COMMUNITY BANK OF TRI-COUNTY SALARY CONTINUATION AGREEMENT
Exhibit 10.51
COMMUNITY BANK OF TRI-COUNTY |
Salary Continuation Agreement |
COMMUNITY BANK OF TRI-COUNTY
THIS SALARY CONTINUATION AGREEMENT (the "Agreement") is adopted this 21st day of August, 2006, by and between COMMUNITY BANK OF TM-COUNTY, a state-chartered commercial bank located in Waldorf, Maryland (the "Company-) and XXXXX XXXXXX (the "Executive").
The purpose of this Agreement is to provide specified benefits to the Executive, a member of a select group of management or highly compensated employees who contribute materially to the continued growth, development, and future business success of the Company. This Agreement shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended from time to time.
Article 1
Whenever used in this Agreement, the following words and phrases shall have the meanings specified:
1.1 "Beneficiary" means each designated person, or the estate of the deceased Executive, entitled to benefits, if any, upon the death of the Executive determined pursuant to Article 4.
1.2 "Beneficiary Designation Form" means the form established from time to time by the Plan Administrator that the Executive completes, signs, and returns to the Plan Administrator to designate one or more Beneficiaries.
1.3 "Board" means the Board of Directors of the Company as from time to time constituted.
1.4 "Change in Control" shall mean the occurrence of any of the following events:
a. | individuals who, on the date of this Agreement, constitute the Board of Directors of the Company (the "Incumbent Directors") cease for any reason to constitute at least half of the Board of Directors of the Company, provided that any person becoming a director subsequent to such time, whose election or nomination for election was approved by a vote of at least two-thirds (2/3) of the Incumbent Directors then on the Board of Directors of the Company (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board of Directors of the Company shall be deemed to be an Incumbent Director; |
COMMUNITY BANK OF TRI-COUNTY
(b) | any "person" (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the "Exchange Act") and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding securities eligible to vote for the election of the Board of Directors of the Company (the "Company Voting Securities"); provided, however, that the event described in this paragraph (b) shall not be deemed to be a Change in Control by virtue of any of the following acquisitions: (1) by the Company or any subsidiary, (2) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary, (3) by any underwriter temporarily holding securities pursuant to an offering of such securities or (4) a transaction (other than one described in (c) below) in which Company Voting Securities are acquired from the Company, if a majority of the Incumbent Directors approve a resolution providing expressly that the acquisition pursuant to this clause (4) does not constitute a Change in Control under this paragraph (b); |
(c) | the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its subsidiaries that requires the approval of the Company's stockholders, whether for such transaction or the issuance of securities in the transaction (a "Business Combination"), unless immediately following such Business Combination: (1) at least 50% of the total voting power of (x) the corporation resulting from such Business Combination (the "Surviving Corporation"), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 100% of the voting securities eligible to elect directors of the Surviving Corporation (the "Parent Corporation"), is represented by the Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among (and only among) the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (2) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation) is or becomes the beneficial owner, directly or indirectly, of 25% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and (3) at least 50% of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination were Incumbent Directors at the time of the Company Board's approval of the execution of the initial agreement providing for such Business Combination; or |
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COMMUNITY BANK OF TRI-COUNTY
(d) | the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or a sale of all or substantially all of the Company's assets. |
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any person acquires beneficial ownership of more than 25% of Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a Change in Control of the Company shall then occur.
1.5 "Code" means the Internal Revenue Code of 1986, as amended.
1.6 "Corporation" means the Tri-County Financial Corporation.
1.7 "Disability" means the Executive's (i) inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (ii) receipt of disability benefits for a period of 3 months under an accident and health plan of the employer by reason of the participant's medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.
1.8 "Early Termination" means Separation from Service before Normal Retirement Age except when such Separation from Service occurs: (i) within twelve (12) months following a Change in Control; or (ii) due to death, Disability, or Termination for Cause.
1.9 "Effective Date" means January 1, 2006.
1.10 "Normal Retirement Age" means the Executive attaining age sixty-five (65).
1.11 "Normal Retirement Date" means the date of the Executive's Separation from Service on or after attaining Normal Retirement Age.
1.12 "Plan Administrator" means the plan administrator described in Article 6.
1.13 "Plan Year" means each twelve-month period commencing on January l and ending on December 31st of each year. The initial Plan Year shall commence on the Effective Date of this Agreement and end on the following December 31.
1.14 "Schedule A" means the schedule attached to this Agreement and made a part hereof. Schedule A shall be updated upon a change in any of the benefits under Articles 2 or 3.
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COMMUNITY BANK OF TRI-COUNTY
1.15 "Separation from Service" means the termination of the Executive's employment with the Company for reasons other than death (except as provided in Section 1.8). Whether a Separation from Service takes place is determined based on the facts and circumstances surrounding the termination of the Executive's employment and whether the Company and the Executive intended for the Executive to provide significant services for the Company following such termination_ A termination of employment will not be considered a Separation from Service if:
(a) | the Executive continues to provide services as an employee of the Company at an annual rate that is twenty percent (20%) or more of the services rendered, on average, during the immediately preceding three full calendar years of employment (or, if employed less than three years, such lesser period) and the annual remuneration for such services is twenty percent (20%) or more of the average annual remuneration earned during the final three full calendar years of employment (or, if less, such lesser period), or |
(b) | the Executive continues to provide services to the Company in a capacity other than as an employee of the Company at an annual rate that is fifty percent (50%) or more of the services rendered, on average, during the immediately preceding three full calendar years of employment (or if employed less than three years, such lesser period) and the annual remuneration for such services is fifty percent (50%) or more of the average annual remuneration earned during the final three full calendar years of employment (or if less, such lesser period). |
1.16 "Specified Employee" means a key employee (as defined in Section 416(i) of the Code without regard to paragraph 5 thereof) of the Company if any stock of the Company is publicly traded on an established securities market or otherwise.
1.17 "Termination for Cause" shall have the meaning set forth in Article 5.
Article 2
2.1.1 | Amount of Benefit. The annual benefit under this Section 2.1 is Forty-One Thousand Six Hundred Dollars ($41,600), payable for a period of fifteen (15) years and resulting in a total benefit of Six Hundred Twenty-Four Thousand Dollars ($624,000). The Company's Board of Directors, in its sole discretion, through a duly adopted resolution, may increase the annual benefit under this Section prior to the Executive's Separation from Service. |
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COMMUNITY BANK OF TRI-COUNTY
2.1.2 | Distribution of Benefit. The Company shall distribute the benefit to the Executive in one hundred eighty (180) consecutive equal monthly installments, commencing on the first day of the month following Separation from Service. |
2.2.1 | Amount of Benefit. The benefit under this Section 2.2 is the Early Termination Benefit set forth on Schedule A for the Plan Year ending prior to Separation from Service. |
2.2.2 | Distribution of Benefit. The Company shall distribute the benefit to the Executive in one hundred eighty (180) consecutive equal monthly installments commencing the first day of the month following the Executive attaining Normal Retirement Age. |
2.3.1 | Amount of Benefit. The benefit under this Section 2.3 is the Normal Retirement Benefit amount described in Section 2.1.1. |
2.3.2 | Distribution of Benefit. The Company shall distribute the benefit to the Executive in one hundred eighty (180) consecutive equal monthly installments commencing the first day of the month following the Executive attaining Normal Retirement Age. |
2.4.1 | Amount of Benefit. The benefit under this Section 2.4 is the Normal Retirement Benefit amount described in Section 2.1.1. |
2.4.2 | Distribution of Benefit. The Company shall distribute the benefit to the Executive in one hundred eighty (180) consecutive equal monthly installments commencing the first day of the month following the Executive attaining Normal Retirement Age. |
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COMMUNITY BANK OF TRI-COUNTY
(a) | may not accelerate the time or schedule of any distribution, except as provided in Section 409A of the Code and the regulations thereunder; |
(b) | must, for benefits distributable under Section 2.2, 2.3 and 2.4, be made at least twelve (12) months prior to the first scheduled distribution; |
(c) | must, for benefits distributable under Sections 2.1, 2.2, 2.3 and 2.4, delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally scheduled to be made; and |
(d) | must take effect not less than twelve (12) months after the amendment is made. |
Article 3
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COMMUNITY BANK OF TRI-COUNTY
3.1.1 | Amount of Benefit. The benefit under this Section 3.1 is the Normal Retirement Benefit amount described in Section 2.1.1. |
3.1.2 | Distribution of Benefit. The Company shall distribute the benefit to the Beneficiary in one hundred eighty (180) consecutive equal monthly installments for commencing the first day of the month following receipt by the Company of the Executive's death certificate. |
Article 4
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COMMUNITY BANK OF TRI-COUNTY
Article 5
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COMMUNITY BANK OF TRI-COUNTY
Salary Continuation Agreement
Article 6
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COMMUNITY BANK OF TRI-COUNTY
Salary Continuation Agreement
6.6 Annual Statement. The Plan Administrator shall provide to the Executive, within one hundred twenty (120) days after the end of each Plan Year, a statement setting forth the benefits to be distributed under this Agreement.
Article 7
7.1 For all claims, the following procedures will apply:
7.1.1 | Claims Procedure. Any individual ("Claimant") who has not received benefits under this Agreement that he or she believes should be paid shall make a claim for such benefits as follows: |
7.1.1.1 | Initiation β Written Claim. The Claimant initiates a claim by submitting to the Company a written claim for the benefits. |
7.1.1.2 | Timing of Company Response, The Company shall respond to such Claimant within ninety (90) days after receiving the claim. If the Company determines that special circumstances require additional time for processing the claim, the Company can extend the response period by an additional ninety (90) days by notifying the Claimant in writing, prior to the end of the initial ninety (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 Company expects to render its decision. |
7.1.1.3 | Notice of Decision. If the Company denies part or all of the claim, the Company shall notify the Claimant in writing of such denial. The Company 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 specific provisions of this 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 this 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 Section 502(a) following an adverse benefit determination on review. |
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COMMUNITY BANK OF TRI-COUNTY
Salary Continuation Agreement
7.1.2 Review Procedure. If the Company denies part or all of the claim, the Claimant shall have the opportunity for a full and fair review by the Company of the denial, as follows:
7.1.2.1 Initiation β Written Request. To initiate the review, the Claimant, within 60 days after receiving the Company's notice of denial, must file with the Company a written request for review.
7.1.2.2 Additional Submissions β Information Access. The Claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim. The Company 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.
7.1.2.3 Considerations on Review. In considering the review, the Company shall take into account all materials and information the Claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.
7.1.2.4 Timing of Company Response. The Company shall respond in writing to such Claimant within 60 days after receiving the request for review. If the Company determines that special circumstances require additional time for processing the claim, the Company 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 Company expects to render its decision.
7.1.2.5 Notice of Decision. The Company shall notify the Claimant in writing of its decision on review. The Company 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 specific provisions of this 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). |
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COMMUNITY BANK OF TRI-COUNTY
Salary Continuation Agreement
Article 8
(a) | Within thirty (30) days before, or twelve (12) months after a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company as described in Section 409A(2)(A)(v) of the Code, provided that all distributions are made no later than twelve (12) months following such termination of the Agreement and further provided that all the Company's arrangements which are substantially similar to the Agreement are terminated so the Executive and all participants in the similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the termination of the arrangements; |
(b) | Upon the Company's dissolution or with the approval of a bankruptcy court provided that the amounts deferred under the Agreement are included in the Executive's gross income in the latest of (i) the calendar year in which the Agreement terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or |
(c) | Upon the Company's termination of this and all other non-account balance plans (as referenced in Section 409A of the Code or the regulations thereunder), provided that all distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and the Company does not adopt any new non-account balance plans for a minimum of five (5) years following the date of such termination; |
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COMMUNITY BANK OF TRI-COUNTY
Salary Continuation Agreement
the Company may distribute the amount which the Company has accrued with respect to the Company's obligations under Article 2 hereof, determined as of the date of the termination of the Agreement, to the Executive in a lump sum subject to the above terms.
Article 9
9.5 Applicable Law. The Agreement and all rights hereunder shall be governed by the laws of the State of Maryland, except to the extent preempted by the laws of the United States Of America.
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COMMUNITY BANK OF TRI-COUNTY
Salary Continuation Agreement
Community Bank of Tri-County
X.X. Xxx 00
Xxxxxxx, XX 00000
Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.
Any notice or filing required or permitted to be given to the Executive under this Agreement shall be sufficient if writing and hand-delivered, or sent by mail, to the last known address of the Executive.
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COMMUNITY BANK OF TRI-COUNTY
Salary Continuation Agreement
EXECUTIVE: | COMPANY: | ||
COMMUNITY BANK OF TRI-COUNTY | |||
/s/Xxxxx X. XxXxxx | By | /s/Xxxxxxx X. Xxxxxxxxx | |
Xxxxx X. XxXxxx | |||
Title | President |
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COMMUNITY BANK OF TRI-COUNTY
Salary Continuation Agreement
FIRST AMENDMENT
TO THE
COMMUNITY BANK OF TRI-COUNTY
SALARY CONTINUATION AGREEMENT
DATED AUGUST 21, 2006
FOR
XXXXX XXXXXX
THIS FIRST AMENDMENT is adopted this 16 day of April, 2007, by and between Community Bank of Tri-County, a state-chartered commercial bank located in Waldorf, Maryland (the "Company") and Xxxxx Xxxxxx (the "Executive").
The Company and the Executive executed the Salary Continuation Agreement on August 21, 2006 effective January 1, 2006 (the "Agreement").
The undersigned hereby amend the Agreement for the purpose of changing the Disability and Change in Control benefit amounts. Therefore, the following changes shall be made:
Section 2.3.1 of the Agreement shall be deleted in its entirety and replaced with the following:
2.3.1 | Amount of Benefit. The benefit under this Section 2.3 is the Disability Benefit set forth on Schedule A for the Plan Year ending prior to Separation from Service. |
Section 2.4.1 of the Agreement shall be deleted in its entirety and replaced with the following:
2.4.1 | Amount of Benefit. The benefit under this Section 2.4 is the Change in Control Benefit set forth on Schedule A for the Plan Year ending prior to Separation from Service. |
Section 2.4.2 of the Agreement shall be deleted in its entirety and replaced with the following:
2.4.2 | Distribution of Benefit. The Company shall distribute the benefit to the Executive in one hundred eighty (180) consecutive monthly installments commencing the first day of the month following Separation from Service. |
Section 2.7 of the Agreement shall be deleted in its entirety and replaced with the following:
2.7 | Change in Form or Timing of Distributions. For distribution of benefits under this Article 2, the Executive and the Company may, subject to the terms of Section 8.1, amend the Agreement to delay the timing or change the form of distributions. Any such amendment: |
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COMMUNITY BANK OF TRI-COUNTY
Salary Continuation Agreement
(a) | may not accelerate the time or schedule of any distribution, except as provided in Section 409A of the Code and the regulations thereunder; |
(b) | must, for benefits distributable under Sections 2.2 and 2.3, be made at least twelve (12) months prior to the first scheduled distribution; |
(c) | must, for benefits distributable under Sections 2.1, 2.2, 2.3 and 2.4, delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally scheduled to be made; and |
(d) | must take effect not less than twelve (12) months after the amendment is made. |
IN WITNESS OF THE ABOVE, the Company and the Executive hereby consent to this First Amendment.
Executive: | Community Bank of Tri-County | ||
/s/Xxxxx Xxxxxx | By | /s/Xxxxxxx X Xxxxxxxxx | |
Xxxxx Xxxxxx | Title | CFO |
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COMMUNITY BANK OF TRI-COUNTY
Salary Continuation Agreement
SECOND AMENDMENT
TO THE
COMMUNITY BANK OF TRI-COUNTY
SALARY CONTINUATION AGREEMENT
DATED AUGUST 21, 2006
AND AMENDED APRIL 16, 2007
FOR
XXXXX XXXXXX
THIS SECOND AMENDMENT is adopted this 30th day of December, 2007, by and between Community Bank of Tri-County, a state-chartered commercial bank located in Waldorf, Maryland (the "Company") and Xxxxx Xxxxxx (the "Executive").
The Company and the Executive executed the Salary Continuation Agreement on August 21, 2006 effective January 1, 2006 a First Amendment on April 16, 2007 (the "Agreement").
The undersigned hereby amend the Agreement for the purpose of changing the Change in Control definition, increasing the Normal Retirement Benefit and updating the plan termination provision. Therefore, the following changes shall be made:
Section 1.4 of the Agreement shall be deleted in its entirety and replaced with the following:
1.4 | "Change in Control" means a change in the ownership or effective control of the Bank, or in the ownership of a substantial portion of the assets of the Bank, as such change is defined in Code Section 409A and regulations thereunder. |
Section 2_1_1 of the Agreement shall be deleted in its entirety and replaced with the following:
2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is Sixty-Five Thousand Dollars ($65,000) for a period of fifteen (15) years resulting in a total benefit of Nine Hundred Seventy Five Thousand Dollars ($975,000). The Company's Board of Directors, in its sole discretion, through duly adopted resolution, may increase the annual benefit under this Section prior to the Executive's Separation from Service.
Section 8.3 of the Agreement shall be deleted in its entirety and replaced with the following:
8.3 | Plan Terminations Under Section 409A. Notwithstanding anything to the contrary in Section 8.2, if the Company terminates this Agreement in the following circumstances: |
(a) | Within thirty (30) days before, or twelve (12) months after a Change in Control, provided that all distributions are made no later than twelve (12) months following such termination of the Agreement and further provided that all the Company's arrangements which are substantially similar to the Agreement are terminated so the Executive and all participants in the similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the termination of the arrangements; |
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COMMUNITY BANK OF TRI-COUNTY
Salary Continuation Agreement
(b) | Upon the Company's dissolution or with the approval of a bankruptcy court provided that the amounts deferred under the Agreement are included in the Executive's gross income in the latest of (i) the calendar year in which the Agreement terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or |
(c) | Upon the Company's termination of this and all other arrangements that would be aggregated with this Agreement pursuant to Treasury Regulations Section 1.409A-1(c) if the Executive participated in such arrangements ("Similar Arrangements"), provided that (i) the termination and liquidation does not occur proximate to a downturn in the financial health of the Company, (ii) all termination distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and (iii) the Company does not adopt any new arrangement that would be a Similar Arrangement for a minimum of three (3) years following the date the Company takes all necessary action to irrevocably terminate and liquidate the Agreement; |
The Company may distribute the amount which the Company has accrued with respect to the Company's obligations hereunder, determined as of the date of the termination of the Agreement, to the Executive in a lump sum subject to the above terms.
Schedule A shall be deleted and replaced with the attached Schedule A.
IN WITNESS OF THE ABOVE, the Company and the Executive hereby consent to this Second Amendment.
Executive: | Community Bank of Tri-County | ||
/s/Xxxxx Xxxxxx | By | /s/Xxxxxxx X. Xxxxxxxxx | |
Xxxxx Xxxxxx | Title | President |
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