EMPLOYMENT AGREEMENT
THIS AGREEMENT entered into this 1st day of February 2001, by and between
Community Bank of Tri-County (the "BANK") and William J. Pasenelli (the
"Employee"), effective as of the date hereof (the "Effective Date").
WHEREAS, the Employee has heretofore been employed by the bank as and is
experienced in all phases of the business of the Bank; and
WHEREAS, the parties desire by this writing to set forth the continuing
employment relationship of the Bank and the Employee.
NOW, THEREFORE, it is AGREED as follows:
1. Employment. The Employee is employed as the Chief Financial Officer of
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the Bank. The Employee shall render such administrative and management services
for the Bank as are currently rendered and as are customarily performed by
persons situated in a similar executive capacity. The Employee shall also
promote, by entertainment or otherwise, as and to the extent permitted by law,
the business of the Bank. The Employee's other duties shall be such as the Board
of Directors of the Bank ("Board") may from time to time reasonably direct,
including normal duties as an officer of the Bank.
2. Base Compensation. The Bank agrees to pay the Employee during the term
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of this agreement a salary at the rate of $103,000 per annum, payable in cash
not less frequently than monthly. The Board shall review, not less than
annually, the rate of the Employee's salary, and in its sole discretion may
decide to increase his/her salary.
3. Discretionary Bonus. The Employee shall participate in an equitable
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manner with all other senior management employees of the Bank in discretionary
bonuses that the Board may award from time to time to the Bank's senior
management employees. No other compensation provided for in this Agreement shall
be deemed a substitute for the Employee's right to participate in such
discretionary bonuses.
4. (a) Participation in Retirement, Medical and Other Plans. The Employee
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shall participate in any plan that the Bank maintains for the benefit of its
employees if the plan relates to (i) pension, profit-sharing, or other
retirement benefits, (ii) medical insurance or the reimbursement of medical or
dependent care expenses, or (iii) other group benefits, including disability and
life insurance plans.
(b) Employee Benefits; Expenses. The Employee shall participate in any
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fringe benefits which are or may become available to the Bank's senior
management employees,
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any other benefits which are commensurate with the responsibilities and
functions to be performed by the Employee under this Agreement. The Employees
shall be reimbursed for all reasonable out-of-pocket business expenses which
he/she shall incur in connection with his/her services under this Agreement upon
substantiation of such expenses in accordance with the policies of the Bank.
5. Term. The Bank hereby employs the Employee, and the Employee hereby
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accepts such employment under this Agreement, for the period commencing on the
Effective Date and ending 36 months thereafter (or such earlier date as is
determined in accordance with Section 9). Additionally, on each annual
anniversary date from the Effective date, the Employee's term of employment
shall be extended for an additional one-year period beyond the then effective
expiration date provided the Board determined in a duly adopted resolution that
the performance of the Employee has met the Board's requirements and standards,
and that this Agreement shall be extended.
6. Loyalty; Non-competition.
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(a) During the period of his/her employment hereunder and except for
illnesses, reasonable vacation periods, and reasonable leaves of absence, the
Employee shall devote all his/her full business time, attention, skill, and
efforts to the faithful performance of his/her duties hereunder; provided,
however, from time to time, the Employee may serve on the boards of directors
of, and hold any other offices or positions in, companies or organizations,
which will not present any conflict of interest with the Bank or any of its
subsidiaries or affiliates, or unfavorably affect the performance of Employee's
duties pursuant to this Agreement, or will not violate any applicable statute or
regulation. "Full business time" is hereby defined as that amount of time
usually devoted to like companies by similarly situated executive officers.
During the term of his/her employment under this Agreement, the Employee shall
not engage in any business or activity contrary to the business affairs or
interest of the Bank, or be gainfully employed in any other position or job
other than as provided above.
(b) Nothing contained in this Paragraph 6 shall be deemed to prevent or
limit the Employee's right to invest in the capital stock or other securities of
any business dissimilar from that of the Bank, or, solely as a passive or
minority investor, in any business.
7. Standards. The Employee shall perform his/her duties under this
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Agreement in accordance with such reasonable standards as the Board may
establish from time to time. The Bank will provide Employee with the working
facilities and staff customary for similar executives and necessary for him/her
to perform his/her duties.
8. Vacation and Sick Leave. At such reasonable times as the Board shall in
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its discretion permit, the Employee shall be entitled, without loss of pay, to
absent himself/herself voluntarily from the performance of his/her employment
under this Agreement, all such voluntary absences to count as vacation time,
provided that:
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(a) The Employee shall be entitled to an annual vacation in accordance
with the policies that the Board periodically established for senior management
employees of the Bank.
(b) The Employee shall not receive any additional compensation from the
Bank on account of his/her failure to take a vacation, and the Employee shall
not accumulate unused vacation, and the Employee shall not accumulate unused
vacation from one fiscal year to the next, except in either case to the extent
authorized by the Board.
(c) In addition to the aforesaid paid vacations, the Employee shall be
entitled, without loss of pay, to absent himself/herself voluntarily from the
performance of his/her employment with the Bank for such additional periods of
time and for such valid and legitimate reasons as the Board may in its
discretion determine. Further, the Board may grant to the Employee a leave or
leaves of absence, with or without pay, at such time or times and upon such
terms and conditions as the Board in its discretion may determine.
(d) In addition, the Employee shall be entitled to an annual sick leave
benefit as established by the Board.
9. Termination and Termination Pay. Subject to Section 11 hereof, the
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Employee's employment hereunder may be terminated under the following
circumstances:
(a) Death. The Employee's employment under this Agreement shall
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terminate upon his/her death during the term of this Agreement, in which event
the Employee's estate shall be entitled to receive the compensation due the
Employee through the last day of the calendar month in which his/her death
occurred.
(b) Disability. The Bank may terminate the Employee's employment after
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having established the Employee's Disability. For purposes of this Agreement,
"Disability" means a physical or mental infirmity which impairs the Employee's
ability to substantially perform his/her duties under this Agreement and which
results in the Employee becoming eligible for long-term disability benefits
under the Bank's long-term disability plan (or, if the Bank has no such plan in
effect, which impairs the Employee's ability to substantially perform his/her
duties under this Agreement for a period of one hundred eighty (180) consecutive
days). The Employee shall be entitled to the compensation and benefits provided
for under this Agreement for (i) any period during the term of this Agreement
and prior to the establishment of the Employee's Disability during which the
Employee is unable to work due to the physical or mental infirmity, or (ii) any
period of Disability which is prior to the Executive's termination of employment
pursuant to this Section 9(b).
(c) Just Cause. The Board may, by written notice to the Employee,
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immediately terminate his/her employment at any time for Just Cause. The
Employee shall have no right to receive compensation or other benefits for any
period after termination for Just Cause. Termination for "Just Cause" shall mean
termination because of, in the good faith determination of the Board, the
Employee's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final
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cease-and desist order, or material breach of any provision of this Agreement.
Notwithstanding the foregoing, (i) the Employee shall not be deemed to have been
terminated for Just Cause unless there shall have been delivered to the Employee
a copy of a resolution duly adopted by the affirmative vote of not less that a
majority of the entire membership of the Board at a meeting of the Board called
and held for the purpose (after reasonable notice to the Employee and an
opportunity for the Employee to be heard before the board), finding that in the
good faith opinion of the board the Employee was guilty of conduct set forth
above in the second sentence of this Subsection (c) and specifying the
particulars thereof in detail.
(d) Without Just Cause. Subject to Section II hereof, the board may, by
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written notice to the Employee, immediately terminate his/her employment at any
time for a reason other than Just Cause, in which event the Employee shall be
entitled to receive the following compensation and benefits: (i) the salary
provided pursuant to Section 2 hereof for a period of one year following
termination of employment, and (ii) the cost to the Employee of obtaining all
health, life, disability and other benefits which the Employee would have been
eligible to participate in for a period of one year following termination of
employment based upon benefit levels substantially equal to those that the bank
provided for the employee at the date of termination of employment. Said sum
shall be paid, at the option of the Employee, either (I) in period payment over
the remaining term of this Agreement, as if the Employee's employment had not
been terminated, or (II) in one lump sum within ten (10) days of such
termination.
Notwithstanding the foregoing, but only to the extent required under
federal banking law, the amount payable under clause (i) hereof shall be reduced
to the extent that on the date of the Employee's termination of employment, the
present value of the benefits payable under clauses (i) and (ii) hereof exceeds
three times his/her average annual compensation based on his/her most recent
five taxable years.
(e) Termination or Suspension under Federal Law. (1) If the Employee is
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removed and/or permanently prohibited from participating in the conduct of the
Bank's affairs by an order issued under Sections 8(e)(4) or 8(g)(1) of the
Federal Deposit Insurance Act ("FDIA") (12 U.S.C. 1818(e)(4) or (g)(1)), all
obligations of the Bank under this Agreement shall terminate, as of the
effective date of the order, but vested rights of the parties shall not be
affected.
(2) If the Bank is in default (as defined in section 3(x)(1) of
FDIA), all obligations under this agreement shall terminate as of
the date of default; however, this Paragraph shall not affect the
vested rights of the parties.
(3) If a notice served under Section 8(e)(3) or (g)(1) of the FDIA
(12 U.S.C. 1818(e)(3) or (g)(1)) suspends and/or temporarily
prohibits the Employee from participating in the conduct of the
Bank's affairs, the Bank's obligations under this Agreement shall
be suspended as of the date of such service, unless stayed by
appropriate proceedings. If the charges in the notice are
dismissed, the Bank may in its discretion (i) pay the Employee
all or part of the compensation withheld while its contract
obligations were suspended, and (ii) reinstate (in whole or in
part) any of its obligations which were suspended.
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(4) Any payments made to the Employee pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance
with applicable laws and regulations.
(f) Voluntary Termination by Employee. Subject to Section 11 hereof, the
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Employee may voluntarily terminate employment with the Bank during the term of
this Agreement, upon at least 60 days' prior written notice to the Board of
Directors, in which case the employee shall receive only his/her compensation,
vested rights and employee benefits up to the date of his/her termination.
10. No Mitigation. The Employee shall not be required to mitigate the
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amount of any payment provided for this Agreement by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent employment.
11. Change in Control.
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(a) Notwithstanding any provision herein to the contrary, if the
Employee's employment under this Agreement is terminated by the Bank, without
the Employee's prior written consent and for a reason other than Just Cause, in
connection with or within twelve (12) months after any change in control of the
Bank or Tri-County Financial Corporation (the "Corporation"), the Employee shall
be paid an amount equal to the difference between (i) the product of 2.00 times
his/her "base amount" as defined in Section 280G (b) (3) of the Internal Revenue
Code of 1986, as amended (the "Code") and regulations promulgated thereunder,
and (ii) the sum of any other parachute payments (as defined under Section 280G
(b) (2) of the Code) that the Employee receives an account of the change in
control. Said sum shall be paid in one lump sum within ten (10) days of such
termination. The term "change in control" shall mean (1) the ownership, holding
or power to vote more than 25% of the Bank's or Corporation's voting stock, (2)
the control of the election of a majority of the Bank's or Corporation's
directors, (3) the exercise of a controlling influence over the management or
policies of the Bank or the Corporation by any person or by persons acting as a
"group" (within the meaning of Section 13(d) of the Securities Exchange Act of
1934), or (4) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the Corporation of
the Bank (the "Company Board") (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 Company Board was
approved by a vote of at least two thirds of the Continuing directors then in
office shall be considered a Continuing Director. The term "person" means an
individual other than the Employee, or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, or any other for of entity not specifically listed herein.
(b) Notwithstanding any other provision of this Agreement to the
contrary, the Employee may voluntarily terminate his/her employment under this
Agreement within twelve (12) months following a change in control of the Bank or
Corporation, and the Employee shall thereupon be entitled to receive the payment
described in Section 11(a) of this Agreement, upon
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the occurrence of any of the following events, or within ninety (90) days
thereafter, which have not been consented to in advance by the Employee in
writing: (i) the requirement that the Employee move his/her personal residence,
or perform his/her principal executive functions, more than thirty-five (35)
miles from his/her primary office as of the date of the change in control; (ii)
a material reduction in the Employee's base compensation as in effect on the
date of the change in control or as the same may be increased from time to time;
(iii) the failure by the Bank to continue to provide the Employee with
compensation and benefits provided for under this Agreement, as the same may be
increased from time to time, or with benefits substantially similar to those
provided to him/her under any of the employee benefit plans in which the
Employee now or hereafter becomes a participant, or the taking of any action by
the Bank which would directly or indirectly reduce any of such benefits or
deprive the Employee of any material fringe benefit enjoyed by him/her at the
time of the change of control; (iv) the assignment to the Employee of duties and
responsibilities materially different from those normally associated with
his/her position as referenced at Section 1; (v) a failure to elect or reelect
the Employee to the Board of Directors of the Bank, if the Employee is serving
on the Board on the date of the change in control; or (vi) a material diminution
or reduction in the Employee's responsibilities or authority (including
reporting responsibilities) in connection with his/her employment with the Bank.
(c) Any payments made to the Employee pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with 12 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.
(d) In the event that any dispute arises between the Employee and the
Bank as to the terms or interpretation of this agreement, including this Section
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action that the Employee takes to enforce the terms of this Section 11 or to
defend against any action taken by the Bank, the Employee shall be reimbursed
for all costs and expenses, including reasonable attorney's fees, arising form
such dispute, proceedings or actions, provided that the Employee shall obtain a
final judgment by a court of competent jurisdiction in favor of the Employee.
Such reimbursement shall be paid within ten (10) days of Employee's furnishing
to the Bank written evidence, which may be in the form, among other things, of a
canceled check or receipt, of any costs or expenses incurred by the Employee.
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12. Successors and Assigns.
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(a) This Agreement shall incur to the benefit of and be binding upon any
corporate of other successor of the Bank which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank.
(b) Since the Bank is contracting for the unique and personal skills of
the Employee, the Employee shall be precluded from assigning or delegating
his/her rights or duties hereunder without first obtaining the written consent
of the Bank.
13. Amendments. No amendments or additions to the Agreement shall be
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binding unless made in writing and signed by all of the parities, except as
herein otherwise specifically provided.
14. Applicable Law. Except to the extent preempted by Federal law, the laws
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of the State of Maryland shall govern this Agreement in all respects, whether as
to its validity, construction, capacity, performance or otherwise.
15. Severability. The provisions of this Agreement shall be deemed
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severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
16. Entire Agreement. This Agreement, together with any understanding or
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modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first hereinabove the written.
ATTEST: COMMUNITY BANK OF TRI-COUNTY
/s/ H. Beaman Smith /s/ Michael L. Middleton
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H. Beaman Smith Michael L. Middleton
Secretary President
WITNESS: EMPLOYEE:
/s/ Christy M. Lombardi /s/ William J. Pasenelli
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William J. Pasenelli
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