EXHIBIT 10 (III) A
CNB FINANCIAL CORPORATION
Form 10-K For The Year Ended December 31, 1998
Deferred Compensation Plan
CNB FINANCIAL CORPORATION
NON-QUALIFIED DEFERRED COMPENSATION PLAN FOR OUTSIDE DIRECTORS
--------------------------------------------------------------
1. Name of Plan. The Plan created in accordance with the terms hereof
------------
shall be known as the CNB FINANCIAL CORPORATION NON-QUALIFIED DEFERRED
COMPENSATION PLAN FOR OUTSIDE DIRECTORS (hereinafter referred to as the "Plan").
2. Purpose. The purpose of this Plan is to recognize the value of an
-------
Outside Director's past service to the Company, to enhance the Company's ability
to attract and retain competent and experienced Outside Directors, and to assure
the availability of each participating Outside Director's knowledge and
experience as a resource to the Company following his retirement as an Outside
Director. The Plan is intended to be an unfunded plan of deferred compensation,
not qualified under the Internal Revenue Code ("Code") or Title I of the
Retirement Employee Firms Security Act of 1974 ("ERISA").
3. Effective Date. The Effective Date of the Plan shall be January 1,
--------------
1998.
4. Termination Date of Plan. The Termination Date of the Plan shall be
------------------------
the date of complete distribution of all assets in the Plan or any associated
trust to its Participants and/or their beneficiaries.
5. Definitions. As used in the Plan, the following words and terms
-----------
shall have the meaning hereinafter set forth unless the context clearly
indicates otherwise:
(a) Administrative Committee. "Administrative Committee" means the
------------------------
Committee appointed by the Board of Directors, in accordance
with Paragraph 21, to administer this Plan.
(b) Bank. "Bank" means County National Bank, a corporation and a
----
national banking and financial institution formed under the
laws of the Commonwealth of Pennsylvania, and a wholly-owned
subsidiary of CNB.
(c) Board of Directors. "Board" or "Board of Directors" means the
------------------
Board of Directors of the Company.
(d) CNB. "CNB" means CNB Financial Corporation, a Pennsylvania
---
corporation and parent company to the Bank.
(e) Common Stock. "Common Stock" means shares of Common Stock of
------------
CNB.
(f) Compensation. "Compensation" means the annual fees paid to
------------
Outside Directors for their service as a Director of the
Company.
(g) Company. "Company" means CNB and the Bank.
-------
(h) Deferred Compensation Account. "Deferred Compensation Account"
-----------------------------
means a book reserve account established by the Company for a
Participant which represents the Participant's interest in the
Plan.
(i) Director. "Director" means a member of the Board.
--------
(j) Fair Market Value. "Fair Market Value" of the Common Stock
-----------------
means the cash price at which the last sale of Common Stock was
made as reported by the National Quotation Bureau on the date
prior to the valuation date in question.
(k) Outside Director. "Outside Director" means a Director who is
----------------
not an employee of the Company.
(l) Participant. "Participant" means any Outside Director of the
-----------
Company who elects to defer all or a portion of his Director's
Compensation in accordance with the terms of this Plan.
6. Eligibility to Participate in Plan. The individuals who are
----------------------------------
eligible to participate in the Plan are the Company's Outside Directors. A
Director's eligibility shall continue from year-to-year during his service as a
Director of the Company, regardless of whether he elects to participate or not
in any given year.
7. Election to Participate. An Outside Director may elect to
-----------------------
participate, alter the extent of his participation, or terminate his
participation by delivering a properly executed "Deferral Election Form," a copy
of which is attached hereto as Exhibit A, to the Administrative Committee.
8. Effective Date for Participation. The effective date for
--------------------------------
participation in the Plan by an Outside Director shall be the first day of the
calendar year following the date the Administrative Committee receives the
Outside Director's Deferral Election Form. The effective date for participation
in the Plan by a newly elected Outside Director shall be the date that he begins
active service as a Director of the Company as long as the Administrative
Committee has received his Deferral Election Form on or prior to that date. Each
Participant may elect to defer receipt of a portion, up to 100% of his
Compensation, designated in whole percentage points, effective with any
Compensation declared and/or payable on or after the Effective Date,
with such election continuing thereafter until changed by the Participant
submitting a new or revised Deferral Election Form, or other written statement
signed by the Participant, to the Administrative Committee, prior to the year
for which the amendment is to be effective. If the Participant fails to notify
the Administrative Committee of any change in his deferral, then the last
Deferral Election Form or other signed written statement completed by the
Participant shall govern his deferral election until changed in the manner set
forth herein.
9. Deferred Compensation Account. The Company shall credit to a
-----------------------------
Deferred Compensation Account for each Participant an amount equal to the
Compensation deferred by the Participant. The Deferred Compensation Account
shall be kept only for bookkeeping and accounting purposes and no Company funds
shall be transferred or designated to this account.
10. Establishment of Deferred Compensation Units. On the first day
--------------------------------------------
following the credit of the Participant's Deferred Compensation Account, the
account shall be converted and credited with the number of Units ("Units")
calculated by dividing the deferred Compensation credited as of the most recent
date by the Fair Market Value of the Company's Common Stock.
11. Credits to Account of Participants.
----------------------------------
(a) So long as this Plan remains in effect, the Company shall
credit to each Participant's Deferred Compensation Account
throughout the term of his service as a Director with the
Company, amounts, calculated in Units, equal to dividends
payable in cash or property paid from time to time on issued
and outstanding shares of Common Stock equal to the number
of Units in his account, so that the amount of each such
credit will be equivalent to dividends which the Participant
would have received had he been the owner of the number of
shares of Common Stock equal to the number of Units in his
account. No such credit shall be made with respect to any
dividend paid after a Participant's service as a Director of
the Company terminates or after any date of termination of
this Plan, even though the record date is prior thereto.
(b) On the last day of each calendar year, or on the date of
termination of his services as a Director, if earlier, each
Participant's Deferred Compensation Account, shall be
revalued at an amount equal to the number of Units then
standing to his credit times the Fair Market Value per
share.
(c) Upon the termination of service of any Participant as a
Director of the Company, there shall be paid to him the
aggregate amount then standing to his credit in his Deferred
Compensation Account. Such amounts shall be payable in
accordance with the elections made under Paragraph 12.
(d) In the event of any stock dividend on the Common Stock or any
split-up or combination of shares of the Common Stock,
appropriate adjustment shall be made by the Administrative
Committee in the aggregate number of Units standing to the credit
of each Participant in his Deferred Compensation Account
provided, however, that the Administrative Committee may, but
shall not be required to, establish any fractional Units.
12. Distribution of Deferred Compensation Account. The Deferred
---------------------------------------------
Compensation Account of each Participant will be as follows:
(a) Payment. Upon termination of an Outside Director's service with
-------
the Board, the balance of the Participant's Deferred Compensation
Account shall be paid to him according to the method and at the
times selected by the Participant in his "Distribution Form" a
copy of which is attached hereto as Exhibit B, which must be
---------
properly executed and delivered to the Administrative Committee.
If the Participant's Distribution Form does not pre-date his
termination, the prior Distribution Form will supersede the
current form. If no Distribution Form has been in effect for at
least one year, a lump sum distribution will occur as early as
administratively possible after termination of service.
(b) Methods of Payment. The Participant may elect one of the
------------------
following methods of payment of his Deferred Compensation Account
on his Distribution Form:
1. A lump sum distribution; or
2. Payments in approximately equal annual installments for a
period not to exceed 10 years.
(c) Beneficiary Designation. In the event the Participant dies before
-----------------------
receiving the entire distribution owned to him, the balance in
his Deferred Compensation Account on the Participant's date of
death shall be paid in a lump sum to the beneficiary designated
by the Participant on his "Beneficiary Designation Form", a copy
of which is attached hereto as Exhibit C, which must be properly
---------
executed and delivered to the Administrative Committee.
(d) Acceleration of Payments. The Company hereby reserves the right
------------------------
to accelerate the payment of any sums specified in the Plan
without the consent of the Participant, his estate,
beneficiaries, or any other person claiming through or under him.
(e) Incapacity of Beneficiary. If Company shall find that any person
-------------------------
to whom any payment is payable under the Plan is unable to care
for his affairs because of illness or accident or is a minor,
any payment due (unless a prior claim therefor shall have been
made by a duly appointed guardian, committee, or other legal
representative) may be paid to the spouse, a child, parent, or
brother or sister, or to any person deemed by the Company have
incurred expense for such person otherwise entitled to payment,
in accordance with the applicable provisions of Paragraph (c).
Any such payment shall be a complete discharge of the Company's
liabilities under the Plan.
13. Trust Not Established. Nothing contained in the Plan and no action
---------------------
taken pursuant to the provisions of the Plan shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Company, its
Board of Directors, officers and employees and any Participant or any other
person. Any assets, whether cash or investments, which the Company may carmark
to pay the amount credited to the Deferred Compensation Account shall continue,
for all purposes, to be a part of the general funds of the Company and the
Participants shall not by virtue of the provisions of the Plan have any property
interest in such funds. The Company may establish one or more trusts, with such
trustees as the Board may approve, for the purpose of providing for the payment
of deferred Compensation hereunder. Such trusts shall be irrevocable but the
assets thereof shall be subject to the claims of the Company's creditors. To the
extent that any deferred Compensation provided under the Plan is actually paid
from any such trust, the Company shall have no further obligations with respect
thereto, but to the extent not so paid, such benefits shall remain the
obligation of and shall be paid by the Company. No Director shall have any
right, title, or interest in or to any investment reserves, accounts, or funds
that the Company may purchase, establish or accumulate to aid in providing
benefits under this Plan. To the extent that any person acquires a right to
receive payments from the Company under the Plan, such right shall be no greater
than the right of any unsecured general creditor of the Company.
14. Alienation and Assignment of Benefits. The right of any Participant
-------------------------------------
or any other person to payment of the Deferred Compensation Account under the
Plan shall not be anticipated, alienated, sold, assigned, transferred, pledged,
encumbered, attached or garnished except by will or by the laws or descent and
distribution.
15. Not a Contract of Service. Neither the establishment of, nor the
-------------------------
participant or eligibility for participation of any Outside Director in, this
Plan shall be construed to confer any right of tenure on the part of any Outside
Director or any right of nomination, renomination, election or re-election to
the Board of Directors of the Company. The Company shall not incur any liability
for any loss of benefits that might result under this Plan from any failure of
the stockholders to elect or re-elect any Outside Director to the Board of
Directors or any failure of the Board of Directors to nominate any Outside
Director for re-election.
16. Binding Effect. The Plan shall be binding upon and inure to the
--------------
benefit of the Company, its successors and assigns and the Participant and his
heirs, executors, and personal representatives.
17. No Security in Deferred Compensation Account. Participants shall
--------------------------------------------
have the status of general unsecured creditors of the Company and the Plan
constitutes a mere promise by the Company to make benefit payments in the
future. The Plan shall be unfunded for purposes of the Code and for purposes of
Title I of ERISA.
18. Governing Law. The Plan shall be governed by and construed in
-------------
all respects under the laws of the Commonwealth of Pennsylvania and applicable
federal law.
19. Entire Agreement. This Plan and the Exhibits attached hereto and
----------------
executed by a Participant contain the entire agreement of the parties with
respect to the subject matter hereof and supersedes all prior contracts,
agreements understandings and representations relating hereto. It may not be
changed orally but only by an amendment in writing in accordance with the terms
hereof.
20. Construction. As used in the Plan, words of masculine gender
------------
shall be construed to include the feminine gender and vice versa.
21. Administration and Interpretation. This Plan shall be
---------------------------------
administered by the Administrative Committee consisting of three County
National Bank Officers: (1) The Chief Executive Officer (2) Senior Trust Officer
and (3) Chief Financial Officer. The members of the Administrative Committee
shall not be eligible to participate in the Plan. The Administrative Committee
shall have the full power and authority to interpret, construe and administer
the Plan and to decide any and all matters arising hereunder, including but not
limited to the right to remedy possible ambiguities, inconsistencies or
omissions, by general rule or particular decision; provided, that all such
interpretations, constructions, and decisions shall be applied in a uniform and
nondiscriminatory manner to all Participants similarly situated. In addition,
any interpretation, construction, or decision made by the Administrative
Committee shall be final, conclusive and binding upon all persons who have or
who claim to have any interest in or under the Plan.
22. Indemnification. The members of the Administrative Committee and
---------------
its agents, and officers, directors and employees of the Company shall be
indemnified and held harmless by the Company to the fullest extent now or
hereafter permitted by law against and from any and all loss, cost, liability or
expense, including attorneys' fees, fines, civil penalties and excise taxes that
may be imposed upon or reasonably incurred by them in connection with or
resulting from any actual or threatened civil, criminal, administrative or
investigative claim, action, suit or proceeding to which they may be a party or
in which they may be involved by reason of any action taken or failure to act
under this Plan and against and from any and all
amounts paid by them in settlement (with the Company's written approval) or paid
by them in satisfaction of a judgment in any such action, suit or proceeding.
The indemnification provided by this paragraph shall continue for persons who
have ceased to be members or agents of the Administrative Committee, and to
former directors, officers and employees of the Company, and shall inure to the
benefit of the heirs, executors and administrators of persons entitled to
indemnity hereunder. This paragraph shall not be applicable to any person if the
loss, cost, liability or expense is finally judicially determined to be due to
such person's recklessness or willful misconduct.
23. Compliance With Code and ERISA. The parties intend that the Plan
------------------------------
comply with the provisions of the Code, ERISA and the Regulations in effect
thereunder at the time of its execution. If, at a later date, the laws of the
United States or the Commonwealth of Pennsylvania are construed in such a way as
to make this Plan null and void, it shall be given effect in a manner that shall
best carry out the Company's purposes and intentions.
24. Severability. In the event any provision of the Plan shall be
------------
held invalid or illegal for any reason, such illegality or invalidity shall not
affect the remaining parts of the Plan, but the Plan shall be construed and
enforced as if the illegal or invalid provision had never been inserted, and the
Company shall have the privilege and opportunity to correct and remedy such
questions of illegality or invalidity by amendment as provided in the Plan.
25. Expenses. The expenses of administering the Plan shall be borne
--------
by the Company.
26. Amendment and Termination. The Company expects to continue the
-------------------------
Plan indefinitely, but specifically reserves the right, in the sole and
unfettered discretion of its Board of Directors, at any time, to amend, in whole
or in part, any or all of the provisions of the Plan and to terminate the Plan
in whole or in part, provided, however, that no such amendment or termination
shall adversely affect any rights of an Outside Director to receive the deferred
Compensation which had accrued on his behalf on account of his service as an
Outside Director prior to such amendment or termination.
IN WITNESS WHEREOF, the Company has caused this Plan to be adopted as
of the _____ day of _____, 1997.
CNB Financial Corporation
By /s/ James P. Moore
----------------------------
President
County National Bank
By /s/ William F. Falger
----------------------------
President