EXHIBIT 10.14
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
AND CONSULTING AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT (Agreement) is intended to amend and replace
the Executive Supplemental Retirement Plan Executive Agreement dated June 18,
2002, as amended June 1, 2003, by and between County National Bank, a bank
organized and existing under the laws of the State of Maryland (hereinafter
referred to as the "Bank") and Xxxxxxx X. Storm, Senior Vice President/Chief
Financial Officer of the Bank (hereinafter referred to as the "Executive".)
WHEREAS, the Executive is now in the employ of the Bank and has faithfully
served the Bank, it is the consensus of the Board of Directors (hereinafter
referred to as the "Board") that the Executive's services have been of
exceptional merit, in excess of the compensation paid and an invaluable
contribution to the profits and position of the Bank in its field of activity.
The Board further believes that the Executive's experience, knowledge of
corporate affairs, reputation and industry contacts are of such value, and the
Executive's continued services so essential to the Bank's future growth and
profits, that it would suffer severe financial loss should the Executive
terminate his services;
ACCORDINGLY, the Board has adopted this County National Bank Executive
Supplemental Retirement Plan and Consulting Agreement (hereinafter referred to
as the "Executive Plan") and it is the desire of the Bank and the Executive to
enter into this Agreement under which the Bank will agree to make certain
payments to the Executive upon the Executive's retirement, to the Executive's
beneficiary (ies) in the event of the Executive's death or otherwise as set
forth herein, as well as provide for payment for personal and advisory services
(Consulting Services) to be provided by Executive after retirement.
FURTHERMORE, it is the intent of the parties hereto that this Plan be considered
an unfunded arrangement maintained to provide supplemental retirement benefits
for, and payment for services to be rendered by, the Executive and be considered
a non-qualified benefit plan for purposes of the Employee Retirement Security
Act of 1974, as amended ("ERISA"). The Executive is aware of the Bank's
financial status and has had substantial input in the design and operation of
the Executive Plan; and
NOW THEREFORE, in consideration of services the Executive has performed in the
past and those to be performed in the future, and based upon mutual promises and
covenants herein contained, the Bank and the Executive agree as follows:
I. DEFINITIONS
A. Effective Date
The Effective Date shall be June 3, 2002.
B. Plan Year
Any reference to "Plan Year" shall mean a calendar year from
January 1st through December 31st. In the year of
implementation, the term "Plan Year" shall mean the period
from the Effective Date through December 31st of the year of
the Effective Date.
C. Normal Retirement Date
The Normal Retirement Date shall mean the first day of the
calendar month following the month in which the Executive
reaches the Normal Retirement Age.
D. Termination of Services
Termination of Service shall mean the Executive's voluntary
resignation of service or the Bank's discharge of the
Executive without cause, in each case prior to the Normal
Retirement Date.
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E. Pre-Retirement Account
A Pre-Retirement Account shall be established as a liability
account on the books of the Bank for the benefit of the
Executive. The Pre-Retirement account shall be increased or
decreased by the Index Benefit each Plan Year, until the
earlier of (i) Executive's Termination of Service, or (ii) the
Executive's retirement on or after the Normal Retirement Date.
F. Index Benefit
For plan periods beginning June 3, 2002 through December 31,
2003, the Index Benefit for the Executive shall be equal to
the excess (if any) of the Index for that Plan Year over the
Cost of Funds Expense for that Plan Year divided by a factor
equal to 1.06 minus the marginal tax rate.
For plan periods beginning January 1, 2004, the Index Benefit
for the Executive shall be equal to the Index for the period
divided by the result of one hundred percent less the Bank's
current incremental Federal tax rate.
G. Index
The Index for the Plan Year shall be the aggregate annual
after-tax income from the life insurance contract(s) described
hereinafter as defined by FASB Technical Bulletin 85-4. This
Index shall be applied as if such insurance contract(s) were
purchased on the Effective Date.
Company #1
Insurance Company: Massachusetts Mutual Life Insurance
Company
Policy Form: Flexible Premium Adjustable Life
Policy Name Strategic Life 11B
Insured's Age & Sex: 51 Male
Riders: None
Ratings: None
Option: Level
Face Amount: $245,001
Premiums Paid: $100,000
# of Premium Payments: 1
Assumed Purchase Date: June 3, 2002
Company #2
Insurance Company:
Policy Form:
Policy Name
Insured's Age & Sex:
Riders:
Ratings:
Option:
Face Amount:
Premiums Paid:
# of Premium Payments:
Assumed Purchase Date:
If such contracts of life insurance are actually purchased by
the Bank, then the actual policies, or replacements thereof,
as of the dates they were actually purchased shall be used in
calculations under this Agreement. If such contracts of life
insurance are not purchased or are subsequently surrendered or
lapsed, then the Bank shall receive annual policy
illustrations that assume the above described policies were
purchased or had not subsequently surrendered or lapsed. Said
illustrations shall be received from the respective insurance
companies and will indicate the increase in policy values for
purposes of calculating the amount of the Index.
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In either case, references to the life insurance contracts are
merely for purposes of calculating a benefit. The Bank has no
obligation to purchase such life insurance and, if purchased,
the Executive and the Executive's beneficiary (ies) shall have
no ownership interest in such policy (ies) and shall always
have no greater interest in the benefits under this Executive
Plan than that of an unsecured creditor of the Bank.
H. Cost of Funds Expense
1. For plan periods beginning June 3, 2002 and ending May 31,
2003, the Cost of Funds Expense for any Plan Year shall be the
after-tax amount as calculated by taking the amount of the
premium(s) for the insurance contract(s) listed above (whether
or not such policies are purchased) times the Bank's
investment portfolio yield, plus the increase in the policy's
cash surrender value since the implementation date times the
interest rate paid on federal funds sold. The interest rates
used for the portfolio yield and fed funds sold will be an
average for the Plan Year.
2. For plan periods beginning June 1, 2003 and ending December
31, 2003, the Cost of Funds Expense (Opportunity Cost) for any
Plan Year shall be calculated by taking the sum of the amount
of premiums for the life insurance policies described in the
definition of "Index" plus the amount of any after-tax
benefits paid to the Executive pursuant to the Executive Plan
plus the amount of all previous years' after-tax Cost of Funds
Expense, and multiplying that sum by the after-tax yield on
the Bank's investment alternatives, computed as the average
of:
Bond Portfolio Yield
5 year Treasury securities
3 year Treasury securities
Federal funds sold overnight rate
3. For plan periods beginning January 1, 2004, the Cost of
Funds expenses shall be zero.
I. Change in Control
A Change in Control shall be deemed to occur on the earliest
of:
i. The acquisition by any entity, person or group (other
than the acquisition by a tax-qualified retirement
plan sponsored by CN Bancorp, Inc. ("Bancorp") or the
Bank) of beneficial ownership, as that term is
defined in Rule 13d-3 under the Securities Exchange
Act of 1934, of more than 50% of the outstanding
capital stock of Bancorp or the Bank entitled to vote
for the election of directors, unless the acquisition
is pursuant to (A) an offering of stock by Bancorp in
which existing shareholders of Bancorp do not sell
the shares of stock that they own in Bancorp, at the
time of, or in connection with the offering, or
subsequent to the offering in a manner contemplated
at the time of the offering ("Voting Stock"), (B) the
laws of descent and distribution, or (C) bona fide
gift;
ii. The commencement by any entity, person, or group
(other than Bancorp or the Bank, a subsidiary of
Bancorp or the Bank, or a tax-qualified retirement
plan sponsored by Bancorp or the Bank) of a tender
offer or an exchange offer for more than 50% of the
outstanding Voting Stock of Bancorp or the Bank;
iii. The effective time of (a) a merger or consolidation
of Bancorp or the Bank with one or more other
corporations as a result of which the holders of the
outstanding Voting Stock of Bancorp or the Bank
immediately prior to such merger exercise voting
control over less than 60% of the Voting Stock of the
surviving or resulting corporation, or (b) a transfer
of substantially all of the property of Bancorp or
the Bank other than to an entity of which Bancorp or
the Bank owns at least 60% of the Voting Stock;
iv. Upon the acquisition by any entity, person, or group
of the control of the election of a majority of the
Bank or Bancorp's directors,
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v. At such time that, during any period of two
consecutive years, individuals who at the beginning
of such period constitute the Board of Bancorp or the
Bank (the "Continuing Directors") cease for any
reason to constitute at least two-thirds thereof,
provided that any individual whose election or
nomination for election as a member of the Board was
approved by a vote of at least two-thirds of the
Continuing Directors then in office shall be
considered a Continuing Director.
J. Normal Retirement Age
Normal Retirement Age shall mean the date on which the
Executive attains age sixty-five (65).
II. INDEX BENEFITS
A. Retirement
Subject to Subparagraph II (D) hereinafter, if the Executive
is continuously employed from the Effective Date until the
Normal Retirement Date, the Executive shall be entitled to
receive the balance in the Pre-Retirement Account in one
hundred and twenty (120) equal monthly installments commencing
thirty (30) days following the Executive's retirement.
B. Consulting Services
The Executive agrees to provide personal and/or advisory
services (Consulting Services) as agreed upon between the Bank
and the Executive after retirement. Payment for such services
rendered shall be the amount of the Index Benefit for each
Plan Year services are provided by the Executive. If
Consulting Services are not provided by the Executive in a
Plan Year, no payments for Consulting Services are due him for
that Plan Year.
C. Termination of Service
Subject to Subparagraph II (D), should an Executive suffer a
Termination of Service prior to retirement, the Executive
shall be entitled to receive zero percent (0%) of the balance
in the Executive's Pre-Retirement Account if the Executive has
less than five (5) years of service, at the time of the
termination, with the Bank, and one hundred percent (100%) if
the Executive has completed, at the time of the termination,
five (5) years of service, payable to the Executive either
over 120 equal payments commencing thirty (30) days following
the Executive's Normal Retirement Age or as may otherwise be
determined by the Bank, in its sole discretion.
If an Executive suffers a Termination of Service prior to
retirement and the Executive has a vested interest in the
funds in the Pre-Retirement Account, the funds in the
Pre-Retirement Account will earn an annual interest rate the
same as paid on the Bank's retail statement savings accounts,
up to the Executive's Normal Retirement Age.
D. Death
Should the Executive die while there is a balance in the
Executive's Pre-Retirement Account, said unpaid balance of the
Executive's Pre-Retirement Account shall be paid in a lump sum
to the individual or individuals the Executive may have
designated in a written designation filed with the Bank. In
the absence of any effective beneficiary designation, the
unpaid balance shall be paid as set forth herein to the duly
qualified executor or administrator of the Executive's estate.
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Said payment due hereunder shall be made the first day of the
second month following the decease of the Executive.
E. Discharge for Cause
Should the Executive be Discharged for Cause at any time, all
benefits under this Executive Plan shall be forfeited. The
term "for cause" shall mean any of the following that result
in an adverse effect on the Bank: (i) gross negligence or
gross neglect; (ii) the commission of a felony or misdemeanor
involving moral turpitude, fraud, or dishonesty; (iii) the
willful violation of any law, rule or regulation (other than a
traffic violation or similar offense); (iv) an intentional
failure to perform stated duties; or (v) a breach of fiduciary
duty involving personal profit. If a dispute arises as to
discharge "for cause", such dispute shall be resolved by
arbitration as set forth in Section VI.B. of this Agreement.
F. Death Benefit
Except as set forth above, there is no death benefit provided
under this Agreement. The Executive has no death benefit under
any insurance contract that may be purchased by the Bank under
this Executive Plan.
III. RESTRICTIONS UPON FUNDING
The Bank shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Executive
Plan. The Executive, the Executive's beneficiary (ies) or any successor
in interest shall be and remain simply a general creditor of the Bank
in the same manner as any other creditor having a general claim for
matured and unpaid compensation.
The Bank reserves the absolute right, at its sole discretion, to either
fund the obligations undertaken by the Executive Plan or to refrain
from funding the same and to determine the extent, nature and method of
such funding. Should the Bank elect to fund this Executive Plan, in
whole or in part, through the purchase of life insurance, mutual funds,
disability policies or annuities, the Bank reserves the absolute right,
in its sole discretion, to terminate such funding at any time, in whole
or in part. At no time shall any Executive be deemed to have any lien
or right, title or interest in or to any specific funding investment or
to any assets of the Bank.
If the Bank elects to invest in life insurance, disability or annuity
policy upon the life of the Executive, then the Executive shall assist
the Bank by freely submitting to a physical examination and supplying
such additional information necessary to obtain such insurance or
annuities.
IV. CHANGE OF CONTROL
Upon a Change of Control, if the Executive subsequently suffers
Termination of Service, then the Executive shall receive retirement
benefits following the Executive's Normal Retirement Date as if the
Executive had been continuously employed by the Bank from the Effective
Date until the Normal Retirement Date. The Executive will also remain
eligible for any and all promised death benefits in this Executive
Plan. In addition, no sale, merger or consolidation of the Bank shall
take place unless the new or surviving entity expressly acknowledges
the obligations under this Executive Plan and agrees to abide by its
terms.
V. MISCELLANEOUS
A. Alienability and Assignment Prohibition
Neither the Executive, nor the Executive's surviving spouse,
nor any other beneficiary (ies) under this Executive Plan
shall have any power or right to transfer, assign, anticipate,
hypothecate, mortgage, commute, modify or otherwise encumber
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in advance any of the benefits payable hereunder nor shall any
of said benefits be subject to seizure for payment of any
debts, judgements, alimony or separate maintenance owed by the
Executive or the Executive's beneficiary (ies), nor be
transferable by operation of law in the event of bankruptcy,
insolvency or otherwise. In the event the Executive or any
beneficiary attempts assignment, commutation, hypothecation,
transfer or disposal of the benefits hereunder, the Bank's
liabilities therefor shall forthwith cease and terminate.
B. Binding Obligation of the Bank and any Successor in Interest
The Bank shall not merge or consolidate into or with another
bank or sell substantially all of its assets to another bank,
firm or person until such bank, firm or person expressly
agrees, in writing to assume and discharge the duties and
obligations of the Bank under this Agreement. This Agreement
shall be binding upon the parties hereto, their successors,
beneficiaries, heirs and personal representatives.
C. Amendment or Revocation
It is agreed by and between the parties hereto that, during
the lifetime of the Executive, this Agreement may be amended
or revoked at any time or times, in whole or in part, by the
mutual written consent of the Executive and the Bank.
D. Gender
Whenever words are used herein in the masculine or neuter
gender, they shall be read and construed as in the masculine,
feminine, or neuter gender, whenever they should so apply.
E. Effect on Other Bank Benefit Plans
Nothing contained in this Agreement shall affect the right of
the Executive to participate in or be covered by any qualified
or non-qualified pension, profit sharing, group, bonus or
other supplemental compensation or fringe benefit plan
constituting a part of the Bank's existing or future
compensation structure.
F. Headings
Headings and subheadings in this Agreement are inserted for
reference and convenience only and shall not be deemed a part
of the Executive Plan.
G. Applicable Law
The validity and interpretation of this Agreement shall be
governed by the laws of the State of Maryland.
H. 12 U.S.C. 1828(k)
Any payments made pursuant to this Agreement are subject to
and conditioned upon their compliance with 12 U.S.C. 1828(k)
or any regulations promulgated thereunder.
I. Partial Invalidity
If any term, provision, or covenant or condition of this
Agreement is determined by an arbitrator or a court, as the
case may be, to be invalid, void or unenforceable, such
determination shall not render any other term, provision,
covenant or condition invalid, void or unenforceable, and this
Agreement shall remain in full force and effect
notwithstanding such partial invalidity.
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J. Employment
No provision of this Agreement shall be deemed to restrict or
limit any existing employment agreement by and between the
Bank and the Executive, nor shall any conditions herein create
specific employment rights to the Executive nor limit the
right of the Bank to discharge the Executive with or without
cause. In a similar fashion, no provision shall limit the
Executive' s rights to voluntary sever the Executive's
employment at any time.
K. Use of Estimated Rates
The Bank shall base calculations and payments required to be
made prior to the receipt of final Cost of Funds Expense
and/or the Index for a particular year on good faith
estimates. Such calculations shall be finalized as soon as
practicable following the receipt of final Cost of Funds
Expense and the Index for such year, and the amount of any
difference between payments made and those due pursuant to
such final calculations shall be corrected, as determined by
the Bank, either by (i) adjustment of future payments, or (ii)
by lump sum payment due to the Bank from the recipient or due
to the recipient from the Bank, within two calendar months of
the final calculations.
VI. ERISA PROVISION
A. Named Fiduciary and Plan Administrator
The "Named Fiduciary and Plan Administrator" of the Executive
Plan shall be County National Bank until its resignation or
removal by the Board. As Named Fiduciary and Plan
Administrator, the Bank shall be responsible for the
management, control and administration of the Executive Plan.
The Named Fiduciary may delegate to other certain aspects of
the management and operation responsibilities of the Executive
Plan including the employment of advisors and the delegation
of ministerial duties to qualified individuals.
B. Claims Procedure and Arbitration
In the event a dispute arises over benefits under this
Executive Plan and benefits are not paid to the Executive (or
to the Executive's beneficiary (ies) in the case of the
Executive's death) and such claimants feel they are entitled
to receive such benefits, then a written claim must be made to
the Named Fiduciary and Plan Administrator named above within
sixty (60) days from the date payments are refused. The Named
Fiduciary and Plan Administrator shall review the written
claim and if the claim is denied, in whole or in part, they
shall provide in writing within sixty (60) days of receipt of
such claim the specific reasons for such denial, reference to
the provisions of this Executive Plan upon which the denial is
based and any additional material or information necessary to
perfect the claim Such written notice shall further indicate
the additional steps to be taken by claimants if a further
review of the claim denial is desired. A claim shall be deemed
denied if the Named Fiduciary and Plan Administrator fails to
take any action within the aforesaid sixty-day period.
If claimants desire a second review they shall notify the
Named Fiduciary and Plan Administrator in writing within sixty
(60) days of the first claim denial. Claimants may review this
Executive Plan or any relating thereto and submit any written
issues and comments it may feel appropriate. In their sole
discretion, the Named Fiduciary and Plan Administrator shall
then review the second claim and provide a written decision
within sixty (60) days of receipt of such claim. This decision
shall likewise state the specific reasons for the decision and
shall include reference to specific provisions of the
Agreement upon which the decision is based.
If claimants continue to dispute the benefit denial based upon
completed performance of this Agreement or the meaning and
effect of the terms and conditions thereof, then claimants may
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submit the dispute to an arbitrator for final arbitration. The
arbitrator shall be selected by mutual agreement of the Bank
and the claimants. The arbitrator shall operate under any
generally recognized set of arbitration rules. The parties
hereto agree that they and their heirs, personal
representatives, successors and assigns shall be bound by the
decision of such arbitrator with respect to any controversy
properly submitted to it for determination.
Where a dispute arises as to the Bank's discharge of the
Executive "for cause", such dispute shall likewise be
submitted to arbitration as above described and the parties
hereto agree to be bound by the decision thereunder.
VII. TERMINATION OR MODIFICATION OF AGREEMENT BY REASON OF CHANGES IN THE
LAW, RULES OR REGULATIONS; TAX CONSEQUENCES
The Bank is entering into this Agreement upon the assumption that
certain existing tax laws, rules and regulations will continue into
effect in their current form. If any said assumptions should change and
said change has a detrimental effect on this Executive Plan, then the
Bank reserves the right to terminate or modify this Agreement
accordingly. Upon a Change of Control, this paragraph shall become null
and void effective immediately upon said Change of Control.
Notwithstanding anything herein to the contrary, the Executive may, in
the Executive's discretion, waive any or all benefits hereunder to the
extent that the amount of such benefit would be or cause an excess
parachute payment under Section 280G of the Internal Revenue Code of
1986, as amended.
IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully read
this Agreement and has executed the original thereof on December 19, 2003, and
that, upon execution, each has received a conforming copy.
County Xxxxxxxx Xxxx
Xxxx Xxxxxx, Xxxxxxxx
__________________________________ By: _/s/ Jan Clark_____________
Witness Xxx X. Xxxxx, President/CEO
Executive:
_________________________________ /s/ Xxxxxxx X. Storm_______
Witness
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