FIRST AMENDMENT UNDER DIRECTOR INDEXED FEE
EXHIBIT
10.2
FIRST
AMENDMENT UNDER DIRECTOR INDEXED FEE
CONTINUATION
PLAN AGREEMENT
Pursuant
to subparagraph VI C of the Director Indexed Fee Continuation Program
Director Agreement between The Centreville National Bank of Maryland and Xxxxxx
X. Xxxxxx, dated January 7, 1997, the Agreement is hereby amended with the
following:
This
Agreement
supersedes and makes null and void all prior benefit plan agreements
between the parties.
IN
WITNESS WHEREOF,
the parties hereto acknowledge that each has carefully read
this
Amendment and mutually consent to its terms. The original has been executed
at
Centreville, Maryland, on the 8th
day of
July, 1997 and that, upon execution, each party has
received a conforming copy.
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THE
CENTREVILLE NATIONAL BANK OF MARYLAND
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/s/
Xxxxxxx X. Xxxxxxx
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By:
/s/
Xxxxx
Xxxxxxxxxx
EVP
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Witness
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Title
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/s/
Xxxxxxx X. Xxxxxxx
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By:
/s/
Xxxxxx X. Xxxxxx
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Witness
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Xxxxxx
X. Xxxxxx
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SECOND
AMENDMENT UNDER DIRECTOR INDEXED FEE
CONTINUATION
PLAN AGREEMENT
Pursuant
to Subparagraph VI (C) of the Director Indexed Fee Continuation Plan Agreement
between The Centreville National Bank of Maryland and Xxxxxx X. Xxxxxx,
dated
January 7, 1997, Subparagraph I (F) of the Agreement is hereby amended to add
the following
sentence at the end of said paragraph:
The
Pre-Retirement Account
shall
have a balance of $32,671.42 as of the effective date hereof.
IN
WITNESS WHEREOF, the parties hereto acknowledge that each has carefully
read
this
Amendment and mutually consent to its terms. The original has been executed
at
Centreville, Maryland on the
23rd day
of
June, 1998 and that, upon execution, each
party has received a conforming copy.
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THE
CENTREVILLE NATIONAL BANK OF MARYLAND
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/s/
Xxxx Xxxxxxxxx Quimly
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By:
/s/
Xxxxx
Xxxxxxxxxx
EVP
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Witness
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Title
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/s/
Xxxx Xxxxxxxxx Quimly
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By:
/s/
Xxxxxx X. Xxxxxx
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Witness
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Xxxxxx
X. Xxxxxx
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DIRECTOR
INDEXED FEE CONTINUATION PLAN
AGREEMENT
This
Agreement, made and entered into this 7th
day
of
January, 1997, by and between
The Centreville National Bank of Maryland, a Bank organized and existing
under
the
laws of the State of Maryland, hereinafter referred to as “the Bank,” and
Xxxxxx
X.
Xxxxxx, a Director of the Bank, hereinafter referred to as “the
Director.”
The
Director has been a member of the Board of Directors for nine years and has
now
and for years past faithfully served the Bank. It is the consensus of the Board
of Directors of the bank (the Board) that the Director'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 Director's
experience, knowledge of corporate affairs, reputation and industry contacts
are
of
such
value and his continued services are so essential to the Bank's future growth
and profits
that it would suffer severe financial loss should the Director terminate his
services.
Accordingly,
it is the desire of the Bank and the Director to enter into this Agreement
under
which the Bank will agree to make certain payments to the Director upon
his
retirement and, alternatively, to his beneficiary(ies) in the event of his
premature death
while employed by the Bank.
It
is the
intent of the parties hereto that this Agreement be considered an arrangement
maintained primarily to provide supplemental retirement benefits for the
Director for purposes of the Employee Retirement Security Act of 1974 (ERISA).
The Director
is fully advised of the Bank's financial status, and has had substantial input
in the design
and operation of this benefit plan.
Therefore,
in consideration of the Director's services performed in the past and those
to
be performed in the future and based upon the mutual promises and covenants
herein contained, the Bank and the Director, agree as follows:
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I.
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DEFINITIONS
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A. Effective
Date:
The
effective date of this Agreement shall be January 7, 1997.
B. Plan
Year:
Any
reference to “year” shall mean a calendar year from January 1 to December 31. In
the year of implementation, the term “year” shall mean the
period from the effective date to December 31 of the year of the effective
date.
C. Normal
Retirement Date:
The
Normal Retirement Date shall mean retirement from service with the Bank which
becomes effective on the first day of the calendar month following the month
in
which the Director reaches his sixty-fifth (65th) birthday.
D. Early
Retirement Date:
Early
Retirement Date shall mean a retirement from service which is effective prior
to
the Normal Retirement Date stated above, provided the Director has attained
age
fifty-five (55).
E. Termination
of Service:
Termination
of Service shall mean voluntary resignation of service by the Director
or the Bank's discharge of the Director, prior to the Early Retirement
Date (described in subparagraph I (D) herein above).
F. Pre-Retirement
Account:
A
Pre-Retirement Account shall be established as a liability reserve account
on the books of the Bank for the benefit of the Director. Prior to termination
of service or the Director's retirement (early or normal), such liability
reserve account shall be increased or decreased each year by an amount
equal to the annual earnings or loss for the year determined by the Index
(described in subparagraph I (H) hereinafter), less the Cost of Funds
Expense
for that year (described in subparagraph I (I) hereinafter).
G. Index
Retirement Benefit:
The
Index
Retirement Benefit for the Director for any year shall be equal to the excess
of
the annual earnings (if any) determined by the Index [subparagraph I (H)] for
that year over the Cost of Funds Expense [subparagraph I (I)], for that
year.
H. Index:
The
Index
for any year shall be the aggregate annual after-tax income from the
life
insurance contracts described hereinafter as defined by FASB Technical Bulletin
85-4. This Index shall be applied as if such insurance contracts were purchased
on the effective date hereof.
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Insurance
Company:
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Massachusetts
Mutual Life Insurance
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Policy
Form:
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Whole
Life Endowment at Age 95
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Policy
Name:
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Executive
Benefit life III
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Insured's
Age
and Sex: Riders:
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48,
Male
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Ratings:
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None
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Option:
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None
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Face
Amount:
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$785,476
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Premiums
Paid:
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$130,000
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Number
of Premiums
Paid:
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One
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Assumed
Purchase Date:
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January
7, 1997
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If
such
contracts of life insurance are actually purchased by the Bank then the actual
policies as of the dates they were 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 from the above named insurance company(ies) on the
effective date from which the increase in policy value will be used to calculate
the amount of the Index.
In
either
case, references to the life insurance contract are merely for purposes of
calculating a benefit. The Bank has no obligation to purchase such life
insurance and, if purchased, the Director and his beneficiary(ies) shall have
no
ownership interest in such policy and shall always have no greater interest
in
the benefits under this Agreement than that of an unsecured general creditor
of
the Bank.
I. Cost
of Funds Expense:
The
Cost
of Funds Expense for any year shall be calculated by taking the sum of the
amount of premiums set forth in the Indexed policies described above plus the
amount of any after-tax benefits paid to the Director pursuant to this Agreement
(Paragraph III hereinafter) plus the amount of all previous years after-tax
Costs of Funds Expense, and multiplying that sum by the average after-tax Cost
of Funds of the Bank's third quarter Call Report for the Plan Year as filed
with
the Office of the Comptroller of the Currency.
J. Change
Of Control:
Change
of
control shall be deemed to be the cumulative transfer of more than fifty percent
(50%) of the voting stock of the Bank holding company from the effective date
of
this Agreement. For the purposes of this Agreement, transfers on account of
deaths or gifts, transfers between family members or transfers to a qualified
retirement plan maintained by the Bank shall not be considered in determining
whether there has been a change in control.
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EMPLOYMENT
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A. Employment:
The
Bank
agrees to employ the Director in such capacity and with such duties,
responsibilities and compensation as recommended by the Board from time to
time.
The
Director agrees to remain in the Bank's employment; to devote his full time
and
attention exclusively to the business of the Bank and to use his best efforts
to
provide faithful and satisfactory service to the Bank.
Employment
services shall include temporary disability specifically granted the Director
by
the Board and periods of “military reserve duty”.
B. No
Employment Agreement Created:
No
provision of this Agreement shall be deemed to restrict or limit any existing
employment agreement by and between the Bank and the Director, nor shall any
conditions herein create specific employment rights to the Director nor limit
the right of the Employer to discharge the Director with or without cause.
In a
similar fashion, no provision shall limit the Director's rights to voluntarily
sever his employment at any time.
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III.
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INDEX
BENEFITS
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The
following benefits provided by the Bank to the Director are in the nature of
a
fringe benefit and shall
in no
event be construed to effect nor limit the Director's current or prospective
salary increases, cash bonuses or profit-sharing distributions or
credits.
A. Retirement
Benefits:
Should
the Director continue to be employed by the Bank until the “Normal Retirement
Date” defined in subparagraph I (C), he shall be entitled to receive the balance
in his Pre-Retirement Account [as defined in subparagraph I (F)] in fifteen
(15)
equal annual installments commencing thirty (30) days following the Director's
retirement. In addition to the these payments, the Index Retirement Benefit
(as
defined in subparagraph I (G) above) for each year shall be paid to the Director
until his death.
B. Early
Retirement:
Should
the Director elect Early Retirement by the Bank subsequent to the Early
Retirement Date [defined in subparagraph I (D)], he shall be entitled to receive
the balance in the Pre-Retirement Account paid over fifteen (15) years in equal
installments commencing at the Normal Retirement Date
[subparagraph
I (C)]. In addition to these payments, the Index Retirement Benefit for each
year shall be paid to the Director until his death.
C. Death:
Should
the Director die prior to having received that portion of the Pre-Retirement
Account he was entitled to pursuant to subparagraph A or B herein above, as
the
case may be, the unpaid balance of the Pre-Retirement Account shall be paid
in a
lump sum to the beneficiary selected by the Director and filed with the Bank.
In
the absence of or a failure to designate a beneficiary, the unpaid balance
shall
be paid in a lump sum to the personal representative of the Director's
estate.
D. Death
Benefit:
Except
as
set forth above, there is no death benefit provided under this
Agreement.
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IV.
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RESTRICTIONS
UPON FUNDING
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The
Bank
shall have no obligation to set aside, earmark or entrust any fund or money
with
which to pay its obligations under this Agreement. The Director, his
beneficiary(ies) or any successor in interest to him 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 this Agreement or to refrain from funding the same
and
to determine the exact nature and method of such funding. Should the Bank elect
to fund this Agreement, 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 the Director 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 a life insurance, disability or annuity policy upon
the
life of the Director, then the Director shall assist the Bank by freely
submitting to a physical exam and supplying such additional information
necessary to obtain such insurance or annuities.
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V.
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CHANGE
OF CONTROL
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Upon
a
Change of Control (as defined in subparagraph I (J) herein), if the Director's
employment is subsequently terminated then he shall receive the benefits
promised in this Agreement upon attaining Normal Retirement Age, as if he had
been continuously employed by the Bank until his Normal Retirement
Age.
The
Director will also remain eligible for all promised death benefits in this
Agreement. 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 Agreement and agrees to abide by its terms.
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VI.
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MISCELLANEOUS
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A. Alienability
and Assignment Prohibition:
Neither
the Director, his widow nor any other beneficiary under this Agreement shall
have any power or right to transfer, assign, anticipate, hypothecate, mortgage,
commute, modify or otherwise encumber in advance any of the benefits payable
hereunder nor shall any of said benefits be subject to seizure for the payment
of any debts, judgments, alimony or separate maintenance owed by the Director
or
his beneficiary, nor be transferable by operation of law in the event of
bankruptcy, insolvency or otherwise. In the event the Director or any
beneficiary attempts assignment, commutation, hypothecation, transfer or
disposal of the benefits hereunder, the Bank's liabilities shall forthwith
cease
and terminate.
B. Binding
Obligation of Bank and any Successor in Interest:
The
Bank
expressly agrees that it 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,
beneficiary(ies), heirs and personal representatives.
C. Revocation:
It
is
agreed by and between the parties hereto that, during the lifetime of the
Director, this Agreement may be amended or revoked at any time or times, in
whole or in part, by the mutual written assent of the Director and the
Bank.
D. Gender:
Whenever
in this Agreement words are used 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 Director 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 this Agreement.
G. Applicable
Law:
The
validity and interpretation of this Agreement shall be governed by the laws
of
the State of Maryland.
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VII.
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ERISA
PROVISION
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A. Named
Fiduciary and Plan Administrator:
The
“Named Fiduciary and Plan Administrator” of this plan shall be The Centreville
National Bank of Maryland until its resignation or removal by the Board. As
Named Fiduciary and Administrator, The Centreville National Bank of Maryland
shall be responsible for the management, control and administration of the
Salary Continuation Agreement as established herein. The Named Fiduciary may
delegate to others certain aspects of the management and operation
responsibilities of the 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 Agreement and benefits are
not
paid to the Director (or to his beneficiary in the case of the Director'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 Administrator named above
within ninety (90) days from the date payments are refused. The Named Fiduciary
and Administrator and the Bank shall review the written claim and if the claim
is denied, in whole or in part, they shall provide in writing within ninety
(90)
days of receipt of such claim their specific reasons for such denial, reference
to the provisions of this Agreement 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 Administrator fails to take any action within the
aforesaid ninety-day period.
If
claimants desire a second review they shall notify the Named Fiduciary and
Administrator in writing within ninety (90) days of the first claim denial.
Claimants may review this Agreement or any documents relating thereto and submit
any written issues and comments they may feel appropriate. In its sole
discretion, the Named Fiduciary and Administrator shall then review the second
claim and provide a written decision within ninety (90) 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 this 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 submit the dispute to a Board of
Arbitration for final arbitration. Said Board shall consist of one member
selected by the claimant, one member selected by the Bank, and the third member
selected by the first two members. The Board 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 Board with respect to any controversy properly submitted
to
it for determination.
IN
WITNESS WHEREOF,
the
parties hereto acknowledge that each has carefully read this Agreement and
executed the original thereof on the 7th day of January, 1997 and that, upon
execution, each has received a conforming copy.
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/s/
Xxxxxx X. Xxxxxxxx
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/s/
Xxxxx
Xxxxxxxxxx
EVP/CFO
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Witness
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Title
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/s/
Xxxxxx X. Xxxxxxxx
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/s/
Xxxxxx X. Xxxxxx
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Witness
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Xxxxxx
X. Xxxxxx
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