COMMUNITY BANK OF TRI-COUNTY
SALARY CONTINUATION AGREEMENT
THIS AGREEMENT is adopted this 6th day of September, 2003, by and between
COMMUNITY BANK OF TRI-COUNTY, a state-chartered commercial bank located in
Waldorf, Maryland (the "Company"), and WILLIAM PASENELLI (the "Executive").
INTRODUCTION
To encourage the Executive to remain an employee of the Company, the
Company is willing to provide salary continuation benefits to the Executive. The
Company will pay the benefits from its general assets. AGREEMENT
The Company and the Executive agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:
1.1 "Change of Control" The term "Change in Control" shall mean any one of
the following events: (i) the acquisition of ownership, holding or power to vote
more than 25% of the voting stock of the Company or the Corporation; (ii) the
acquisition of the ability to control the election of a majority of the
Company's or the Corporation's directors; (iii) the acquisition of a controlling
influence over the management or policies of the Company or the Corporation by
an y person or by persons acting as a "group" (within the meaning of Section
13(d) of the Securities Exchange Act of 1934); or (iv) during any period of two
consecutive years, individuals (the "Continuing Directors") who at the beginning
of such period constitute the Board of Directors of the Company or the
Corporation (the "Existing Board") 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 Existing Board was approved by a vote of at
least two-thirds of the Continuing Directors then in office shall be considered
a Continuing Director. Notwithstanding the foregoing, the Corporation's
ownership of the Company shall not of itself constitute a Change in Control for
purposes of the Agreement. For purposes of this paragraph only, the term
"person" refers to an individual or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein.
1.2 "Code" means the Internal Revenue Code of 1986, as amended.
1.3 "Corporation" means the Tri-County Financial Corporation.
1.4 "Disability" means a physical or mental infirmity which impairs the
Executive's ability to substantially perform his duties under the Employment
Agreement with the Company and which results in the Executive becoming eligible
for long-term disability benefits under the Company's long-term disability plan
(or if the Company has no such plan in effect, which impairs the Executive's
ability to substantially perform his duties under his Employment Agreement for a
period of 180 consecutive days).
1.5 "Effective Date" means March 28, 2003.
1.6 "Employment Agreement" means the (name of employment agreement)
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between the Company and the Executive dated ____________ __, ____, as the
same may be amended from time to time.
1.7 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.8 "Normal Retirement Age" means the Executive attaining age 65.
1.9 "Plan Year" means a twelve-month period commencing on January 1 and
ending on December 31 of each year. The initial Plan Year shall commence on the
Effective Date of this Agreement.
1.10 "Termination for Cause" shall be defined as set forth in Article 5.
1.11 "Termination of Employment" means that the Executive ceases to be
employed by the Company for any reason, voluntary or involuntary, other than by
reason of a leave of absence approved by the Company.
1.12 "Years of Service" means the twelve consecutive month period beginning
on the Executive's date of hire and any twelve (12) month anniversary thereof,
during the entirety of which time the Executive is an employee of the Company.
ARTICLE 2
LIFETIME BENEFITS
2.1 Normal Retirement Benefit. Upon Termination of Employment on or after
the Executive's Normal Retirement Age, other than for reason of death, the
Company shall pay to the Executive the benefit described in this Section 2.1 in
lieu of any other benefit under this Agreement.
2.1.1 Amount of Benefit. The benefit under this Section 2.1 is an
annual benefit of $74,112 (Seventy-Four Thousand One Hundred Twelve Dollars
) for a period of fifteen (15) years resulting in a total benefit of
$1,111,680 (One Million One Hundred Eleven Thousand Six Hundred Eighty
Dollars). The Company's Board of Directors, in its sole discretion,
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through duly adopted resolution, may increase the annual benefit under this
Section.
2.1.2. Payment of Benefit. The Company shall pay the benefit to the
Executive in 180 equal monthly installments of $6,176 (Six Thousand One
Hundred Seventy Six Dollars) commencing with the month following the later
of (a) the Executive's Termination of Employment, or (b) the Executive
attaining Normal Retirement Age.
2.2 Early Termination Benefit. Upon Termination of Employment prior to
Normal Retirement Age, other than for reasons of Disability, Change of Control
or death, the Company shall pay to the Executive the benefit described in this
Section 2.2 in lieu of any other benefit under this Agreement.
2.2.1 Amount of Benefit. The benefit under this Section 2.2 is
determined by multiplying the Normal Retirement Benefit amount described in
Section 2.1.1 by a fraction (rounded to the nearest hundredth), the
numerator of which is the number of Years of Service at the time of the
Executive's termination of employment (rounded to one tenth of a year); and
the denominator is the number of Years of Service that the Executive would
have had if the Executive had remained employed with the Company until the
Normal Retirement Age (rounded to one tenth of a year).
2.2.2 Payment of Benefit. The Company shall pay the benefit to the
Executive in 180 equal monthly installments commencing with the month
following the Executive attaining Normal Retirement Age.
2.3 Disability Benefit. Upon Termination of Employment due to Disability
prior to Normal Retirement Age, the Company shall pay to the Executive the
benefit described in this Section 2.3 in lieu of any other benefit under this
Agreement.
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 Payment of Benefit. The Company shall pay the annual benefit to
the Executive in 180 equal monthly installments commencing with the month
following the Executive attaining Normal Retirement Age, paying the annual
benefit to the Executive for a period of 15 years.
2.4 Change of Control Benefit. Upon Termination of Employment within 12
months subsequent to a Change of Control and prior to Normal Retirement Age, the
Company shall pay to the Executive the benefit described in this Section 2.4 in
lieu of any other benefit under this Agreement.
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.
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2.4.2 Payment of Benefit. The Company shall pay the annual benefit to
the Executive in 12 equal monthly installments commencing with the month
following the Executive attaining Normal Retirement Age, paying the annual
benefit to the Executive for a period of 15 years.
2.4.3 Excess Parachute Payment. Notwithstanding any provision of this
Agreement to the contrary, the Company will reduce any benefit under this
Agreement by an amount necessary to avoid an excise tax under the excess
parachute rules of Section 280G of the Code.
2.5 Early Payout. If the Executive's Termination of Employment occurs prior
to Normal retirement Age, he may in a written request to the Company elect to
have annual benefit payments commence within 30 days following his Termination
of Employment rather than at age 65, provided the election is made 13 months
prior to Termination of Employment. If such election occurs the annual benefit
amount shall be further reduced per month for each month between Termination of
Employment and age 65. Said reduction shall be determined by using the 5-year
Treasury Constant Maturity Rate (not to exceed 6% annually) as of the last day
of the month prior to Termination of Employment, divided by 12.
ARTICLE 3
DEATH BENEFITS
3.1 Death During Active Service. If the Executive dies while in the active
service of the Company, the Company shall pay to the Executive's beneficiary the
benefit described in this Section 3.1. This benefit shall be paid in lieu of the
benefits under Article 2.
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 Payment of Benefit. The Company shall pay the benefit to the
Executive's beneficiary in 180 equal monthly installments commencing with
the month following the Executive's death.
3.2 Death During Payment of a Benefit. If the Executive dies after any
benefit payments have commenced under Article 2 of this Agreement but before
receiving all such payments, the Company shall pay the remaining benefits to the
Executive's beneficiary at the same time and in the same amounts they would have
been paid to the Executive had the Executive survived.
3.3 Death After Termination of Employment But Before Payment of a Benefit
Commences. If the Executive is entitled to a benefit under Article 2 of this
Agreement, but dies prior to the commencement of said benefit payments, the
Company shall pay the same benefit payments to the Executive's beneficiary that
the Executive was entitled to prior to death except that the benefit payments
shall commence on the first day of the month following the date of the
Executive's death, without any reduction for earlier commencement.
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ARTICLE 4
BENEFICIARIES
4.1 Beneficiary Designations. The Executive shall designate a beneficiary
by filing a written designation with the Company. The Executive may revoke or
modify the designation at any time by filing a new designation. However,
designations will only be effective if signed by the Executive and received by
the Company during the Executive's lifetime. The Executive's beneficiary
designation shall be deemed automatically revoked if the beneficiary predeceases
the Executive, or if the Executive names a spouse as beneficiary and the
marriage is subsequently dissolved. If the Executive dies without a valid
beneficiary designation, all payments shall be made to the Executive's estate.
4.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incompetent, or to a person incapable of handling the disposition of
his or her property, the Company may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incompetent
person or incapable person. The Company may require proof of incompetence,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit. Such distribution shall completely discharge the Company from all
liability with respect to such benefit.
ARTICLE 5
GENERAL LIMITATIONS
5.1 Termination for Cause. Notwithstanding any provision of this Agreement
to the contrary, the Company shall not pay any benefit under this Agreement if
the Company terminates the Executive's employment for Cause. Cause shall mean,
in the good faith determination of the Company's Board of Directors, the
Executive'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 cease-and-desist order, or material
breach of any provision of this Agreement. The Executive shall have no right to
receive compensation or other benefits for any period after Termination for
Cause. No act, or failure to act, on the Executive's part shall be considered
"willful" unless he has acted, or failed to act, with an absence of good faith
and without a reasonable belief that his action or failure to act was in the
best interest of the Company.
5.2 Suicide or Misstatement. The Company shall not pay any benefit under
this Agreement if the Executive commits suicide within three years after the
date of this Agreement. In addition, the Company shall not pay any benefit under
this Agreement if the Executive has made any material misstatement of fact on an
employment application or resume provided to the Company, on any application for
any benefits provided by the Company to the Executive, or on any application for
insurance that the Company may purchase on the life of Executive.
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5.3 Termination or Suspension Under Federal Law. (1) If the Executive is
removed and/or permanently prohibited from participating in the conduct of the
Company's affairs by an order issued under Sections 8(c)(4) or 8(g)(1) of the
Federal Deposit Insurance Act ("FDIA") (12 U.S.C. 1818(e)(4) and (g)(1)), all
obligations of the Company 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 Company 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) of the FDIA (12 U.S.C.
1818(e)(3) or (g)(1)) suspends and/or temporarily prohibits the Executive
from participating in the conduct of the Company's affairs, the Company'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 Company may in its discretion (i) pay the
Executive all or part of the compensation withheld while is contract
obligations were suspended, and (ii) reinstate (in whole or in apart) any
of its obligations which were suspended.
ARTICLE 6
CLAIMS AND REVIEW PROCEDURE
6.1 Claims Procedure. Any individual ("claimant") who has not received
benefits under the Agreement that he or she believes should be paid shall make a
claim for such benefits as follows:
6.1.1 Initiation - Written Claim. The claimant initiates a claim by
submitting to the Company a written claim for the benefits.
6.1.2 Timing of Company Response. The Company shall respond to such
claimant within 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 90 days by notifying the claimant in writing, prior to the end
of the initial 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.
6.1.3 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
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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.
6.2 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:
6.2.1 Initiation - 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.
6.2.2 Additional Submissions - 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.
6.2.3 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.
6.2.4 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.
6.2.5 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
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(d) A statement of the claimant's right to bring a civil action
under ERISA Section 502(a).
ARTICLE 7
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Executive.
ARTICLE 8
MISCELLANEOUS
8.1 Binding Effect. This Agreement shall bind the Executive and the
Company, and their beneficiaries, survivors, executors, successors,
administrators and transferees.
8.2 No Guarantee of Employment. This Agreement is not an employment policy
or contract. It does not give the Executive the right to remain an employee of
the Company, nor does it interfere with the Company's right to discharge the
Executive. It also does not require the Executive to remain an employee nor
interfere with the Executive's right to terminate employment at any time.
8.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
8.4 Reorganization. The Company shall not merge or consolidate into or with
another company, or reorganize, or sell substantially all of its assets to
another company, firm, or person unless such succeeding or continuing company,
firm, or person agrees to assume and discharge the obligations of the Company
under this Agreement. Upon the occurrence of such event, the term "Company" as
used in this Agreement shall be deemed to refer to the successor or survivor
company.
8.5 Tax Withholding. The Company shall withhold any taxes that are required
to be withheld from the benefits provided under this Agreement.
8.6 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.
8.7 Unfunded Arrangement. The Executive and beneficiary are general
unsecured creditors of the Company for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Company to pay such
benefits. The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge,
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encumbrance, attachment, or garnishment by creditors. Any insurance on the
Executive's life is a general asset of the Company to which the Executive and
beneficiary have no preferred or secured claim.
8.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Executive as to the subject matter hereof. No rights
are granted to the Executive by virtue of this Agreement other than those
specifically set forth herein.
8.9 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
(a) Establishing and revising the method of accounting for the
Agreement;
(b) Maintaining a record of benefit payments;
(c) Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement; and
(d) Interpreting the provisions of the Agreement.
IN WITNESS WHEREOF, the Executive and the Company have signed this
Agreement.
EXECUTIVE: COMPANY:
Community Bank of Tri-County
/s/ William Pasenelli By: /s/ H. Beaman Smith
- -------------------------- ---------------------------
WILLIAM PASENELLI Title: Secretary/Treasurer
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BENEFICIARY DESIGNATION
COMMUNITY BANK OF TRI-COUNTY
SALARY CONTINUATION AGREEMENT
GENERIC EXECUTIVE
I designate the following as beneficiary of any death benefits under this
Agreement:
Primary:
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Relationship and Social Security Number:
-------------------------------
Contingent (if the Primary is deceased):
---------------------------------------
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Relationship and Social Security Number:
------------------------------
Note:
o Include instructions regarding how you want benefits divided if you are
naming more than one Primary or Contingent beneficiary and their share is
not equal.
o To name a trust as beneficiary, please provide the name of the trustee(s)
and the exact name and date of the trust agreement and the tax
identification number.
I understand that I may change these beneficiary designations by filing a new
written designation with the Company. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or, if I have
named my spouse as beneficiary and our marriage is subsequently dissolved.
Signature ______________________________
GENERIC EXECUTIVE
Date __________________________________
Received by the Company this ______ day of _________________, 2003.
By ____________________________________
Title __________________________________
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Schedule of Early Retirement Benefits
-----
(as of each December 31)
William Pasenelli
Date of Hire April 3, 2000
Normal Retirement Date (Age 65) May 29, 2023
(1) (2) (3) (4) (5) (6)
Years of Service Early Normal Early
Year Age as --------------------------------- Retirement Retirement Retirement
Ended of At End At Normal "Vesting" Annual Annual Benefit
December 31: December 31: of Year Retirement Date Factor Benefit as of December 31
- ------------ ------------ ------- --------------- ------ ------- -----------------
[col 2/col 3] [col 4 X col 5]
2003 45 3.8 23.2 0.16 74,112 11,858
2004 46 4.8 23.2 0.21 74,112 15,564
2005 47 5.8 23.2 0.25 74,112 18,528
2006 48 6.8 23.2 0.29 74,112 21,492
2007 49 7.8 23.2 0.34 74,112 25,198
2008 50 8.8 23.2 0.38 74,112 28,163
2009 51 9.8 23.2 0.42 74,112 31,127
2010 52 10.8 23.2 0.47 74,112 34,833
2011 53 11.8 23.2 0.51 74,112 37,797
2012 54 12.8 23.2 0.55 74,112 40,762
2013 55 13.8 23.2 0.59 74,112 43,726
2014 56 14.8 23.2 0.64 74,112 47,432
2015 57 15.8 23.2 0.68 74,112 50,396
2016 58 16.8 23.2 0.72 74,112 53,361
2017 59 17.8 23.2 0.77 74,112 57,066
2018 60 18.8 23.2 0.81 74,112 60,031
2019 61 19.8 23.2 0.85 74,112 62,995
2020 62 20.8 23.2 0.90 74,112 66,701
2021 63 21.8 23.2 0.94 74,112 69,665
2022 64 22.8 23.2 0.98 74,112 72,630
May 29, 2023 Normal Ret. 23.2 23.2 1.00 74,112
Date
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