EXHIBIT 10.4
AMENDMENT
TO THE EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN AGREEMENT DATED JANUARY 1, 1999
AND THE LIFE INSURANCE ENDORSEMENT METHOD SPLIT DOLLAR
AGREEMENT DATED JANUARY 1, 1999
This Amendment, made and entered into this 30 day November, 2000, by
and between The Centreville National Bank of Maryland, a Bank organized and
existing under the laws of the State of Maryland, hereinafter each referred to
as a, "Bank", and Daniel T. Cannon, a Key Employee and Executive of the Bank,
hereinafter referred to as the, "Executive", shall effectively amend the
Executive Supplemental Retirement Plan Agreement and the Life Insurance
Endorsement Method Split Dollar Agreement both dated January 1, 1999 as
specifically set forth herein pursuant to the terms of said agreements.
The agreements shall be amended as follows:
1.) Subparagraph III (C) Termination of Service, contained in the Executive
Supplemental Retirement Agreement shall be deleted in its entirety and
replaced with the following:
C. Termination of Service:
Subject to Subparagraph III (E) hereinafter, should the Executive
suffer a termination of service [defined in Subparagraph I (E)], he
shall be entitled to receive the balance in the Pre-Retirement Account
paid over ten (10) years in equal installments commencing at the Normal
Retirement Age [Subparagraph I (K)]. In addition to these payments, and
commencing in the year in which the Executive attains his Normal
Retirement Age, the Index Retirement Benefit for each year shall be
paid to the Executive until his death.
2.) Subparagraphs VI (A), (B), (C) and (D), Division of Death Proceeds,
contained in the Life Insurance Endorsement Method Split Dollar Plan
Agreement shall be deleted in its entirety and replaced with the
following:
A. Upon the death of the Insured, the Insured's
beneficiary(ies), designated in accordance with Paragraph
III, shall be entitled to an amount equal to eighty percent
(80%) of the net-at-risk insurance portion of the proceeds.
The net-at-risk insurance portion is the total proceeds less
the cash value of the policy.
B. The Bank shall be entitled to the remainder of such proceeds.
C. The Bank and the Insured (or assignees) shall share in any
interest due on the death proceeds on a pro rata basis as the
proceeds due each respectively bears to the total proceeds,
excluding any such interest.
This Amendment shall be effective the 30 day of November, 2000, and the
Subparagraph III (C) referred to hereinabove shall supercede Subparagraph III
(C) of the January 1, 1999 Executive Supplemental Retirement Agreement and
Subparagraphs VI (A), (B), and (C) referred to hereinabove shall supercede
Subparagraphs VI (A), (B). (C) and (D) of the January 1, 1999 Life Insurance
Endorsement Method Split Dollar Plan Agreement. To the extent that any term,
provision, or paragraph of said agreement is not specifically amended herein, or
in any other amendment
thereto, said term, provision, or paragraph shall remain in full force and
effect as set forth in said January 1, 1999 agreement.
IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Amendment and executed the original thereof on the 30 day of
November, 2000, and that, upon execution, each has received a conforming copy.
THE CENTREVILLE NATIONAL BANK
OF MARYLAND
CENTREVILLE, MARYLAND
By:/s/ B. Vance Carmean, Jr.
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Witness B. Vance Carmean, Jr., Chairman
/s/ Daniel T. Cannon
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Witness Daniel T. Cannon, Participant
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
AGREEMENT
This Agreement, made and entered into this 1st day of January, 1999, 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 Daniel Cannon, a Key Employee and the Executive of the Bank,
hereinafter referred to as the "Executive".
The Executive has been in the employ of the Bank for twenty-nine (29)
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 Executive'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 Executive'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 Executive
terminate his services.
Accordingly, it is the desire of the Bank and the Executive to enter
into this Agreement under which the Bank will agree to make certain payments to
the Executive 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 Executive, as a member of a select group of
management or highly-compensated employees of the Bank, and to be considered a
non-qualified benefit plan for purposes of the Employee Retirement Security Act
of 1974 (ERISA). The Executive 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 Executive'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 Executive, agree as
follows:
I. DEFINITIONS
A. Effective Date:
The effective date of this Agreement shall be January 1, 1999.
B. Plan Year:
Any reference to "Plan Year" shall mean a calendar year from
January 1 to December 31. In the year of implementation, the term
"Plan Year" shall mean the period from the effective date to
December 31 of the year of the effective date.
C. Retirement Date:
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 Executive reaches his sixty-fifth
(65th) birthday or such later date as the Executive may actually
retire.
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 Executive has attained age sixty (60).
E. Termination of Service:
Termination of Service shall mean voluntary resignation of service
by the Executive Of the Bank's discharge of the Executive without
cause ("cause" defined in Subparagraph III (E) hereinafter), prior
to the Normal Retirement Age (described in Subparagraph I (K)
hereinafter).
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
Executive. Prior to termination of service, the Executive's
Retirement (early or otherwise), 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 for that year (described in Subparagraph I (I) hereinafter).
G. Index Retirement Benefit:
The Index Retirement Benefit for the Executive 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 [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.
Insurance Company: Connecticut Mutual Life Insurance Company
Policy Form: Whole Life Policy
Policy Name:
Insured's Age and Sex: 45, Male
Riders: None
Ratings: None
Option: N/A
Face Amount: $523,305
Premiums Paid: $15,000
Number of Premiums Paid: Twenty
Assumed Purchase Date: November 16, 1994
Assumed Cash Value
on 12/31/98: $62,920.00
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
Executive 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:
The Cost of Funds 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 Executive pursuant to this Agreement (Paragraph III
hereinafter) plus the amount of all previous years after-tax Cost
of Funds, 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 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.
K. Normal Retirement Age:
Normal Retirement Age shall mean the date on which the Executive
attains age sixty-five (65).
II. EMPLOYMENT
No provision of this Agreement shall be deemed to restrict or limit any
existing employment agreement by and between the Bank and the
Executive, nor shall any conditions herein create specific employment
rights to the Executive nor limit the right of the Employer to
discharge the Executive with or without cause. In a similar fashion, no
provision shall limit the Executive's rights to voluntarily sever his
employment at any time.
III. INDEX BENEFITS
The following benefits provided by the Bank to the Executive are in the
nature of a fringe benefit and shall in no event be construed to effect
nor limit the Executive's current or prospective salary increases, cash
bonuses or profit-sharing distributions or credits.
A. Retirement Benefits:
Should the Executive continue to be employed by the Bank until the
"Normal Retirement Age" defined in Subparagraph I (K), he shall be
entitled to receive the balance in his Pre-Retirement Account [as
defined in Subparagraph I (F)] in ten (10) equal annual
installments commencing thirty (30) days following the Executive's
retirement. In addition to the these payments, and commencing in
the year in which the Executive retires, the Index Retirement
Benefit (as defined in Subparagraph I (G) above) for each year
shall be paid to the Executive until his death.
B. Early Retirement:
Should the Executive elect Early Retirement or be discharged
without cause 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 ten (10) years
in equal installments commencing at the Normal Retirement Age
[Subparagraph I (K)]. In addition to these payments, and
commencing in the year in which the Executive attains his Normal
Retirement Age, the Index Retirement Benefit for each year shall
be paid to the Executive until his death.
C. Termination of Service:
Subject to Subparagraph III (E) hereinafter, should the Executive
suffer a termination of service [defined in Subparagraph I (E)],
he shall be entitled to receive ten percent (10%) times the number
of full years of service with the Bank from the effective date of
this Agreement (to a maximum of 100%), times the balance in the
Pre-Retirement Account paid over ten (10) years in equal
installments commencing at the Normal Retirement Age [Subparagraph
I (K)]. In addition to these payments, and commencing in the year
in which the Executive attains his Normal Retirement Age, ten
percent (10%) times the number of full years of service with the
Bank from the effective date of this Agreement (to a maximum of
100%), times the Index Retirement Benefit for each year shall be
paid to the Executive until his death.
D. Death:
Should the Executive die prior to having received that portion (If
the Pre- Retirement Account he was entitled to pursuant to this
agreement, 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 Executive 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 Executive's estate.
E. Discharge for Cause:
Should the Executive be discharged for cause at any time, all
Benefits under this Agreement shall be forfeited. The term "for
cause" shall mean gross negligence or gross neglect or the
commission of a felony or gross- misdemeanor involving moral
turpitude) fraud, dishonesty or willful violation of any law that
results in any adverse effect on the bank. If a dispute arises as
to discharge "for cause", such dispute shall be resolved by
arbitration as set forth in this Agreement.
F. Death Benefit:
Except as set forth above, there is no death benefit provided
under this Agreement.
IV. RESTRICTIONS UPON FUNDING
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 Executive, 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 Executive 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 Executive, then the Executive shall assist
the Bank by freely submitting to a physical exam and supplying such
additional information necessary to obtain such insurance or annuities.
V. CHANGE OF CONTROL
Upon a Change of Control (as defined in Subparagraph 1 (J) herein), if
the Executive's employment is subsequently terminated, except for
cause, 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 Executive
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.
VI. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
Neither the Executive, 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 Executive or his beneficiary, nor be transferable by operation
of law in the event of bankruptcy, insolvency or otherwise. In the
event the Executive 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 Executive, this Agreement may be amended or
revoked at any time or times, in whole or in part, by the mutual
written assent of the Executive 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 Executive to participate in or be covered by an y
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.
VII. ERISA PROVISION
A. Named Fiduciary and Plan Administrator:
The "Named Fiduciary and Plan Administrator" of this plan shall be
The Centreville National Bank until its resignation or removal by
the Board. As Named Fiduciary and Administrator, the Bank 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 Executive (or to his beneficiary
in the case of the Executive'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) day 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.
Where a dispute arises as to the Bank's discharge of the Executive
"for cause", such dispute shall likewise be submitted to
arbitration as above described and the parties hereto agree to be
bound by the decision thereunder.
IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Agreement and executed the original thereof on the 1st day
of January, 1999 and that, upon execution, each has received a conforming copy.
THE CENTREVILLE NATIONAL BANK
/s/ B. Vance Carmean, Jr., Chairman
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Witness Title
/s/ Daniel Cannon
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Witness Daniel Cannon