EXHIBIT 10.13
FORM OF
EXECUTIVE SURVIVOR INCOME AGREEMENT
THIS EXECUTIVE SURVIVOR INCOME AGREEMENT is made this _____ day of
April, 2003; by and between The Fauquier Bank, a Virginia banking corporation
with its main office in Warrenton, VA (the Bank), and _________________ (the
Executive).
WHEREAS, to encourage the Executive to remain an employee of the Bank,
the Bank is willing to provide benefits to the Executive's beneficiary(ies) (i)
if the Executive dies prior to terminating employment, or (ii) if the Executive
dies after Termination of Employment provided the Executive terminated
employment due to Disability, Change in Control, or attaining Early Retirement
Age or Normal Retirement Age. The Bank will pay the benefits from its general
assets, but only so long as one of its general assets is a life insurance policy
on the Executive's life.
AGREEMENT
The Executive and the Bank agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall
have the meanings specified:
1.1 Change in Control means the occurrence of any one of the
following events:
(a) an event of a nature that results in an acquisition
of control of The Fauquier Bank (the Company) within the
meaning of the Change in Bank Control Act and applicable
regulations thereunder (or any successor statute or
regulation),
(b) an event with respect to the Company that would be
required to be reported in response to Item 1 of the
Current Report on Form 8-K, as in effect on the date of
this Agreement, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the Exchange Act),
(c) any person (as the term is used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act)
directly or indirectly of securities of the Company or
the Bank representing 25% or more of the combined voting
power of the Company or the Bank's outstanding
securities,
(d) individuals who are members of the Board of Directors
of the Company as of the date of this Agreement (the
Incumbent Board) cease for any reason to constitute as
least a majority thereof, provided that any person
becoming a director subsequent to the date of this
Agreement whose election was approved by a vote of at
least three-quarters of the directors comprising the
Incumbent Board, or whose nomination for election by the
Company's stockholders was approved by the nominating
committee serving under the Incumbent Board, shall be
considered a member of the Incumbent Board,
(e) consummation of a reorganization, merger,
consolidation or similar transaction in which the Company
is not the resulting entity,
(f) consummation of a reorganization, merger,
consolidation or similar transaction in which the Company
is the resulting entity and at the completion of which
the stockholders of the Company who were stockholders of
the Company immediately prior to the
transaction hold less than 60% of the outstanding stock
of the Company immediately after consummation of the
transaction, or
(g) a sale of all or substantially all of the assets of
the Company or a transaction or related transactions at
the conclusion of which all or substantially all of the
assets of the Bank (i) are not directly or indirectly
held by the Company or (ii) are directly or indirectly
held by the Company but the stockholders of the Company
immediately prior to the transaction or related
transactions hold less than 60% of the outstanding stock
of the Company immediately after the transaction or
related transactions; provided that the term Change in
Control shall not include an acquisition of securities by
an employee benefit plan of the Company or any of its
subsidiaries. In the application of regulations under the
Change in Bank Control Act to a determination of a Change
in Control under this Agreement, determinations to be
made by the applicable federal banking regulator under
such regulations shall be made by the Board of Directors.
1.2 Disability means the Executive suffers a sickness, accident,
or injury which has been determined by the carrier of any
individual or group disability insurance policy covering the
Executive, or by the Social Security Administration, to be a
disability rendering the Executive totally and permanently
disabled. The Executive must submit proof to the Bank of the
carrier's or the Social Security Administration's
determination upon the request of the Bank.
1.3 Early Retirement Age means the Executive's 55th birthday,
provided the Executive has at least 10 Years of Service with
the Bank on that date. If the Executive does not have 10 years
of service with the Bank by the date of his 55th birthday, the
Executive's Early Retirement Age means the date on which the
Executive has 10 years of service with the Bank, provided such
10 Years of Service occurs before the Executive's Normal
Retirement Age.
1.4 Good Reason means the occurrence of any of the events or
conditions described in clauses (a) through (e) hereof without
the Executive's express written consent B
(a) a material reduction in Executive's title or responsibilities;
(b) a reduction in base salary as in effect on the date of a
Change in Control;
(c) relocation of the Bank's principal executive offices, or
requiring the Executive to change his principal work location,
to any location that is more than 15 miles from the location
of the Bank's principal executive offices on the date of this
Agreement;
(d) the failure by the Bank to continue to provide the Executive
with compensation and benefits substantially similar to those
provided to him under any of the employee benefit plans in
which the Executive becomes a participant, or the taking of
any action by the Bank which would directly or indirectly
materially reduce any of such benefits or deprive the
Executive of any material fringe benefit enjoyed by him at the
time of the Change in Control; or
(e) the failure of the Bank to obtain a satisfactory agreement
from any successor or assignee of the Bank to assume and agree
to perform this Agreement.
1.5 "Normal Retirement Age" means the Executive's 65th birthday.
1.6 "Normal Retirement Date" means the later of the Normal
Retirement Age or Termination of Employment.
1.7 Termination for Cause means the definition of termination for
cause specified in any employment agreement existing on the
date hereof or hereafter entered into between the Executive
and the
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Bank. If the Executive is not a party to an employment
agreement containing a definition of termination for cause,
Termination for Cause means the Bank has terminated the
Executive's employment for any of the following reasons:
(a) Gross negligence or gross neglect of duties;
(b) Commission of a felony or of a gross misdemeanor involving
moral turpitude; or
(c) Fraud, disloyalty, or willful violation of any law or
significant Bank policy committed in connection with the
Executive's employment and resulting in an adverse effect on
the Bank.
1.8 Termination of Employment with the Bank means that the
Executive shall have ceased to be employed by the Bank for any
reason whatsoever, excepting a leave of absence approved by
the Bank. For purposes of this Agreement, if there is a
dispute over the employment status of the Executive or the
date of termination of the Executive's employment, the Bank
shall have the sole and absolute right to decide the dispute,
unless a Change in Control shall have occurred.
1.9 Years of Service means the total number of twelve-month
periods during which the Executive serves as an employee of
the Bank.
ARTICLE 2
ENTITLEMENT TO BENEFIT
2.1 Pre-Termination of Employment Survivor Income Benefit. If the
Executive dies in active service to the Bank, the Bank shall
pay to the Executive's designated beneficiary in a single lump
sum the survivor income benefit described in Section 2.6.1.
2.2 Disability Benefit. If the Executive terminates employment due
to Disability, the Bank shall pay to the Executive's
designated beneficiary in a single lump sum the survivor
income benefit described in Section 2.6.2 following the
Executive's death.
2.3 Change in Control Benefit. If the Executive's employment with
the Bank terminates involuntarily within 24 months after a
Change in Control (excepting Termination for Cause) or in the
event the Executive terminates employment voluntarily for Good
Reason within 24 months after such Change in Control, the Bank
shall pay the Executive's designated beneficiary the survivor
income benefit described in Section 2.6.2 following the
Executive's death.
2.4 Early Retirement Benefit. If the Executive terminates
employment on or after Early Retirement Age, the Bank shall
pay to the Executive's designated beneficiary in a single lump
sum the survivor income benefit described in Section 2.6.2.
following the Executive's death.
2.5 Normal Retirement Benefit. If the Executive terminates
employment on or after Normal Retirement Age, the Bank shall
pay to the Executive's designated beneficiary in a single lump
sum the survivor income benefit described in Section 2.6.2
following the Executive's death.
2.6 Amount of Benefits. The Bank shall pay one of the following
benefits to the Executive's beneficiary in a single lump sum
within 90 days following submission of a proof of a claim
substantiating the Executive's death.
2.6.1 Pre-Retirement Death Benefit. If the Executive was employed by
the Bank at the time of death, the death benefit shall be
$50,000.
2.6.2 Post-Retirement Death Benefit. If the Executive was no longer
employed by the Bank at the time of death but had terminated
employment
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o due to Disability,
o involuntarily within two years after Change in Control
(excepting Termination for Cause), or in the event the
Executive had terminated employment voluntarily for Good
Reason within two years of such Change in Control,
o on or after Early Retirement Age, or
o on or after Normal Retirement Age,
the death benefit shall be $50,000.
ARTICLE 3
BENEFICIARIES
3.1 Beneficiary Designations. The Executive shall designate a
beneficiary by filing a written designation with the Bank. The
Executive's beneficiary designation shall be deemed
automatically revoked if the beneficiary predeceases the
Executive or if the Executive names a spouse as beneficiary
and the marriage is subsequently dissolved. If the Executive
dies without a valid beneficiary designation, all payments
shall be made to the Executive's estate.
3.2 Facility of Payment. If a benefit is payable to a minor, to a
person declared incompetent, or to a person incapable of
handling the disposition of his or her property, the Bank may
pay such benefit to the guardian, legal representative, or
person having the care or custody of such minor, incompetent
person or incapable person. The Bank may require proof of
incompetence, minority, or guardianship as it may deem
appropriate prior to distribution of the benefit. Such
distribution shall completely discharge the Bank from all
liability with respect to such benefit.
ARTICLE 4
GENERAL LIMITATIONS
4.1 Termination for Cause. Notwithstanding any provision of this
Agreement to the contrary, the Bank shall not pay any benefit
under this Agreement if Termination of Employment is due to
the Executive's actions resulting in Termination for Cause.
4.2 Suicide or Misstatement. The Bank shall not pay any benefit
under this Agreement if the Executive commits suicide within
three years after the date of this Agreement. In addition, the
Bank shall not pay any benefit under this Agreement if the
Executive has made any material misstatement of fact on any
application or resume provided to the Bank, or on any
application for any benefits provided by the Bank to the
Executive.
4.3 Removal. If the Executive is removed from office or
permanently prohibited from participating in the conduct of
the Bank's affairs by an order issued under Section 8(e)(4) or
(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
1818(e)(4) or (g)(l), all obligations of the Bank under this
Agreement shall terminate as of the effective date of the
order.
4.4 Default. If the Bank is in default (as defined in Section
3(x)(l) of the Federal Deposit Insurance Act), all obligations
under this Agreement shall terminate as of the date of
default, but vested rights of the contracting parties shall
not be affected.
4.5 FDIC Open-Bank Assistance. All obligations under this
Agreement will be terminated, except to the extent determined
that continuation of the Agreement is necessary for the
continued operation of the Bank, by the Director of the Office
of Thrift Supervision or his or her designee, at the time the
Federal Deposit Insurance Corporation enters into an agreement
to provide assistance to or on behalf of the Bank under the
authority contained in Section 13(c) of the Federal Deposit
Insurance
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Act 12 U.S.C 1823(c). Any rights of the parties that have
already vested, however, shall not be adversely affected by
such action.
4.6 Termination of Participation. The Executive's rights under
this Agreement shall cease if the Executive's employment with
the Bank is terminated prior to the Early Retirement Age,
except as provided in section 2.2 (termination because of
Disability) or section 2.3 (termination within 24 months after
a Change in Control).
ARTICLE 5
CLAIMS AND REVIEW PROCEDURES
5.1 Claims Procedure. A participant or beneficiary (claimant) who
has not received benefits under the Agreement that her or she
believes should be paid shall make a claim for such benefits
as follows:
5.1.1 Initiation: Written Claim. The claimant initiates a claim by
submitting to the Bank a written claim for the benefits.
5.1.2 Timing of Bank Response. The Bank shall respond to such
claimant within 90 days after receiving the claim. If the Bank
determines that special circumstances require additional time
for processing the claim, the Bank can extend the response
period by an additional 90 days by notifying the claimant in
writing, prior to the end of the initial 90-day period, that
an additional period is required. The notice of extension
must set forth the special circumstances and the date by
which the Bank expects to render its decision.
5.1.3 Notice of Decision. If the Bank denies part or all of the
claim, the Bank shall notify the claimant in writing of such
denial. The Bank shall write the notification in a manner
calculated to be understood by the claimant. The notification
shall set forth:
(a) The specific reasons for the denial;
(b) A reference to the specified provisions of the Agreement
on which the denial is based;
(c) A description of any additional information or material
necessary for the claimant to perfect the claim and an
explanation of why it is needed;
(d) An explanation of the Agreement's review procedures and
the time limits applicable to such procedures; and
(e) A statement of the claimant's right to bring a civil
action under ERISA (Employee Retirement Income Security Act)
Section 502(a) following an adverse benefit determination on
review.
5.2 Review Procedure. If the Bank denies part or all of the claim,
the claimant shall have the opportunity for a full and fair
review by the Bank of the denial, as follows:
5.2.1 Initiation: Written Request. To initiate the review, the
claimant, within 60 days after receiving the Bank's notice of
denial, must file with the Bank a written request for review.
5.2.2 Additional Submissions: Information Access. The claimant shall
then have the opportunity to submit written comments,
documents, records and other information relating to the
claim. The Bank shall also provide the claimant, upon request
and free of charge, reasonable access to, and copies of, all
documents, records, and other information relevant (as defined
in applicable ERISA regulations) to the claimant's claim for
benefits.
5.2.3 Considerations on Review. In considering the review, the Bank
shall take into account all materials and information the
claimant submits relating to the claim, without regard to
whether
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such information was submitted or considered in the initial
benefit determination.
5.2.4 Timing of Bank Response. The Bank shall respond in writing to
such claimant within 60 days after receiving the request for
review. If the Bank determines that special circumstances
require additional time for processing the claim, the Bank can
extend the response period by an additional 60 days by
notifying the claimant in writing, prior to the end of the
initial 60-day period, that an additional period is required.
The notice of extension must set forth the special
circumstances and the date by which the Bank expects to render
its decision.
5.2.5 Notice of Decision. The Bank shall notify the claimant in
writing of its decision on review. The Bank shall write the
notification in a manner calculated to be understood by the
claimant. The notification shall be set forth:
(a) The specific reasons for the denial;
(b) A reference to the specific provisions of the Agreement on
which the denial is based;
(c) A statement that the claimant is entitled to receive, upon
request and free of charge, reasonable access to, and copies
of, all documents, records, and other information relevant (as
defined in applicable ERISA regulations) to the claimant's
claim for benefits; and
(d) A statement of the claimant's right to bring a civil
action under ERISA Section 502(a).
ARTICLE 6
MISCELLANEOUS
6.1 Amendments and Termination. The Bank may amend or terminate
this Agreement at any time if, pursuant to legislative,
judicial, or regulatory action, continuation of the Agreement
would (i) cause benefits to be taxable to the Executive prior
to actual receipt, or (ii) result in significant financial
penalties or other significantly detrimental ramifications to
the Bank (other than the financial impact of paying the
benefits).
6.2 Binding Effect. This Agreement shall bind the Executive and
the Bank and their beneficiaries, survivors, executors,
administrators and transferees.
6.3 No Guarantee of Employment. This Agreement is not a contract
for employment. It does not give the Executive the right to
remain an employee of the Bank, nor does it interfere with the
Bank's right to discharge the Executive. It also does not
require the Executive to remain an employee nor interfere with
the Executive's right to terminate employment at any time.
6.4 Non-Transferability. Benefits under this Agreement cannot be
sold, transferred, assigned, pledged, attached or encumbered
in any manner.
6.5 Successors; Binding Agreement. By an assumption agreement in
form and substance satisfactory to the Executive, the Bank
will require any successor (whether direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or
substantially all of the business or assets of the Bank to
expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Bank would be
required to perform this Agreement if no such succession had
occurred. The Bank's failure to obtain such an assumption
agreement before the succession becomes effective shall be
considered a breach of this Agreement and shall entitle the
Executive to the Change-in-Control benefit specified in
Section 2.3.
6.6 Tax Withholding. The Bank shall withhold any taxes that are
required to be withheld from the benefits provided under this
Agreement.
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6.7 Applicable Law. Except to the extent preempted by the laws of
the United States of America, the validity, interpretation,
construction, and performance of this Agreement shall be
governed by and construed in accordance with the laws of the
State of Virginia, without giving effect to the principles of
conflict of laws of such state.
6.8 Unfunded Arrangement. The Executive's beneficiary(ies) are
general unsecured creditors of the Bank for the payment of
benefits under this Agreement. The benefits represent the mere
promise by the Bank to pay such benefits. The rights to
benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors. Any insurance on the
Executive's life is a general asset of the Bank of which the
Executive and the Executive's beneficiary(ies) have no
preferred or secured claim.
6.9 Entire Agreement. This Agreement constitutes the entire
agreement between the Bank and the Executive as to the subject
matter hereof. No rights are granted to the Executive's
beneficiary by virtue of this Agreement other than those
specifically set forth herein.
6.10 Administration. The Bank shall have all powers which are
necessary to administer this Agreement, including but not
limited to:
(a) Interpreting the provisions of the Agreement;
(b) Establishing and revising the method of accounting for the
Agreement;
(c) Maintaining a record of benefit payments; and
(d) Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
6.11 Named Fiduciary. For purposes of the Employee Retirement
Income Security Act of 1974, if applicable, the Bank shall be
the named fiduciary and plan administrator under this
Agreement. The named fiduciary may delegate to others certain
aspects of the management and operation responsibilities of
the plan including the employment of advisors and the
delegation of ministerial duties to qualified individuals.
6.12 Severability. If for any reason any provision of this
Agreement is held invalid, such invalidity shall not affect
any other provision of this Agreement not held so invalid, and
each such other provision shall, to the full extent consistent
with the law, continue in full force and effect. If any
provision of this Agreement shall be held invalid in part,
such invalidity shall in no way affect the remainder of such
provision not held so invalid and the remainder of such
provision, together with all other provisions of this
Agreement shall, to the full extent consistent with the law,
continue in full force an effect.
6.13 Headings. The headings of Sections herein are included solely
for convenience of reference and shall not affect the meaning
or interpretation of any provision of this Agreement.
6.14 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be
deemed to have been duly given if delivered by hand or mailed,
certified or registered mail, return receipt requested, with
postage prepaid, to the following addresses or to such other
address as either party may designate by like notice.
(a) If to the Bank, to:
Board of Directors
The Fauquier Bank
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(b) If to the Executive, to:
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and to such other or additional person or persons as either
party shall have designated to the other party in writing by
like notice.
IN WITNESS WHEREOF, the Executive and a duly authorized Bank officer have
signed this Agreement.
EXECUTIVE: BANK:
THE FAUQUIER BANK
By By:
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[Name of Executive]
------------------------------- -------------------------------
[Title]
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BENEFICIARY DESIGNATION
THE FAUQUIER BANK
EXECUTIVE SURVIVOR INCOME AGREEMENT
I designate the following as beneficiary of benefits under this Agreement
payable following my death:
Primary:
________________________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
Contingent:_____________________________________________________________________
________________________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
NOTE: TO NAME A TRUST AS BENEFICIARY, PLEASE PROVIDE THE NAME OF THE TRUSTEE(S)
AND THE EXACT NAME AND DATE OF THE TRUST AGREEMENT.
I understand that I may change these beneficiary designations by filing a new
written designation with the Bank. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or if I have
named my spouse as beneficiary and our marriage is subsequently dissolved.
Signature
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Date
---------------------------------
Received by the Bank this ___ day of __________, 2003.
By
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Title
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