Exhibit 10.1
UNFUNDED DEFERRED COMPENSATION AGREEMENT
This agreement is made and entered into ___________, 2004, by and between County
National Bank (hereinafter referred to as the "Bank") and ______________________
(hereinafter referred to as the "Director").
Recitals:
A. Bank is a wholly-owned subsidiary of CN Bancorp, Inc., a
one-bank holding company.
B. Director has been duly elected to serve on the Board of
Directors of the Bank.
C. Bank wishes to provide a benefit to Director while he serves
on the Board of Directors by providing a deferred compensation
plan.
D. Director wishes to defer payment of all of the Director's fees
earned and payable from the period of January 1, 2005 through
December 31, 2005.
In consideration of the services to be rendered by Director and the mutual
promises contained herein, the parties agree as follows:
1. Service. Director has been elected to Bank's Board of Directors and
performs customary duties as a director during the term of this agreement. The
term "service" shall refer to service while an active director. Service as a
director emeritus or honorary director is not encompassed within the definition
of "service" for purposes of this Agreement
2. Deferred Compensation. Director elects to defer all of the Director
fees earned and payable from January 1, 2005 through December 31, 2005.
3. Voluntary Election. Director hereby enters into this Agreement as
his/her voluntary act and deed. Director reserves the right to enter into
similar deferred compensation agreements for subsequent calendar years if he/she
remains on the Bank's Board of Directors.
4. Credits to Account. A general ledger liability account shall be
established for the purpose of reflecting Director's deferred compensation under
this Agreement.
Unless Director has ceased service as a member of Bank's Board of Directors and
until payment has been made pursuant to paragraph 5, the ledger liability
account shall accrue interest at a rate equal to the rate being paid on the
Bank's one year certificate of deposit account, plus 25 bpts as of December 31,
2004. Said interest will be computed based upon the deferred fee balance at the
beginning of each month. Interest will not be compounded. Interest will be
credited to the liability account at December 2005.
5. Payment Provisions. Benefit payments will commence as noted in (a)
below and Director makes the following election with respect to the method of
benefit payments, as noted in (b).
(a) Time of Commencement. When Director's service on the
Board of Directors is terminated, benefit payments
shall be made in a lump sum twelve (12) months
following Director's termination of service. If
Director chooses as his/her method of payment the
purchase of a joint and survivor annuity, said
annuity will be purchased within ninety days of
Director's termination of service.
(b) Method of Payment. Director hereby elects the
following method to be used in payment of deferred
compensation which benefits are to commence:
_____ One lump sum
_____ By monthly payments that would be payable under
an annuity that could be purchased from an issuer
rated superior by A.M. Best (or, in the Bank's
discretion, with an equivalent rating from another
rating organization of similar reputation) for cash
equal to the applicable amount of benefit. Bank will
consult with Director, taking into account Director's
wishes and desires regarding the terms and conditions
of the annuity, prior to making that purchase.
Director's election, as set forth above, are subject to the following:
(c) The foregoing election (including any amended
election permitted under paragraph 6 below) by
Director shall also be applicable to all subsequent
Unfunded Deferred Compensation Agreements entered
into by Director and Bank for deferral of Director's
fees. In any such subsequent Agreement, Director
agrees to elect the same method of distribution as in
effect with respect to previous Agreements.
(d) If Director has entered into a previous Unfunded
Deferred Compensation Agreement for deferral of
Director's fees, the payment options selected above
must be the same method of distribution in effect
with respect to all previous Agreements.
6. Amendments of Payment Options. Director may elect in writing to amend the
payment option made under paragraph 5(b) above, subject, however, to all of the
following conditions and restrictions:
(a) Any such amendment shall be effective only if made at
least twelve months prior to the date on which
Director (or his/her designated beneficiary or
beneficiaries) is first entitled to receive payments
under paragraph 7 below; and
(b) The amendment will be effective only if consented to
by Bank in writing; and
(c) Any such amendment must be made while Director is
still serving on Bank's Board of Directors.
7. Benefits. The benefits to be paid as deferred compensation are as follows:
(a) Termination by Death. If Director's service hereunder
is terminated by reason of death, Bank shall pay the
deferred compensation account to the designated
beneficiary or beneficiaries in a lump sum. If
Director, having elected the lump sum method of
payment, should die prior to payment of said sum,
Bank shall pay the deferred compensation account in a
single sum to the designated beneficiary or
beneficiaries. Such payment shall be made within six
months following Director's death.
If Director elected the annuity method of payment and
the annuity has been purchased, the annuity contract
will define benefits.
(b) Termination by Disability. If Director's service
hereunder is terminated by reason of disability, Bank
shall pay to him/her his/her deferred compensation
account as elected in paragraph 5(b) above or as
amended under paragraph 6 above. Such payment shall
be made by lump sum within 12 months following
Director's termination of service.
(c) Other Termination. If Director's service hereunder is
terminated for reasons other than his/her death or
disability, Bank shall pay to him/her his/her
deferred compensation account as elected in paragraph
5(b) above or as amended under paragraph 6 above.
If Director, having elected the annuity method of
payment, should die prior to the purchase of the
annuity, his/her deferred compensation account will
be paid by the Bank to Director's designated
beneficiary or beneficiaries, in a lump sum payment.
This payment will be made within six months following
Director's death.
(d) Time of Payment or Commencement of Payment. Whenever
payment of Director's deferred compensation account
is to be made or commenced or an annuity purchased
within a specific time period under paragraph 6
above, Bank shall have the sole right to select the
particular date on which payment or purchase is to be
made subject, however, to Director's elections under
paragraphs 5 and 6 herein.
(e) Designated Beneficiary or Beneficiaries. The
beneficiary or beneficiaries referred to in this
paragraph 7 may be designated or changed by Director
(without the consent of any prior beneficiary) on a
form provided by Bank and delivered to Bank before
death. If no such beneficiary or beneficiaries shall
have been designated, or if no designated beneficiary
or beneficiaries shall survive Director, Director's
deferred compensation account, or the balance
thereof, shall be paid to Director's estate in a lump
sum within six months following Director's death,
notwithstanding any other provision in this agreement
to the contrary.
(f) Disability Determination. Director shall be deemed to
have become "disabled" for purposes of this paragraph
7 if Bank shall find, on the basis of medical
evidence satisfactory to Bank, Director is totally
disabled (mentally or physically) from engaging in
further service to Bank as an active director and
that such disability will be permanent and continuous
during the remaining lifetime.
8. No Trust. Nothing contained in the Agreement and no action taken pursuant to
the provisions of this Agreement shall create or be construed to create a trust
of any kind or a fiduciary relationship between Bank and Director, the
designated beneficiary or beneficiaries, or any other person. To the extent that
Director acquires a right to receive payments from Bank under this Agreement,
such right shall be no greater than the right of any unsecured general creditor
of Bank. The Bank's obligation under this Agreement shall be that of an
unfounded and unsecured promise by Bank to pay money in the future.
9. No Assignment. The right of Director or any other person to the payment of
deferred compensation or other benefits under this Agreement shall not be
assigned, transferred, pledged or encumbered except by will or by the laws of
descent and distribution, nor shall such deferred compensation or other benefits
under this Agreement be subject to seizure for the payment of debts, judgments,
alimony or separate maintenance owed by Director or his/her beneficiary or
beneficiaries.
10. Facility of Payment. If Bank shall find that any person to whom any payment
is payable under this Agreement is unable to care for his or her affairs because
of illness or accident or is minor, any payment due hereunder may be paid (a) to
the legally appointed guardian or conservator of the person, (b) to a custodian
for the person under the Uniform Gifts to Minors Act, (c) to the person's
spouse, (d) to the person's attorney in fact under a written power of attorney,
(e) by Bank directly for the benefit of the person, (f) to an adult relative or
friend or to any other person deemed by Bank to have incurred expenses for such
person otherwise entitled to payment. All such payments shall be in accordance
with the applicable provisions of paragraph 7 herein. Any such payment shall be
a complete discharge of the liabilities of Bank under this Agreement.
11. Tax Treatment. It is intended that any deferred compensation payable under
this Agreement shall not be deemed salary or wages and shall not be included in
Director's taxable income under federal and state law until it is actually
received by Director. All provisions of this Agreement shall be construed
consistent with said intent.
12. Bank's Powers and Liabilities. Bank, through its Board of Directors, shall
have full power and authority to interpret, construe and administer this
Agreement, and Bank's interpretations and construction thereof and actions
thereunder, including any valuation of the deferred compensation account, or the
amount, or the recipient of the payment to be made therefrom, shall be binding
and conclusive on all persons for all purposes. Neither Bank nor any of its
agents, officers, directors or employees shall be liable to any person for any
action taken or omitted in connection with the interpretation and administration
of this Agreement unless attributed to there own willful misconduct or lack of
good faith.
13. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of Bank, its successors and assigns, and Director, and heirs,
executors, administrators and legal representatives.
14. Governing Law. This Agreement shall be construed in accordance with a
governed by the laws of the state of Maryland.
15. Compliance with Internal Revenue Code. It is intended and understood by the
parties hereto that this Agreement complies with the provisions of the Internal
Revenue Code and regulations in effect at the time of its execution. If, at a
later date, the laws of the United States or the state of Maryland are construed
in such a way as to make this Agreement void and of no effect, then this
Agreement will be given effect in such manner as will best carry out the
purposes and intentions of the parties.
16. Severability. If this Agreement should ever be interpreted by the Internal
Revenue Service as ineffective with regard to deferral of Director's income and
such interpretation shall become final and unappealable, then only those amounts
in the deferred compensation account which would be treated as taxable income by
the Internal Revenue Service at the time of such final determination will be
paid over to Director. The remaining balance in the account at the time of such
final determination shall be distributed to Director in accordance with
paragraphs 5 and 7 above.
Dated this _____ day of __________, 2004.
COUNTY NATIONAL BANK
Glen Burnie, Maryland
By______________________________
Title___________________________
DIRECTOR
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