31, 2004), (II) the
amount of any Employer contributions allocated or deemed allocated as provided in
clause (ii)(B) of this subparagraph to the Defined Contribution Plan as of a date
after December 31, 2004 (with such contributions being considered held in the Defined
Contribution Plan from the last day of the plan year for which contributed or deemed
considered contributed as provided in clause (ii)(B) of this subparagraph, even if
contributed before or after such last day), (III) if the determination is made prior
to the Participant’s Normal Retirement Date, the amount of Employer contributions
that would be credited or deemed credited as provided in clause (ii)(B) of this
subparagraph annually through his Normal Retirement Date in the same amount as for
the Participant’s last full year of participation in the Defined Contribution Plan
(with such contributions being considered held in the Defined Contribution Plan from
the last day of the plan year for which deemed contributed), and (IV) an assumed
increase in the amounts provided for in (I), (II) and (III) at the DCP Interest Rate
compounded annually until the Participant would reach his Normal Retirement Date (or
if his employment with the Employer terminates after his Normal Retirement Date,
through the last day of the calendar month coinciding with or next following his
cessation of employment),

 - 7 -

 

     (B) Where any Employer contributions referred to in clause (A) above are
matching contributions, it will be assumed that the Participant received the maximum
matching contribution available under the Defined Contribution Plan (sometimes
referred as deemed contributions, allocations or credits) based on his compensation
for the plan year and determined without regard to any suspension from participation
and regardless of his actual employee contributions, and

     (C) The Participant’s “deemed balance” is converted to the annual amount of
Defined Contribution Offset Amount by dividing it by an actuarial adjustment factor
derived from the factors used to determined Actuarial Equivalents.

The “DCP Interest Rate” is seven percent (7%), compounded annually, provided that the
Committee may determine a different interest rate or rates for this purpose at any time or
from time to time on a prospective basis.

     (iv) A Participant’s “Primary Social Security Benefit” means the annual income to which
the Participant is entitled at his Normal Retirement Date under the provisions of the Federal
Social Security Act as in effect on the first day of the calendar year in which he reaches his
Normal Retirement Date. If a Participant does not qualify for, or loses, Social Security
benefits to which he is entitled under the Federal Social Security Act because of failure to
make application therefor, or entering into covered employment, such Social Security benefits
shall nevertheless be considered, for purposes of the Plan, as being received by such
Participant.

     (A) The Primary Social Security Benefit with respect to any Participant shall be
established by the Administrator on the basis of such evidence as may be available
and reasonable assumptions based thereon. In case of a Participant’s retirement or
severance of employment before his Normal Retirement Date, the Primary Social
Security Benefit to which he would be entitled at his Normal Retirement Date shall be
computed assuming (I) that there will be no change in the Federal Social Security Act
between the time of the Participant’s retirement or severance of
employment and his attainment of his Normal Retirement Date and (II) that he will
continue to receive Compensation at the same rate as at his retirement or severance
of employment until age sixty-five (65), which Compensation would be considered as
wages for purposes of the Federal Social Security Act.

     (B) In determining a Participant’s Primary Social Security Benefit, the
Participant’s estimated compensation, as determined by the Administrator, may be used
for all years before retirement or separation from the service of the Employer or
alternatively for all years before employment by the Employer. For purposes hereof,
a Participant’s “estimated compensation” shall be determined by applying a salary
scale, projected backwards, to his annual rate of Compensation at separation or
retirement or alternatively at date of hire by the Employer. The salary scale shall
be the actual change in the average wages from year to year as determined by the
Social Security Administration.

     (iv) A Participant’s “Service Fraction” is determined as follows.

     (A) Where the determination is made as of a date before his Normal Retirement
Date, a fraction (not to exceed one) determined at the end of the most recent month
(which may be the current month) in which he is credited with a month of Benefit
Service, the numerator of which is his years and months of Benefit Service as of the
time such determination is made, and the denominator of which is the number of years
and months of Benefit Service (including those in the numerator) with which he would
be credited if he remains an Eligible Employee accumulating one month of Benefit
Service during each month from such time until his Normal Retirement Date, or

 - 8 -

 

     (B) Where the determination is made as of a date on or after his Normal
Retirement Date, one (1).

Notwithstanding the foregoing, if a Change in Control occurs while the Participant is an
Active Participant, his Service Fraction shall be deemed to be one.

     4.2 No Duplication of Benefits. Notwithstanding any other provision of the Plan, the
total Accrued Benefit (including any Death Benefit derived from a calculation of the Accrued
Benefit) which may be earned by any Participant shall not exceed his maximum Accrued Benefit (or
Death Benefit) under the Plan, calculated without regard to any prior distributions of his Accrued
Benefit, and then reduced by the actuarial value of any prior distributions on such basis as the
Administrator shall determine or otherwise on the basis of the benefit payment actuarial factors of
the Defined Benefit Plan.

ARTICLE V

Retirement Dates

     5.1 Normal Retirement Date. The Normal Retirement Date of a Participant shall be the
first day of the calendar month coinciding with or next following the date on which the Participant
attains his Normal Retirement Age. A Participant who is an Employee and who is entitled to a
non-forfeitable Accrued Benefit may retire from the employment of the Employer on his Normal
Retirement Date for purposes of the Plan. A Participant who so retires shall be considered
“Retired” on Normal Retirement for purposes of this Plan.

     5.2 Delayed Retirement Date. If a Participant continues to be an Employee after his
Normal Retirement Date and if he is entitled to a non-forfeitable Accrued Benefit, he may retire
from the employment of the Employer at any time for purposes of the Plan and his Delayed Retirement Date shall be the
first day of the calendar month coinciding with or next following his retirement. A Participant
who so retires shall be considered “Retired” on Delayed Retirement for purposes of this Plan.

     5.3 Early Retirement Date. A Participant who has attained the age of sixty (60) years
or more while an Eligible Employee and has completed at least ten (10) years of Vesting Service may
retire from the employment of the Employer and shall be considered “Retired” on Early Retirement
for purposes of this Plan. Such Participant’s Early Retirement Date for purposes of this Plan
shall be the date of such retirement.

     5.4 Disability Retirement Date. A Participant who retires from the employment of the
Employer on disability retirement under the Defined Benefit Plan as an Eligible Employee shall be
considered “Retired” on Disability Retirement for purposes of this Plan and shall further be
considered to be “Disabled” or to be suffering a “Disability” for purposes of this Plan for the
period or periods he is considered “disabled” or to suffer a “disability” for purposes of the
Defined Benefit Plan. Such Participant’s Disability Retirement Date shall be the date of such
retirement under the Defined Benefit Plan.

ARTICLE VI

Vesting and Forfeiture of Benefits

     6.1 General Vesting and Forfeiture Rules.

     6.1(a) The Accrued Benefit and Death Benefit of a Participant shall be fully vested and
non-forfeitable upon the first to occur of the following while an Active Participant:

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	 	 	(i)  	Satisfaction of the age and service requirements for Early Retirement under the Plan,
	 
	 	 	(ii)  	Attainment of his Normal Retirement Age,
	 
	 	 	(iii)  	Death, or
	 
	 	 	(iv)  	Voluntary termination of employment with the consent of the Board so long as such
consent expressly provides for such vesting.

     6.1(b) If a Participant ceases to be an Active Participant or dies under any circumstances not
described in subparagraph 6.1(a), his Accrued Benefit and Death Benefit shall be forfeited.

     6.2 Forfeiture in Other Cases.

     6.2(a) Notwithstanding the provisions of paragraph 6.1, a Participant shall forfeit his
entitlement to his Accrued Benefit and his Death Benefit, and the Board may order payments already
being made to be discontinued upon, and in its discretion may require repayment of benefits paid in
the event the Participant’s employment is terminated by the Employer for Cause.

     (i) The Participant’s termination of employment with the Employer and all Affiliates for
Cause (as defined in subparagraph 6.2(b));

     (ii) The Participant’s entering into Competition (as defined in subparagraph 6.2(b)) with
the Employer or any Affiliate without the prior written consent of the Board after Retirement
or other termination of employment; or

     (iii) The Participant’s Unauthorized Disclosure of Confidential Information (as defined
in subparagraph 6.2(b)) of the Employer or any Affiliate without the prior written consent of
the Board after Retirement or other termination of employment.

The Board may at its option reinstate payment of future benefits if a Participant ceases to engage
in Competition with the Employer and its Affiliates.

     6.2(b) For purposes hereof:

     (i) “Cause” means:

     (A) Continual or deliberate neglect by the Participant in the performance of his
material duties and responsibilities as an Employee as established from time to time
pursuant, or the Participant’s willful failure to follow reasonable instructions or
policies of the Employer after being advised in writing of such failure and being
given a reasonable opportunity and period to remedy such failure;

     (B) Conviction of, indictment for (or its procedural equivalent), entering of a
guilty plea or plea of no contest with respect to a felony, a crime of moral
turpitude or any other crime with respect to which imprisonment is a possible
punishment, or the commission of an act of embezzlement or fraud against the Employer
or any Affiliate;

     (C) Any breach by the Participant of a material term of his employment agreement
(if any), or violation in any material respect of any code or standard of behavior
generally applicable to officers of the Employer and its Affiliates, after being
advised in writing of such breach or violation and being given a reasonable
opportunity and period to remedy such breach or violation;

 - 10 -

 

     (D) Dishonesty of the Participant with respect to the Employer or any Affiliate,
or breach of a fiduciary duty owed to the Employer or any Affiliate; or

     (E) The willful engaging by the Participant in conduct that is reasonably likely
to result, in the good faith judgment of a majority of the outside members of the
Board of the Plan Sponsor, in material injury to the Employer or any Affiliate,
monetarily or otherwise.

For purposes hereof, no act, or failure to act, on the Participant’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 Employer and its Affiliates;
provided that any act or omission to act on the Participant’s behalf in reliance upon an
opinion of counsel to the Employer or any Affiliate or counsel to the Participant shall not be
deemed to be willful. Notwithstanding the foregoing, the Participant shall not be deemed to
have been terminated for Cause unless and until there shall have been delivered to him a copy
of a certification by a majority of the outside members of the Board of the Plan Sponsor
finding that, in the good faith opinion of such majority, the Participant was guilty of
conduct which is deemed to be Cause within the meaning hereof and specifying the particulars
thereof in detail, after reasonable notice to the Participant and an opportunity for him,
together with his counsel, to be heard before such majority.

     (ii) “Competition” means the Participant’s engaging without the written consent of the
Board of the Plan Sponsor or a person authorized thereby, in an activity as an officer, a
director, an employee, a partner, a more than one percent shareholder or other owner, an
agent, a consultant, or in any other individual or representative capacity within fifty (50)
miles of the Plan Sponsor’s headquarters or any branch office of the Employer or any Affiliate (unless the Participant’s duties,
responsibilities and activities, including supervisory activities, for or on behalf of such
activity, are not related in any way to such competitive activity) if it involves:

     (A) Engaging in or entering into the business of banking, lending or any other
business activity in which the Employer or any Affiliates is actively engaged at the
time the Participant’s employment ceases, or

     (B) Soliciting or contacting, either directly or indirectly, any of the
customers or clients of the Employer or any Affiliate for the purpose of competing
with the products or services provided by the Employer or any Affiliate, or

     (C) Employing or soliciting for employment any employees of the Employer or any
Affiliate for the purpose of competing with the Employer or any Affiliate.

In the event any of the restrictions against engaging in a competitive activity contained in
this subparagraph shall be determined by any court of competent jurisdiction to be
unenforceable by reason of its extending for too great a period of time or over too great a
geographical area or by reason of its being too extensive in any other respect, it shall be
interpreted to extend only over the maximum period of time for which it may be enforceable,
and over the maximum geographical area as to which it may be enforceable and to the maximum
extent in all other respects as to which it may be enforceable, all as determined by such
court in such action.

     (iii) “Unauthorized Disclosure of Confidential Information” means the disclosure by the
Participant without the written consent of the Board of the Plan Sponsor or a person
authorized thereby, to any person other than as required by law or court order, or other than
to an authorized employee of the Employer or an Affiliate, or to a person to whom disclosure
is necessary or appropriate in connection with the performance by the Participant of his
duties as an employee or director of the Employer or an Affiliate

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(including, but not limited to, disclosure to the Employer’s or an Affiliate’s outside counsel, accountants or bankers of
financial data properly requested by such persons and approved by an authorized officer of the
Plan Sponsor), any non-public, proprietary and confidential information of the Employer or any
Affiliate. Confidential information may include, but is not limited to, trade secrets,
customer lists and information, internal corporate planning, methods of marketing and
operation, and other data or information of or concerning the Employer and its Affiliates or
any of their customers that is not generally known to the public.

     6.3 No Reduction in Certain Vested Accrued Benefits by Reason of Re-Employment.
Notwithstanding any provisions hereof to the contrary, in the case of a Participant who has a
non-forfeitable interest in his Accrued Benefit and who separates from the service of the Employer
whether by Retirement, Disability or other termination, the dollar amount of his non-forfeitable
interest in his Accrued Benefit immediately prior to his re-employment shall not be reduced by
reason of his re-employment.

     6.4 Vesting upon Change in Control. Notwithstanding the foregoing provisions of this
ARTICLE VI, upon a Change in Control, the Accrued Benefit and Death Benefit of each of the
following Participants shall be fully vested and non-forfeitable without the requirement of further
service under paragraph 6.1 and without forfeiture pursuant to clause (ii) of subparagraph 6.2(b)
as a result of his Competition after the Change in Control. Participants to whom this paragraph
applies are each Participant who at the Change in Control:

     (i) Is then an Active Participant, and

     (ii) Has not then otherwise forfeited his Accrued Benefit and Death Benefit.

ARTICLE VII

Death Benefits

     7.1 Death after Annuity Starting Date. If a Participant dies after his Annuity
Starting Date, the only benefits payable under the Plan after his death shall be those, if any,
provided under the form of payment of his Accrued Benefit being made to him at his death, and no
Death Benefit shall be paid with respect to him.

     7.2 Death before Annuity Starting Date. If a Participant dies before his Annuity
Starting Date, no benefit shall be paid under the Plan except any Death Benefit which may be
provided under this ARTICLE VII, and no Accrued Benefit shall be paid to or with respect to him.

     7.3 Death Benefit.

     7.3(a) In the event that a Participant dies before his Annuity Starting Date at a time when he
has a non-forfeitable interest in his Accrued Benefit and provided that the Participant’s death
does not occur as a result of suicide within two (2) years of his becoming a Participant, then the
Beneficiary of such Participant shall be entitled to receive as a death benefit under the Plan
(referred to as the “Death Benefit”) a term certain annuity with no life contingencies payable
monthly on the first day of each calendar month for one hundred eighty (180) months in an amount
equal to the Participant’s non-forfeitable interest in his Accrued Benefit and commencing on
commencing on his Normal Retirement Date (or if his death occurs after his Normal Retirement Date,
on the first day of the month coinciding with or next following the date of his death), determined
as follows:

     (i) If he dies while an Active Participant, such benefit shall be calculated based on:

     (A) Where he has not yet reached his Normal Retirement Date, the assumptions
that his aggregate years of Benefit Service are that number he would have at his
Normal Retirement Date assuming he had remained employed by the Employer in the same
capacity as at his date of death or,

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if he Retired on Disability Retirement, at the
date of his Disability from such date to his Normal Retirement Date, and that he
continued to receive Compensation to his Normal Retirement Date at his most recent
actual or equivalent hourly rate in effect at the date of his death, or

     (B) Where he dies after his Normal Retirement Date, his Average Compensation and
actual aggregate years of Benefit Service at the date of his death, or

     (ii) If he dies when not an Active Participant, such benefit shall be calculated based on
his non-forfeitable Accrued Benefit when he ceased to be an Active Participant and shall be
payable commencing on his Normal Retirement Date.

     7.3(b) The Death Benefit of a Participant shall be fully vested and non-forfeitable as
provided in ARTICLE VI. Death Benefits which are not non-forfeitable shall be forfeited as
provided in ARTICLE VI.

     7.3(c) The non-forfeitable Death Benefit of a Participant shall be payable to the
Participant’s Beneficiary commencing with the month immediately following the month in which the
Participant died.

     7.4 Beneficiary Designation.

     7.4(a) Each Participant shall have the right to notify the Administrator in writing of any
elections which he is entitled to make under the provisions of the Plan and 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.

     7.4(b) If a Participant dies without having designated a Beneficiary, or if the Beneficiary so
designated has predeceased the Participant or 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 the Participant’s surviving spouse, or if none, then his descendants, per
stirpes, or if none, then the executor or the administrator of his estate shall be deemed to be his
Beneficiary.

     7.4(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.

     7.4(d) The determination of the marital status of a Participant shall be made pursuant to
applicable local law; provided, however, that a person of the same sex as the Participant shall in
no event be considered to be the spouse of the Participant for any purpose under or relating to the
Plan.

ARTICLE VIII

Payment of Benefits

     8.1 Time of Payment.

     8.1(a) Subject to the limitations and qualifications of ARTICLE VI, the non-forfeitable
Accrued Benefit of a Participant shall become payable to the Participant or, if deceased, the
non-forfeitable Death Benefit payable with respect to a Participant shall become payable to his
Beneficiary, at the following applicable time:

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     (i) In the case of the Participant’s non-forfeitable Accrued Benefit, the earlier of:

     (A) The Participant’s Early, Normal or Delayed Retirement Date on which he
retires under the Plan, or

     (B) The Participant’s Normal Retirement Date if he is not then an Employee.

     (ii) In the case of the Death Benefit, the first day of the calendar month following the
date on which the Participant dies.

     8.1(b) Notwithstanding the foregoing provisions of this paragraph, payment 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, or
additional time is needed to calculate the Accrued Benefit or Death Benefit.

     8.2(c) Notwithstanding the foregoing, no benefit payment shall commence to the Participant
until the occurrence of a payment event described in Section 409A(a)(2)(A)(i) (separation from
service), (ii) (disability as defined in Section 409A(a)(2)(C) of the Code), (iii) (death) or (v) (a change in the ownership of
the corporation, or in the ownership of a substantial portion of the corporation) of the Code,
provided, however, that any payment to a Participant who is key employee (as determined for
purposes of Section 409A(a)(2)(B)(i) of the Code) of a corporation which is publicly traded on an
established securities exchange or otherwise on account of separation from service (all as
determined for purposes of Section 409A(a)(2)(B)(i) of the Code) shall not commence before the date
which is six (6) months after the date of his separation from service (or, if earlier, his death).
If payment commencement is deferred due to the proviso of the preceding sentence, the first payment
shall include any monthly payments which would have been paid prior thereto but for the payment
deferral.

     8.2 Form and Amount of Accrued Benefit Payment.

     8.2(a) Subject to the limitations and qualifications of ARTICLE VI, non-forfeitable Accrued
Benefit payments to a Participant shall be paid in the form of a term certain annuity with no life
contingencies for one hundred eighty (180) months payable on the first day of each calendar month
and commencing as provided in paragraph 8.1, with any portion of the unpaid one hundred eighty
(180) monthly payments at the Participant’s death payable as a continuing term certain annuity to
his Beneficiary.

     8.2(b) The amount of each monthly payment shall be the amount of his non-forfeitable Accrued
Benefit, reduced where applicable pursuant to the following:

     (i) In the event that a Participant’s Accrued Benefit commences to be paid to him prior
to his Normal Retirement Date, the amount payable shall be reduced by five-tenths of one
percent (.5%) for each full month by which his Annuity Starting Date precedes his Normal
Retirement Date.

     (ii) Notwithstanding the foregoing, there shall be no such reduction in the amount of the
Participant’s monthly payment if either:

     (A) He retires on Early Retirement at the request of the Board so long as such
request expressly provides for no reduction in the amount of his Accrued Benefit
payment due to commencement before his Normal Retirement Date, or

     (B) His voluntary termination of employment with the consent of the Board so
long as such consent expressly provides for no reduction in the amount of his Accrued
Benefit payment due to commencement before his Normal Retirement Date.

 - 14 -

 

     8.3 Form and Amount of Death Benefit Payment.

     8.3(a) Subject to the limitations and qualifications of ARTICLE VI, the non-forfeitable Death
Benefit with respect to a Participant shall be paid to his Beneficiary in the form of a term
certain annuity with no life contingencies for one hundred eighty (180) months payable on the first
day of each calendar month, commencing as provided in paragraph 8.1.

     8.3(b) The amount of each monthly payment shall be the amount of the non-forfeitable Death
Benefit with respect to the Participant, reduced where applicable pursuant to the following:

     (i) The amount of the Death Benefit payable with respect to the Participant shall be
reduced in the event payment commences before the Participant’s Normal Retirement Date by
five-tenths of one percent (.5%) for each month by which the benefit commencement date
precedes his Normal Retirement Date.

     (ii) Notwithstanding the foregoing, there shall be no such reduction in the amount of the
Beneficiary’s monthly payment if either:

     (A) The Participant retired on Early Retirement at the request of the Board so
long as such consent expressly provides for no reduction in the amount of the Death
Benefit payment due to commencement before the Participant’s Normal Retirement Date,
or

     (B) The Participant’s voluntary termination of employment with the consent of
the Board so long as such consent expressly provides for no reduction in the amount
of the Death Benefit payment due to commencement before the Participant’s Normal
Retirement Date.

     8.4 Cashout of Benefit. Notwithstanding any contrary provision of the Plan, if the
Actuarial Value of a Participant’s non-forfeitable Accrued Benefit or Death Benefit does not exceed
$25,000 (or any lesser amount permitted under Section 409A of the Code), the Committee may cause
the Actuarial Value of such benefit to be cashed out in a lump sum payment at any time after the
Participant’s cessation of employment with the Employer and its Affiliates or his death.

     8.5 Suspension or Deferral of Benefits upon Re-Employment. If a Participant is
re-employed by the Employer, benefit payments to which such Participant is entitled under the Plan
shall be suspended during the period of his re-employment if then in pay status or shall be
deferred if not then in pay status until the end of the period of his re-employment by the
Employer. Upon such Participant’s subsequent death, retirement, or other termination of employment
with the Employer, such Participant’s non-forfeitable Accrued Benefit or Death Benefit, as the case
may be, shall be redetermined (subject to appropriate adjustment for time of payment and to
increase in the same for any additional benefits earned under the Plan) and shall be recommenced
over the balance of the remaining term of payment in the event his benefit was in pay status or
otherwise shall be paid in the form then applicable to the recipient. All such redetermined
non-forfeitable Accrued Benefits and Death Benefits shall be reduced by the actuarial value of any
benefit payments previously made to the Participant on such basis as the Administrator shall
determine or otherwise on the basis of the benefit payment actuarial factors of the Defined Benefit
Plan.

     8.6 Benefit Determination and Payment Procedure. The Administrator shall make all
determinations concerning eligibility for benefits under the Plan, the time or terms of payment,
and the forms or manner of payment to the Participant or the Participant’s Beneficiary, in the
event of the death of a Participant. The Administrator shall promptly notify the Plan Sponsor of
each such determination that benefit payments are due or should cease to be made and provide to the
Plan Sponsor all other information necessary to allow the Plan Sponsor to carry out said
determination, whereupon the Plan Sponsor shall pay or cease to pay or cause to be paid, or cause
to cease to be paid, by one or more of the Employers such benefits in accordance with the
Administrator’s determination.

 - 15 -

 

     8.7 Claims Procedure.

     8.7(a) A Participant or Beneficiary (the “claimant”) shall have the right to request any
benefit under the Plan by filing a written claim for any such benefit with the Administrator on a
form provided or approved by the Administrator for such purpose. The Administrator (or a claims
fiduciary appointed by the Administrator) shall give such claim due consideration and shall either
approve or deny it in whole or in part. The following procedure shall apply:

     (i) The Administrator (or a claims fiduciary appointed by the Administrator) may schedule
and hold a hearing.

     (ii) If the claim is not a Disability Benefit Claim, within ninety (90) days following
receipt of such claim by the Administrator, notice of any approval or denial thereof, in whole
or in part, shall be delivered to the claimant or his duly authorized representative or such
notice of denial shall be sent by mail (postage prepaid) to the claimant or his duly
authorized representative at the address shown on the claim form or such individual’s last
known address. The aforesaid ninety (90) day response period may be extended to one hundred
eighty (180) days after receipt of the claimant’s claim if special circumstances exist and if
written notice of the extension to one hundred eighty (180) days indicating the special
circumstances involved and the date by which a decision is expected to be made is furnished to
the claimant or his duly authorized representative within ninety (90) days after receipt of
the claimant’s claim.

     (iii) If the claim is a Disability Benefit Claim, within forty-five (45) days following
receipt of such claim by the Administrator, notice of any approval or denial thereof, in whole
or in part, shall be delivered to the claimant or his duly authorized representative or such
notice of denial shall be sent by mail to the claimant or his duly authorized representative
at the address shown on the claim form or such individual’s last known address. The aforesaid
forty-five (45) day response period may be extended to seventy-five (75) days after receipt of
the claimant’s claim if it is determined that such an extension is necessary due to matters
beyond the control of the Plan and if written notice of the extension to seventy-five (75)
days indicating the circumstances involved and the date by which a decision is expected to be
made is furnished to the claimant or his duly authorized representative within forty-five (45)
days after receipt of the claimant’s claim. Thereafter, the aforesaid seventy-five (75) day
response period may be extended to one hundred five (105) days after receipt of the claimant’s
claim if it is determined that such an extension is necessary due to matters beyond the
control of the Plan and if written notice of the extension to one hundred five (105) days
indicating the circumstances involved and the date by which a decision is expected to be made
is furnished to the claimant or his duly authorized representative within seventy-five (75)
days after receipt of the claimant’s claim. In the event of any such extension, the notice of
extension shall specifically explain, to the extent applicable, the standards on which
entitlement to a benefit is based, the unresolved issues that prevent a decision on the claim,
and the additional information needed to resolve those issues, and the claimant shall be
afforded at least forty-five (45) days within which to provide any specified information which
is to be provided by the claimant.

     (iv) Any notice of denial shall be written in a manner calculated to be understood by the
claimant and shall:

     (A) Set forth a specific reason or reasons for the denial,

     (B) Make reference to the specific provisions of the Plan document or other
relevant documents, records or information on which the denial is based,

     (C) Describe any additional material or information necessary for the claimant
to perfect the claim and explain why such material or information is necessary,

 - 16 -

 

     (D) Explain the Plan’s claim review procedures, including the time limits
applicable to such procedures (which are generally contained in subparagraph 8.7(b)),
and provide a statement of the claimant’s right to bring a civil action in state or
federal court under Section 502(a) of the Act following an adverse determination on
review of the claim denial,

     (E) In the case of a Disability Benefit Claim, if an internal rule, guideline,
protocol, or other similar criterion was relied upon in making the adverse
determination, either provide the specific rule, guideline, protocol or other similar
criterion, or provide a statement that such a rule, guideline, protocol or other
similar criterion was relied upon in making the adverse determination and that a copy of such rule, guideline, protocol or other criterion will be provided
free of charge to the claimant or his duly authorized representative upon request in
writing, and

     (F) In the case of a Disability Benefit Claim, if the adverse benefit
determination is based on a medical necessity or experimental treatment or similar
exclusion or limit, either provide an explanation of the scientific or clinical
judgment for the determination, applying the terms of the Plan to the claimant’s
medical circumstances, or provide a statement that such explanation will be provided
free of charge upon request in writing.

     8.7(b) A Participant or Beneficiary whose claim filed pursuant to subparagraph 8.7(a) has been
denied, in whole or in part, may, within sixty (60) days (or one hundred eighty (180) days in the
case of a Disability Benefit Claim) following receipt of notice of such denial, make written
application to the Administrator for a review of such claim, which application shall be filed with
the Administrator. For purposes of such review, the following procedure shall apply:

     (i) The Administrator (or a claims fiduciary appointed by the Administrator) may schedule
and hold a hearing.

     (ii) The claimant or his duly authorized representative shall be provided the opportunity
to submit written comments, documents, records, and other information relating to the claim
for benefits.

     (iii) The claimant or his duly authorized representative shall be provided, upon request
in writing and free of charge, reasonable access to, and copies of, all documents, records,
and other information relevant to such claim and may submit to the Administrator written
comments, documents, records, and other information relating to such claim.

     (iv) The Administrator (or a claims fiduciary appointed by the Administrator) shall make
a full and fair review of any denial of a claim for benefits, which shall include:

     (A) Taking into account all comments, documents, records, and other information
submitted by the claimant or his duly authorized representative relating to the
claim, without regard to whether such information was submitted or considered in the
initial benefit determination, and

     (B) In the case of a Disability Benefit Claim:

     (I) Providing for a review that does not afford deference to the initial
claim denial and that is conducted by an appropriate named fiduciary of the Plan
who is neither the individual who made the claim denial that is the subject of
the review, nor the subordinate of such individual,

 - 17 -

 

     (II) In making its decision on a review of any claim denial that is based
in whole or in part on a medical judgment, including determinations with regard
to whether a particular treatment, drug, or other item is experimental,
investigational, or not medically necessary or appropriate, consulting with a
health care professional who has appropriate training and experience in the
field of medicine involved in the medical judgment,

     (III) Providing to the claimant or his authorized representative, either
upon request in writing and free of charge or automatically, the identification
of medical or vocational experts whose advice was obtained on behalf of the Plan
in connection with the claim denial that is the subject of the review, without regard to whether the advice was relied upon
in making the benefit determination, and

     (IV) Ensuring that the health care professional engaged for purposes of a
consultation under clause (iv)(B)(II) of this subparagraph shall be an
individual who is neither an individual who was consulted in connection with the
claim denial that is the subject of the review, nor the subordinate of any such
individual.

     (v) If the claim is not a Disability Benefit Claim, the decision on review shall be
issued promptly, but no later than sixty (60) days after receipt by the Administrator of the
claimant’s request for review, or one hundred twenty (120) days after such receipt if a
hearing is to be held or if other special circumstances exist and if written notice of the
extension to one hundred twenty (120) days indicating the special circumstances involved and
the date by which a decision is expected to be made on review is furnished to the claimant or
his duly authorized representative within sixty (60) days after the receipt of the claimant’s
request for a review.

     (vi) If the claim is a Disability Benefit Claim, the decision on review shall be issued
promptly, but no later than forty-five (45) days after receipt by the Administrator of the
claimant’s request for review, or ninety (90) days after such receipt if a hearing is to be
held or if other special circumstances exist and if written notice of the extension to ninety
(90) days indicating the special circumstances involved and the date by which a decision is
expected to be made on review is furnished to the claimant or his duly authorized
representative within forty-five (45) days after the receipt of the claimant’s request for a
review.

     (vii) The decision on review shall be in writing, shall be delivered or mailed by the
Administrator to the claimant or his duly authorized representative in the manner prescribed
in subparagraph 8.7(a) for notices of approval or denial of claims, shall be written in a
manner calculated to be understood by the claimant and shall in the case of an adverse
determination:

     (A) Include the specific reason or reasons for the adverse determination,

     (B) Make reference to the specific provisions of the Plan on which the adverse
determination is based,

     (C) Include a statement that the claimant is entitled to receive, upon request
in writing and free of charge, reasonable access to, and copies of, all documents,
records, and other information relevant to the claimant’s claim for benefits,

     (D) Include a statement of the claimant’s right to bring a civil action in state
or federal court under Section 502(a) of the Act following the adverse determination
on review,

     (E) In the case of a Disability Benefit Claim, if an internal rule, guideline,
protocol, or other similar criterion was relied upon in making the adverse
determination, either provide the specific rule, guideline, protocol or other similar
criterion, or provide a statement that such a rule,

 - 18 -

 

guideline, protocol or other
similar criterion was relied upon in making the adverse determination and that a copy
of such rule, guideline, protocol or other criterion will be provided free of charge
to the claimant or his duly authorized representative upon request in writing,

     (F) In the case of a Disability Benefit Claim, if the adverse benefit
determination is based on a medical necessity or experimental treatment or similar
exclusion or limit, either provide an explanation of the scientific or clinical
judgment for the determination, applying the terms of the
Plan to the claimant’s medical circumstances, or provide a statement that such
explanation will be provided free of charge upon request in writing, and

     (G) In the case of a Disability Benefit Claim, provide the following statement
(if applicable and appropriate): “You and your plan may have other voluntary
alternative dispute resolution options, such as mediation. One way to find out what
may be available is to contact your local U.S. Department of Labor Office and your
State insurance regulatory agency.”

The Administrator’s decision made in good faith shall be final.

     8.7(c) The period of time within which a benefit determination initially or on review is
required to be made shall begin at the time the claim or request for review is filed in accordance
with the procedures of the Plan, without regard to whether all the information necessary to make a
benefit determination accompanies the filing. In the event that a period of time is extended as
permitted pursuant to this paragraph due to the failure of a claimant or his duly authorized
representative to submit information necessary to decide a claim or review, the period for making
the benefit determination shall be tolled from the date on which the notification of the extension
is sent to the claimant or his duly authorized representative until the date on which the claimant
or his duly authorized representative responds to the request for additional information.

     8.7(d) For purposes of the Plan’s claims procedure:

     (i) A “Disability Benefit Claim” is a claim for a Plan benefit whose availability is
conditioned on a determination of disability and where the Plan’s claim’s adjudicator must
make a determination of disability in order to decide the claim. A claim is not a Disability
Benefit Claim where the determination of disability is made by a party (other than the Plan’s
claim’s adjudicator or other fiduciary) outside the Plan for purposes other than making a
benefit determination under the Plan (such as a determination of disability by the Social
Security Administration or under the Employer’s long term disability plan).

     (ii) A document, record, or other information shall be considered “relevant” to a
claimant’s claim if such document, record, or other information (A) was relied upon in making
the benefit determination, (B) was submitted, considered, or generated in the course of making
the benefit determination, without regard to whether such document, record, or other
information was relied upon in making the benefit determination, (C) demonstrates compliance
with the administrative processes and safeguards required in making the benefit determination,
or (D) in the case of a Disability Benefit Claim, constitutes a statement of policy or
guidance with respect to the Plan concerning the denied treatment option or benefit for the
claimant’s diagnosis, without regard to whether such advice or statement was relied upon in
making the benefit determination.

     8.7(e) The Administrator may establish reasonable procedures for determining whether a person
has been authorized to act on behalf of a claimant.

     8.8 Payments to Minors and Incompetents. If a Participant or Beneficiary entitled to
receive any benefits hereunder is a minor or is adjudged to be legally incapable of giving valid
receipt and discharge for such benefits, or is deemed so by the Administrator, benefits will be
paid to such person as the Administrator may designate for the benefit of such Participant or
Beneficiary. Such payments shall be considered a payment to such

 - 19 -

 

Participant or Beneficiary and shall, to the extent made, be deemed a complete discharge of any liability for such payments under
the Plan.

     8.9 Distribution of Benefit When Participant Cannot Be Located. The Administrator
shall make all reasonable attempts to determine the whereabouts of a Participant entitled to a
benefit under the Plan, including the mailing by certified mail of a notice to the last known address shown on the Employer’s or the
Administrator’s records. If the Administrator is unable to locate the Participant, or if there has
been no claim made for such benefits, the Plan Sponsor shall continue to hold the benefit due such
Participant, subject to a determination that it is reasonable to believe that the Participant is
deceased, in which case the Participant’s Beneficiary shall be paid any benefits thereby due under
the Plan.

     8.10 Minimum Amount Paid Monthly. Notwithstanding any other provisions of this
ARTICLE VIII, monthly benefits equal to One Hundred Dollars ($100.00) or less need not be paid
monthly, but may be accumulated and paid annually on the last day of each Plan Year.

     8.11 Limitations on Benefits.

     (i) Excess Parachute Payments. Notwithstanding the foregoing, in the event that
the payments and benefits provided to the Participant, or for the Participant’s benefit, under
the Plan or under any other plan or agreement which become payable or are taken into account
as “parachute payments” within the meaning of Section 280G of the Code, as a result of a
Change in Control or the Participant’s termination of employment relating thereto (the “Total
Parachute Payments”) would result in the Participant’s being entitled to “excess parachute
payments” as defined in Section 280G of the Code, the payments and benefits provided to the
Participant, or for the Participant’s benefit, under the Plan shall be reduced (but not below
zero) to the extent necessary so that no payment to be made, or benefit to be provided, to the
Participant or for the Participant’s benefit under the Plan or any other plan or agreement
would result in “excess parachute payments” as defined in Section 280G of the Code and there
would consequently be no loss of an income tax deduction by the Employer or the imposition of
an excise tax on the Participant under Section 4999 of the Code, provided, however that such
reduction shall not apply unless the Participant’s Net After-tax Benefit if such reduction
were made shall exceed the Participant’s Net After-tax Benefit if such reduction were not made
by at least $25,000. In connection with the foregoing:

     (A) “Net After-tax Benefit” shall mean the sum of (1) the Total Parachute
Payments which the Participant receives or is then entitled to receive, less (2) the
amount of federal, state and local income and employment taxes payable by the
Participant with respect to the Total Parachute Payments, less (3) the amount of
excise taxes imposed with respect to the Total Parachute Payments by Section 4999 of
the Code.

     (B) All determinations regarding such reduction shall be made by the registered
public accounting firm under Section 102 of the Sarbanes-Oxley Act serving as
auditors for the Plan Sponsor on the date of a Change in Control (or any other
registered public accounting firm designated by the Plan Sponsor) and shall be based
on the maximum applicable marginal tax rates for each year in which such payments and
benefits shall be paid or provided to the Participant or for the Participant’s
benefit (based upon the rate in effect for such year at the time of the first payment
of the foregoing and, as appropriate as determined by such tax counsel, the taxable
wage base for employment tax purposes). The determination made as to the reduction
of benefits or payments required hereunder by such registered public accounting firm
shall be binding, absent a determination by the Internal Revenue Service which is
agreed to by both the Plan Sponsor and the Participant or a final decision by a court
of competent jurisdiction over the tax issue in which case such determination or
decision shall control.

 - 20 -

 

     (C) The Participant shall have the right to designate within a reasonable
period, which payments or benefits will be reduced; provided, however, that if no
direction is received from the Participant, the Plan Sponsor shall implement the
reductions in its discretion.

     (ii) Banking Payment Limitation. Notwithstanding anything contained in the Plan
or any other agreement or plan to the contrary, the payments and benefits provided to, or for
the benefit of, the Participant under the Plan or under any other plan or agreement shall be
reduced (but not below zero) to the extent necessary so that no payment to be made, or benefit
to be provided, to the Participant or for his benefit under the Plan or any other plan or
agreement shall be in violation of the golden parachute and indemnification payment
limitations and prohibitions of 12 CFR Section 359.

ARTICLE IX

Fiduciaries

     9.1 Named Fiduciaries and Duties and Responsibilities. Authority to control and
manage the operation and administration of the Plan shall be vested in the following, who, together
with their membership, if any, shall be the Named Fiduciaries under the Plan with those powers,
duties, and responsibilities specifically allocated to them by the Plan:

     9.1(a) Plan Sponsor — The Plan Sponsor in connection with its fiduciary obligations
and rights under the Plan.

     9.1(b) Plan Administrator — The Plan Administrator named and serving as provided in
ARTICLE X hereof.

     9.1(c) Administrative Committee — The Administrative Committee provided for in ARTICLE
X hereof.

     9.1(d) Board — The Board in connection with its fiduciary obligations and rights under
the Plan.

     9.2 Limitation of Duties and Responsibilities of Named Fiduciaries. The duties and
responsibilities, and any liability therefor, of the Named Fiduciaries provided for in paragraph
9.1 shall be severally limited to the duties and responsibilities specifically allocated to each
such Named Fiduciary in accordance with the terms of the Plan, and there shall be no joint duty,
responsibility, or liability among any such groups of Named Fiduciaries in the control and
management of the operation and administration of the Plan.

     9.3 Service by Named Fiduciaries in More than One Capacity. Any person or group of
persons may serve in more than one Named Fiduciary capacity with respect to the Plan.

     9.4 Allocation or Delegation of Duties and Responsibilities by Named Fiduciaries. By
written agreement filed with the Administrator and the Plan Sponsor, any duties and
responsibilities of any Named Fiduciary may be allocated among Named Fiduciaries or may, with the
consent of the Plan Sponsor, be delegated to persons other than Named Fiduciaries. Any written
agreement shall specifically set forth the duties and responsibilities so allocated or delegated,
shall contain reasonable provisions for termination, and shall be executed by the parties thereto.

     9.5 Assistance and Consultation. A Named Fiduciary, and any delegate named pursuant
to paragraph 9.4, may engage agents to assist in its duties and may consult with counsel, who may
be counsel for the Employer, with respect to any matter affecting the Plan or its obligations and
responsibilities hereunder, or with respect to any action or proceeding affecting the Plan. All
compensation and expenses of such agents and counsel shall be paid or reimbursed by the Employer.

 - 21 -

 

     9.6 Indemnification. The Employer shall indemnify and hold harmless any individual
who is a Named Fiduciary or a member of a Named Fiduciary under the Plan and any other individual
to whom duties of a Named Fiduciary are delegated pursuant to paragraph 9.4, to the extent
permitted by law, from and against any liability, loss, cost or expense arising from their good
faith action or inaction in connection with their responsibilities under the Plan.

ARTICLE X

Plan Administration

     10.1 Appointment of Plan Administrator. The Board may appoint one or more persons to
serve as the Plan Administrator (the “Administrator”) for the purpose of carrying out the duties
specifically imposed on the Administrator by the Plan, the Act and the Code. The person serving as
Administrator shall serve for an indefinite term at the pleasure of the Board, and may, by thirty
(30) days prior written notice to the Board, terminate such appointment.

     10.2 Plan Sponsor as Plan Administrator. In the event that no Administrator is
appointed or in office pursuant to paragraph 10.1, the Plan Sponsor shall be the Administrator.

     10.3 Duties and Responsibilities of Plan Administrator. In addition to duties and
responsibilities expressly provided elsewhere in the Plan, the Administrator shall have the
following duties and responsibilities:

     10.3(a) The Administrator shall be responsible for the fulfillment of all relevant reporting
and disclosure requirements set forth in the Act and the Code.

     10.3(b) The Administrator shall maintain and retain necessary records respecting
administration of the Plan and matters upon which disclosure is required under the Act and the
Code.

     10.3(c) The Administrator shall provide to Participants and Beneficiaries such notices and
information as are required by the Plan, the Act and the Code.

     10.3(d) Except as limited by paragraph 10.6, the Administrator shall make all determinations
regarding eligibility for participation in and benefits under the Plan.

     10.3(e) The Administrator shall exercise its power and authority in its discretion. It is
intended that a court review of the Administrator’s exercise of its power and authority be made
only on an arbitrary and capricious standard.

     10.4 Availability to Plan Administrator of Records. The Employer shall, at the
request of the Administrator, make available necessary records or other information they possess
which may be required by the Administrator in order to carry out its duties hereunder.

     10.5 No Action by Plan Administrator with Respect to Own Benefit. No Administrator
who is a Participant shall take any part as the Administrator in any discretionary action in
connection with his participation as an individual. Such action shall be taken by the remaining
Administrator, if any, or otherwise by the Plan Sponsor.

     10.6 Limitations on Plan Administrator’s Discretion. Notwithstanding any grant of
authority by the Plan, the Administrator shall exercise his discretionary authority granted under
the Plan, including, but not limited to, benefit eligibility, benefit entitlement, payments and
distributions, and adoption of procedures pertaining thereto, only as directed by the Committee,
except in connection with the following matters:

          (i) Determination that a Participant is deceased;

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          (ii) Initial review of claims; and

          (iii) Any other matter that the Committee authorizes the Administrator to determine.

     10.7 Makeup of Administrative Committee. The Administrative Committee (the
“Committee”) shall consist of the membership, as from time to time serving, of the Compensation
Committee (or any successor thereto) of the Board.

     10.8 Power and Authority of Administrative Committee. The Committee is hereby vested
with all the power and authority necessary in order to carry out its duties and responsibilities in
connection with the administration of the Plan, including the power to interpret the provisions of
the Plan. For such purpose, the Committee shall have the power to adopt rules and regulations
consistent with the terms of the Plan. The Committee shall exercise its power and authority in its
discretion. It is intended that a court review of the Committee’s exercise of its power and
authority be made only on an arbitrary and capricious standard.

     10.9 No Action by Administrative Committee Member with Respect to Own Benefit. No
member of the Committee who is a Participant shall take any part in any action in connection with
his participation as an individual. Such action shall be taken by the remaining members of the
Committee, if any, or otherwise by the Plan Sponsor.

     10.10 Action by Administrative Committee by Majority Vote. The action of the
Committee in all matters, questions and decisions shall be determined by a majority vote of its
members qualified to act thereon. They may meet informally or take any action without the
necessity of meeting as a group.

     10.11 Provision to Administrative Committee of Necessary Information. The Employer
and the Administrator shall supply full and timely information to the Committee of all matters
relating to all Participants which the Committee may require for the effective discharge of its
duties.

     10.12 Limitation on Powers and Authority of Administrative Committee. The Committee
shall have no power in any way to modify, alter, add to or subtract from any provisions of the
Plan.

ARTICLE XI

Amendment and Termination of Plan

     11.1 Amendment and Termination.

     11.1(a) The Plan may be amended or terminated in whole or in part at any time by action of the
Board; provided, however, that neither the non-forfeitable Accrued Benefit of a Participant, the
right to payment without reduction under paragraph 8.2 before the Normal Retirement Date of a
Participant (but only to the extent that all events have occurred which give rise to such right as
of the date of amendment or termination) or the non-forfeitable Death Benefit with respect to a
Participant at the time of any such amendment or termination shall be adversely affected thereby.
Notice of every amendment or termination of the Plan shall be given to each Participant and
Beneficiary of a deceased Participant, the Administrator, the Committee and the Employer.

     11.1(b) In the event of a termination or a partial termination of the Plan, so much of the
Plan as has been terminated shall be automatically amended on the effective date of such
termination by terminating additional benefit accrual and by reducing or eliminating any incidental
benefits, other than non-forfeitable Death Benefits, of Participants and their Beneficiaries under
so much of the Plan as has terminated, but only if payment thereof has not commenced or is not
subject only to the expiration of a waiting period or occurrence of death, to the fullest extent
permitted by subparagraph 11.1(a). Under no circumstances shall all or any portion of the Accrued
Benefit or Death

- 23 -

 

Benefit of any such Participant under the Plan, or the non-forfeitable percentage
thereof at the time of such termination, to the extent terminated be increased by reason of
continued service as an Employee with any Employer with respect to which the Plan has been
terminated, unless otherwise provided by the Board. In the event of a termination or a partial
termination of the Plan, all Accrued Benefits (and Death Benefits attributable to such Accrued
Benefits) shall automatically become fully vested and non-forfeitable.

     11.1(c) Termination of the Plan shall mean termination of active participation by
Participants, but shall not mean immediate payment of all vested Accrued Benefits or Death Benefits
unless the Plan Sponsor so directs. On termination of the Plan, the Board of the Plan Sponsor may
provide for the acceleration of payment of the vested Accrued Benefits of all affected Participants
on such basis as it may direct.

     11.2 Termination Events with Respect to Employers Other Than the Plan Sponsor.

     11.2(a) The Plan shall terminate with respect to any Employer other than the Plan Sponsor, and
such Employer shall automatically cease to be an Employer for purposes of the Plan, upon the
happening of any of the following events:

          (i) Action by the Board of the Plan Sponsor terminating the Plan as to it and specifying
the date of such termination. Notice of such termination shall be delivered to the
Administrator, the Committee and the Plan Sponsor.

          (ii) Its ceasing to be an Affiliate.

     11.2(b) Termination of the Plan with respect to any Employer shall mean termination of active
participation of, and cessation of the accrual of additional benefits by, the Participants employed
by such Employer, but shall not mean immediate payment of all vested Accrued Benefits with respect
to the Employees of such Employer unless the Plan Sponsor so directs. On termination of the Plan
with respect to any Employer, the Board of the Plan Sponsor may provide for the acceleration of
payment of the vested Accrued Benefits of all affected Participants of that former participating
Employer on such basis as it may direct.

     11.3 Effect of Employer Merger, Consolidation or Liquidation. Notwithstanding the
foregoing provisions of this ARTICLE XI, the merger or liquidation of any Employer into any other
Employer or the consolidation of two (2) or more of the Employers shall not cause the Plan to
terminate with respect to the merging, liquidating or consolidating Employers, provided that the
surviving or continuing employer is otherwise considered to be, and continues to be, a
participating Employer in the Plan.

ARTICLE XII

Miscellaneous

     12.1 Headings. The headings in the Plan have been inserted for convenience of
reference only and are to be ignored in any construction of the provisions hereof.

     12.2 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.

     12.3 Governing Law. The Plan shall be construed, enforced and administered in
accordance with the laws of the Commonwealth of Virginia, and any federal law preempting the same.
Unless federal law specifically addresses the issue, federal law shall not preempt applicable state
law preventing an individual or person claiming through him from acquiring property or receiving
benefits as a result of the death of a decedent where such individual caused the death.

- 24 -

 

     12.4 Employment Rights. Participation in the Plan shall not give any Employee the
right to be retained in the Employer’s employ nor, upon dismissal or upon his voluntary termination
of employment, to have any right or interest under the Plan other than as herein provided.

     12.5 Conclusiveness of Employer Records. The records of the Employer with respect to
age, service, employment history, compensation, absences, illnesses and all other relevant matters
shall be conclusive for purposes of the administration of the Plan.

     12.6 Right to Require Information and Reliance Thereon. The Employer and 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 and may rely thereon 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 the provisions 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.

     12.7 Alienation and Assignment. Except as may be required by the Act, no benefit
hereunder shall be subject in any manner to alienation, sale, anticipation, transfer, assignment,
pledge, encumbrance, garnishment, attachment, execution or levy of any kind.

     12.8 Notices and Elections.

     12.8(a) Except as provided in subparagraph 12.8(b), all notices required to be given in
writing and all elections, consents, applications and the like 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, election, consent or application by a
Participant or Beneficiary, unless executed by the Participant or Beneficiary giving such notice or
making such election, consent or application.

     12.8(b) Subject to limitations under applicable provisions of the Act (such as the requirement
that spousal consent be in writing), the Administrator is authorized in its discretion to accept
other means for receipt of effective notices, elections, consents and/or applications by
Participants and/or Beneficiaries, including but not limited to interactive voice systems and
electronic or internet communications, on such basis and for such purposes as it determines from
time to time.

     12.9 Delegation of Authority. Whenever the Plan Sponsor or any Employer is permitted
or required to perform any act, except where prohibited by applicable law, such act may be
performed by its Chief Executive Officer, its President, the Compensation Committee of its Board of
Directors or its Board of Directors or by any person duly authorized by any of the foregoing.

     12.10 Service of Process. The Administrator shall be the agent for service of process
on the Plan.

     12.11 Construction. This Plan is created for the exclusive benefit of Eligible
Employees of the Employer and their Beneficiaries and shall be interpreted and administered in a
manner consistent with its being an unfunded deferred compensation plan maintained for a select
group of management or highly compensated employees (sometimes referred to as a “top-hat” plan)
described in Sections 201(2), 301(a)(3) and 401(a)(1) of the Act.

     12.12 Nonqualified Deferred Compensation Plan Omnibus Provision. Any benefit, payment
or other right provided by the Plan shall be provided or made in a manner, and at such time, in
such form and subject to such election procedures (if any), as complies with the applicable
requirements of Section 409A of the Code to

- 25 -

 

avoid a plan failure described in Section 409A(a)(1) of
the Code, including without limitation, deferring payment until the occurrence of a specified
payment event described in Section 409A(a)(2) of the Code. Notwithstanding any other provision
hereof or document pertaining hereto, the Plan shall be so construed and interpreted to meet the
applicable requirements of Section 409A of the Code to avoid a plan failure described in Section
409A(a)(1) of the Code.

- 26 -

 

IN WITNESS WHEREOF, the Plan Sponsor, pursuant to the authorization of its Board of Directors,
has caused its name to be signed to this Plan, for itself and for each participating Employer, by
its duly authorized officer with its corporate seal hereunto affixed and attested by its Secretary
or Assistant Secretary, as of the day and year above written.

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	FAUQUIER BANKSHARES, INC.,

Plan Sponsor and participating Employer	 
	 
	 	 	 	 	 	 	 	 	 
	Dated:
	 	1-18-05	 	By:	 	/s/ Brian S. Montgomery	 
	

	 	 	 	 
	 	 	 	 	 
	

	 	 	 	 	 	Its	 	Chairman of Compensation Committee	 
	

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	Attest:

	 
	 	 	 	 	 	 	 	 	 
	/s/ Randy K. Ferrell
	 	 	 	 	 
	 
	 	 	 	 	 
	Its
	 	President and CEO	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	/s/ Eric P. Graap
	 	 	 	 	 
	 
	 	 	 	 	 
	Its
	 	CFO and SVP	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	/s/ Edna T. Brannan
	 	 	 	 	 
	 
	 	 	 	 	 
	Its
	 	SVP	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	/s/ Mark A. Debes
	 	 	 	 	 
	 
	 	 	 	 	 
	Its
	 	SVP	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	/s/ Jeffrey A. Sisson
	 	 	 	 	 
	 
	 	 	 	 	 
	Its
	 	SVP

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