Fauquier
Bankshares, Inc.
Stock Incentive
Plan
1.
Purpose and Effective Date .
(a) The
purpose of the Fauquier Bankshares, Inc. Stock Incentive Plan (the
“Plan”) is to further the long-term stability and
financial success of the Company (as defined below) by attracting
and retaining personnel, including employees, directors and
consultants, through the use of stock incentives. The Company
believes that ownership of Company Stock will stimulate the efforts
of those persons upon whose judgment, interest and efforts the
Company is and will be largely dependent for the successful conduct
of its business and will further the identification of those
persons’ interests with the interests of the Company’s
shareholders. This Plan will supersede and replace the Fauquier
Bankshares, Inc. Omnibus Stock Ownership and Long Term Incentive
Plan, as amended and restated effective January 1, 2000, which
expires December 31, 2009.
(b) The
Plan was adopted by the Board of Directors of the Company on March
19, 2009, subject to the approval of the Plan by the
Company’s shareholders.
2.
Certain Definitions . The following terms have the meanings
indicated:
(a)
Act . The Securities Exchange Act of 1934, as
amended.
(b)
Applicable Withholding Taxes . The aggregate amount of
federal, state and local income and payroll taxes that the Company
is required to withhold (based on the minimum applicable statutory
withholding rates) in connection with any exercise of an Option or
the award, lapse of restrictions or payment with respect to
Restricted Stock.
(c)
Award . The award of an Option, Restricted Stock or Other
Stock-Based Award under the Plan.
(d)
Board . The Board of Directors of the Company.
(e)
Cause . Dishonesty, fraud, misconduct, gross incompetence,
gross negligence, breach of a material fiduciary duty, material
breach of an agreement with the Company (including, without
limitation, any loyalty, noncompetition, non-solicitation,
confidentiality and/or invention assignment agreement),
unauthorized use or disclosure of confidential information or trade
secrets, or conviction or confession of a crime punishable by law
(except minor violations), in each case as determined by the
Committee, which determination shall be binding. Notwithstanding
the foregoing, if “Cause” is defined in an employment
agreement between a Participant and the Company,
“Cause” shall have the meaning assigned to it in such
agreement.
(i) The
acquisition by any Person (as defined below) of beneficial
ownership of 20% or more of the then outstanding shares of common
stock of the Company;
(ii) Individuals
who constitute the Board on the effective date of this Plan (the
“Incumbent Board”) cease to constitute a majority of
the Board, provided that any director whose nomination was approved
by a vote of at least a majority of the directors then comprising
the Incumbent Board will be considered a member of the Incumbent
Board, but excluding any such individual whose initial assumption
of office is in connection with an actual or threatened election
contest or actual or threatened solicitation of proxies or consents
by or on behalf of a person other than the Board of directors of
the Company, as such terms are used in Rules 14a-11 and 12
under the Act;
(iii) Approval by
the shareholders of the Company and consummation of a
reorganization, merger, share exchange or consolidation (a
“Reorganization”), provided that shareholder approval
of a Reorganization will not constitute a Change in Control if,
upon consummation of the Reorganization, each of the following
conditions is satisfied:
(I) no Person
beneficially owns 50% or more of either (1) the then
outstanding shares of common stock or voting securities of the
corporation or other entity resulting from the transaction or
(2) the combined voting power of the then outstanding voting
securities of such corporation or other entity entitled to vote
generally in the election of members of the board of directors (or
similar governing body); or
(II) at least a
majority of the members of the board of directors (or similar
governing body) of the corporation or other entity resulting from
the Reorganization were members of the Incumbent Board at the time
of the execution of the initial agreement providing for the
Reorganization; or
(iv) Approval by
the shareholders of the Company of a complete liquidation or
dissolution of the Company, or of the sale or other disposition of
all or substantially all of the assets of the Company.
For purposes of
this Section 2(f), “Person” means any individual,
entity or group (within the meaning of Section 13(d)(3) of the
Act), other than any employee benefit plan (or related trust)
sponsored or maintained by the Company or any affiliated company,
and “beneficial ownership” has the meaning given the
term in Rule 13d-3 under the Act.
(g)
Code . The Internal Revenue Code of 1986, as
amended.
2
(h)
Committee . The Committee appointed to administer the Plan
pursuant to Plan Section 15, or if no such Committee has been
appointed, the Board.
(i)
Company . Fauquier Bankshares, Inc., a Virginia
corporation.
(j)
Company Stock . Common stock of the Company. If the par
value of the Company Stock is changed, or in the event of a change
in the capital structure of the Company (as provided in
Section 13), the shares resulting from such a change shall be
deemed to be Company Stock within the meaning of the
Plan.
(k)
Consultant . A person or entity rendering services to the
Company who is not an “employee” for purposes of
employment tax withholding under the Code.
(l)
Date of Grant . The effective date of an Award granted by
the Committee.
(m)
Disability or Disabled . As to an Incentive Stock Option, a
Disability within the meaning of Code Section 22(e)(3). As to
all other Awards, the Committee shall determine whether a
Disability exists and such determination shall be
conclusive.
(i) If the Company
Stock is listed on any established stock exchange or quoted on any
established stock market system, its Fair Market Value shall be the
closing price for such stock on the Date of Grant as reported by
such exchange or stock market system, or, if there are no trades on
such date, the value shall be determined as of the last preceding
day on which the Company Stock was traded.
(ii) If the
Company Stock is not publicly traded, the Fair Market Value shall
be determined by the Committee using any reasonable method in good
faith, provided that the fair market value of Company Stock subject
to an Incentive Stock Option shall be determined in good faith
within the meaning of Treasury Regulation §
1.422-2(e)(2).
(iii) Fair Market
Value shall be determined as of the Date of Grant specified in the
Award.
(o)
Incentive Stock Option . An Option intended to meet the
requirements of, and qualify for favorable federal income tax
treatment under, Code Section 422.
(p)
Nonstatutory Stock Option . An Option that does not meet the
requirements of Code Section 422, or that is otherwise not
intended to be an Incentive Stock Option and is so
designated.
3
(q)
Option . A right to purchase Company Stock granted under the
Plan, at a price determined in accordance with the Plan.
(r)
Other Stock-Based Award . A right granted under
Section 9.
(s)
Participant . Any individual who is granted an Award under
the Plan.
(t)
Restricted Stock . Company Stock awarded upon the terms and
subject to the restrictions set forth in Section 8.
(i) the
termination of an employee’s employment under conditions
which would constitute “normal retirement” or
“early retirement” under any tax qualified retirement
plan maintained by the Company;
(ii) the
termination of an employee’s employment after attaining age
65 (except in the case of termination for Cause); or
(iii) the
termination of a Non-Employee Director’s service as a member
of the Board after attaining age 65.
(v)
Rule 16b-3 . Rule 16b-3 promulgated under the Act,
including any corresponding subsequent rule or any amendments to
Rule 16b-3 enacted after the effective date of the
Plan.
(w)
10% Shareholder . A person who owns, directly or indirectly
and within the meaning of Section 422 or 424 of the Code,
stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or any parent or subsidiary
of the Company. Indirect ownership of stock shall be determined in
accordance with Code Section 424(d).
3.
General . Awards of Options or Restricted Stock may be
granted under the Plan. Options granted under the Plan may be
Incentive Stock Options or Nonstatutory Stock Options.
|
|
(a)
|
|
Subject to Section 13 of the
Plan, there shall be reserved for issuance under the Plan an
aggregate of 350,000 shares of Company Stock; which may include
authorized, but unissued, shares. Not more than 200,000 of such
shares shall be available as any type of awards other than
Incentive Stock Options or Stock Appreciation Rights. Shares
allocable to Options granted under the Plan that expire or
otherwise terminate and shares that are forfeited pursuant to
restrictions on Restricted Stock awarded under the Plan may again
be subjected to an Award under this Plan.
|
4
(b) The
maximum number of shares with respect to which an Award may be
granted in any calendar year to any employee during such calendar
year shall be 35,000 shares.
(a) Any
employee of, director of, or Consultant to the Company (including
an employee of, director of, or consultant to an affiliate of the
Company) who, in the judgment of the Committee, has contributed or
can be expected to contribute to the profits or growth of the
Company is eligible to become a Participant. The Committee shall
have the power and complete discretion, as provided in
Section 15, to select eligible Participants and to determine
for each Participant the terms, conditions and nature of the Award
and the number of shares to be allocated as part of the Award;
provided, however, that any Award made to a member of the Committee
must be approved by the Board. The Committee is expressly
authorized to make an Award to a Participant conditioned on the
surrender for cancellation of an existing Award.
(b) The
grant of an Award shall not obligate the Company to pay an employee
any particular amount of remuneration, to continue the employment
of the employee after the grant or to make further grants to the
employee at any time thereafter.
(c) Non-Employee
Directors and Consultants shall not be eligible to receive the
Award of an Incentive Stock Option.
(a)
Grant. Whenever the Committee deems it appropriate to grant
Options, notice shall be given to the Participant stating the
number of shares for which Options are granted, the exercise price
per share, whether the options are Incentive Stock Options or
Nonstatutory Stock Options, and the conditions to which the grant
and exercise of the Options are subject. This notice, when duly
accepted in writing by the Participant, shall become a stock option
agreement between the Company and the Participant. A
Participant’s stock option agreement shall set forth all
restrictions on disposition and transfer applicable to the Option
shares.
(b)
Exercise Price. The Committee shall establish the exercise
price of Options. The exercise price of an Option shall be not less
than 100% of the Fair Market Value of such shares on the Date of
Grant, provided that if the Participant is a 10% Shareholder, the
exercise price of an Incentive Stock Option shall not be less than
110% of the Fair Market Value of such shares on the Date of
Grant.
(c)
Term. The Committee shall establish the term of each Option
in the Participant’s stock option agreement. The term of an
Incentive Stock Option shall not be longer than ten years from the
Date of Grant, except that an Incentive Stock Option granted to a
10% Shareholder shall not have a term in excess of five years. No
Option may be exercised after the expiration of its term or, except
as set forth in the Participant’s stock option agreement,
after the termination of the Participant’s
employment.
5
(i) During
Participant’s Employment . Options may be exercised
during their terms in whole or in part at such times as may be
specified by the Committee in the Participant’s stock option
agreement. The Committee may impose such vesting conditions and
other requirements as the Committee deems appropriate, and the
Committee may include such provisions regarding a Change in Control
as the Committee deems appropriate.
(ii) After
Participant’s Termination of Employment . The Committee
shall set forth in the Participant’s stock option agreement
when, and under what circumstances, an Option may be exercised
after termination of the Participant’s employment or period
of service; provided that no Incentive Stock Option may be
exercised after the earlier of (a) (i) three months from the
Participant’s termination of employment with the Company for
reasons other than Disability or death, or (ii) one year from
the Participant’s termination of employment on account of
Disability or death; or (b) the expiration of the
Option’s term.
(iii) After
Participant’s Death . If a Participant dies and if the
Participant’s stock option agreement provides that part or
all of the Option may be exercised after the Participant’s
death, then such portion may be exercised by the executor or
administrator of the Participant’s estate during the time
period specified in the stock option agreement, but not later than
the expiration of the Option’s term.
(e)
Limit on Exercise of Incentive Stock Options. An Incentive
Stock Option, by its terms, shall be exercisable in any calendar
year only to the extent that the aggregate Fair Market Value
(determined at the Date of Grant) of the Company Stock with respect
to which Incentive Stock Options are exercisable by the Participant
for the first time during the calendar year does not exceed
$100,000 (the “Limitation Amount”). Incentive Stock
Options granted under the Plan and all other plans of the Company
and any parent or subsidiary of the Company shall be aggregated for
purposes of determining whether the Limitation Amount has been
exceeded. The Board may impose such conditions as it deems
appropriate on an Incentive Stock Option to ensure that the
foregoing requirement is met. If Incentive Stock Options that first
become exercisable in a calendar year exceed the Limitation Amount,
the excess Options will be treated as Nonstatutory Stock Options to
the extent permitted by law.
(f)
Options Forfeited Upon Termination of Employment for Cause.
If a Participant’s employment or services is terminated by
the Company for Cause, the Participant’s Options, both vested
and unvested, shall terminate as of the date of the misconduct, as
determined by the Committee in its sole discretion.
6
7. Method
of Exercise of Options .
(a)
Exercise. Options may be exercised by giving written notice
of the exercise to the Company, stating the Option being exercised
and the number of shares the Participant has elected to purchase
under the Option.
(b)
Payment. In no event shall any shares be issued pursuant to
the exercise of an Option until the Participant has made full
payment for the shares of Company Stock (including payment of the
exercise price and any Applicable Withholding Taxes). Company Stock
purchased upon the exercise of an Option granted under the Plan
shall be paid for
|
