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Exhibit 10.4
Form of Consent
Letter
[Insert Name]
First National Corporation
112 West King Street
Strasburg, Virginia 22657
Dear [Insert Name]:
First National Corporation (the
“ Company ”) anticipates entering into a
Securities Purchase Agreement (the “ Securities Purchase
Agreement ”), with the United States Department of
Treasury (“ Treasury ”) that provides for the
Company's participation in the Treasury's TARP Capital Purchase
Program (the “ CPP ”). If the Company does not
participate or ceases at any time to participate in the CPP, this
letter shall be of no further force and effect.
For the Company to participate in
the CPP and as a condition to the closing of the investment
contemplated by the Securities Purchase Agreement, the Company is
required to establish specified standards for incentive
compensation to its senior executive officers and its next five
most highly-compensated employees and to make changes to its
compensation agreements. To comply with these requirements, and in
consideration of the benefits that you will receive as a result of
the Company's participation in the CPP, you agree as
follows:
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(1)
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No Golden Parachute Payments
. The Company is prohibiting any
golden parachute payment to you during any “CPP Covered
Period.” A “ CPP Covered Period ” is any
period during which any obligation from financial assistance
provided under the CPP remains outstanding.
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(2)
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Recovery of Bonus and Incentive
Compensation . Any bonus
and incentive compensation paid to you during a CPP Covered Period
is subject to recovery or “clawback” by the Company if
the payments were based on materially inaccurate financial
statements or any other materially inaccurate performance metric
criteria.
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(3)
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Compensation Program Amendments
. Each of the Company's
compensation, bonus, incentive and other benefit plans,
arrangements and agreements (including golden parachute, severance
and employment agreements) (collectively, “ Benefit
Plans ”) with respect to you is hereby amended to the
extent necessary to give effect to provisions (1) and (2) and you
agree to execute any such amendments as maybe necessary to
implement the agreements contained in this letter.
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(4)
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Benefit Plan Review. In addition, the Company is required to review
its Benefit Plans to ensure that they do not (a) encourage senior
executive officers to take unnecessary and excessive risks that
threaten the value of the Company, (b) encourage manipulation of
the Company’s reported earnings to enhance compensation of
any employees or (c) commit the Company to make excessive
or
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