EXHIBIT
10.1
EMPLOYMENT
TERMINATION AGREEMENT
THIS
EMPLOYMENT TERMINATION AGREEMENT
,
is
entered into this 7
th
day of
December, 2006, (this “
Termination
Agreement
”)
by and
between
The
Centreville National Bank of Maryland
(the
“
Bank
”)
and
Shore
Bancshares, Inc.
(“
SHBI
”,
and
with the Bank, collectively, the “
Companies
”)
and
Daniel
T. Cannon
(the
“
Employee
”).
WHEREAS
,
the
Companies and Employee entered into a “Form of Employment Agreement”, dated
November 30, 2000 (the “
Employment
Agreement
”);
and
WHEREAS
,
Employee has announced his intention to retire on or before the expiration
of
the current term of the Employment Agreement, i.e. November 30, 2010; and
WHEREAS
,
the
Companies and Employee agree that it would be in their mutual best interests
to
terminate the employment relationship in a manner which provides for an orderly
transition period recognizing that Employee, with more than 37 years of service,
has been an integral part of the Bank; and
WHEREAS
,
the
parties hereto desire by writing to set forth their agreement to terminate
the
employment relationship upon the terms and conditions hereinafter
provided.
NOW,
THEREFORE
,
in
consideration of the mutual promises and covenants set forth herein, the
receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree
as
follows:
1.
Resignation
-
Employee
hereby resigns/retires effective January 1, 2007, as the Executive Vice
President of SHBI, as a Director of SHBI, and as the President and Chief
Executive Officer of the Bank. Employee will retain his position as a Director
of the Bank and assist in the transition, as hereinafter provided, to ensure
that his successor(s) are positioned to best serve the Companies. The parties
acknowledge that such resignation/retirement is intended to constitute a
“separation from service” within the meaning of Section 409A(a)(2)(A)(i) of the
Internal Revenue Code of 1986, as amended (the “Code”), and any related
regulations or other guidance promulgated with respect to Section 409A of
the
Code (and any successor section or regulations).
2.
Transition
Services
-
Commencing on the execution day of this Termination Agreement, the parties
will
begin a transition period wherein a mutually agreed upon public announcement
will be made regarding Employee’s resignation; provided, however, that the
foregoing sentence shall not restrict the content or timing of any disclosure
required by law. It is the intention of the parties to ensure that customer
and
employee relationships are transitioned smoothly to Employee’s successor(s).
Employee
will provide up to a total of twenty (20) hours per month of administrative
and/or operational support, for a period of five (5) months following the
date
of his resignation, as and if requested by Companies. Thereafter, and continuing
until December
31,
2008,
Employee will provide up to a total of ten (10) hours per month of
administrative and/or operational support, as and if requested by Companies.
Employee has purchased a home in Delaware. Accordingly, unless impractical,
Employees support services may be provided via telephone, e-mail and/or in
person, as Employee may elect.
3.
Employee
Severance Benefits
-
Employee will receive severance benefits, as follows:
a.
Employee
will receive his current salary and all employee benefits attributable to
the
positions held by him through December 31, 2006.
b.
Accounting
from January 1, 2007 and ending on December 31, 2008, the Companies agree
to pay
Employee his current annual salary of $205,000, payable not less frequently
than
twice monthly, through the Bank’s normal payroll processing procedures, with all
appropriate statutory withholding, including FICA (matched by Bank), to be
reported as wages.
c.
Beginning
January 1, 2007:
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i.
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Employee
shall not be eligible to make additional salary deferrals in the
Companies’ 401(k) Plan. Any matching funds due for the year ended December
31, 2006 will, however, be paid.
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ii.
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Employee
shall not be eligible to participate in additional discretionary
contributions made to the Companies’ Profit Sharing Plan. Any
contributions made for the year ended December 31, 2006 will be
paid on
behalf of Employee as if he were still
employed
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iii.
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Except
for Cobra coverage available at Employee’s expense, employer paid health
insurance benefits shall cease.
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d.
Employee
is 100% vested in, and shall be entitled to receive, all current
benefits
and balances in the Companies 401(k) Plan and Profit Sharing
Plan.
e.
Notwithstanding
any provision of this Agreement to the contrary, if the Employee is deemed
to be
a “key employee” (as defined in Section 416(i) of the Code (applied in
accordance with Section 416 regulations and disregarding Section 416(i)(5)
of
the Code)) at any time during the 12-month period ending on December 31,
2006,
no distribution of any severance benefits under Section 3(c) or any other
benefit contemplated by this Agreement that constitutes non-qualified deferred
compensation within the meaning of Section 409A of the Code may be made to
the
Employee on account of his separation from service prior to July 1, 2007
(i.e.,
the sixth month following separation from service) or, if earlier, the date
of
the Employee’s death. Any payments delayed pursuant to this paragraph will be
accumulated and paid during July 2007 (i.e., the seventh month following
the
month in which the separation occurred).
4.
Employee
Retirement and Death Benefits
-
Employee and/or his beneficiary will receive the benefits specified in the
following:
a.
“Life
Insurance Endorsement Method Split Dollar Plan Agreement
”
,
dated
April 1, 1997, by and between the Bank and Employee. This agreement governs
distributions of Massachusetts Mutual Life Insurance Policy Number 6197329.
The
anticipated benefit is more particularly shown on the “Participant Plan Summary
- Director” attached hereto as a part hereof marked “Exhibit A”.
b.
“Director
Indexed Fee Continuation Plan Agreement
”
,
dated
June 23, 1998, by and between Bank and Employee. For purposes of interpreting
this agreement, Employee shall be deemed to have taken an “Early Retirement” as
defined by Subparagraph I D. The anticipated benefit is more particularly
shown
on the “Participant Plan Summary - Director” attached hereto as a part hereof
marked “Exhibit A”.
c.
“Executive
Supplement Retirement Plan Agreement
”
,
dated
January 1, 1999, by and between Bank and Employee, as amended by the “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.” For the purpose of interpreting these agreements, Employee’s service
shall be deemed to have terminated pursuant to the provisions of Subparagraph
III C of the amendment. The anticipated benefit is more particularly shown
on
the “Participant Plan Summary - Executive” attached hereto as a part hereof
marked “Exhibit B”.
d.
“Life
Insurance Endorsement Method Split Dollar Plan Agreement
”
,
dated
January 1, 1999, by and between the Bank and Employee, as amended by the
“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 agreement governs distributions of Connecticut Mutual
Life Insurance Company Policy Number 6,129,921. For the purpose of interpreting
these agreements, the division of death benefits shall be governed by the
provisions of Subparagraphs VI (A), (B) and (C) of the amendment. Bank shall
continue to pay the premiums pursuant to Paragraph IV and Employee shall
continue to be obligated for the taxable benefit pursuant to Paragraph V
of the
agreements. The anticipated benefit is more particularly shown on the
“Participant Plan Summary - Executive” attached hereto as a part hereof marked
“Exhibit B”.
e.
The
parties hereby acknowledge that the agreements identified under Subparagraphs
4
b, c, and d above each provide that “… 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.”
f.
Companies
acknowledge the validity and recognize the anticipated benefits of the
agreements identified under Subparagraphs 4 a, b, c, and d above (the “Employee
Retirement and Death Benefits”). The Companies shall not directly or indirectly
take any action that would reduce or eliminate the Employee Retirement and
Death
Benefits.
5.
Non-Compete
Provision
-
Employee shall not be a director, officer, or employee of, or consultant
to, any
federal or state financial institution operating in Queen Anne’s, Kent,
Caroline, Talbot, Dorchester or Anne Arundel Counties in the State of Maryland,
or Kent County, Delaware, other than the Companies or their subsidiaries
or
affiliates. Such non- compete covenant shall terminate and be of no further
force and effect three (3) years from the date of this Agreement.
6.
Miscellaneous
a.
Binding
Effect; Benefit
.
This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective heirs, personal representatives, trustees, guardians,
successors and assigns. Nothing in this Agreement, expressed or implied,
is
intended to confer upon any other person any rights, remedies, obligations
or
liabilities.
b.
Entire
Agreement
.
This
Agreement (together with the other agreements referred to herein and the
Exhibits attached hereto) constitutes the full, entire and integrated agreement
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior negotiations, correspondence and understandings between
the
parties hereto respecting the subject matter hereof.
c.
Severability
.
Any
provision of this Agreement which is held by a court of competent jurisdiction
to be prohibited or unenforceable shall be ineffective only to the extent
of
such prohibition or unenforceability, without invalidating or rendering
unenforceable the remaining provisions of this Agreement.
d.
Amendments;
Waiver
.
No
provision of this Agreement may be amended, waived or otherwise modified
without
the prior written consent of the parties; provided, however, that the Companies
may amend this Agreement without the consent of the Employee as the Employer
deems necessary or appropriate to ensure compliance with any law, rule,
regulation or other regulatory pronouncement applicable to the Agreement,
including, without limitation, Section 409A of the Code and any related
regulations or other guidance promulgated with respect to Section 409A of
the
Code.
e.
Counterparts
.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed to be an original and all of which together shall be deemed to be
one and
the same instrument.
f.
Applicable
Law
.
This
Agreement was made in the State of Maryland and shall be governed by, construed,
interpreted and enforced in accordance with the laws of the State of Maryland.
g.
Further
Assurances
.
The
parties agree to execute, acknowledge, seal and deliver after the date hereof
and without additional consideration such further assurances, instruments
and
documents and take such further actions, as the other party may reasonably
request in order to fulfill the intent of this Agreement and the transactions
contemplated hereby.
h.
Facsimile
Signatures
.
The
parties acknowledge that photocopies of this Agreement which have been executed
by the parties hereto or their respective agents shall be binding upon the
parties as if such photocopies were originals regardless of whether such
photocopies of the Agreement have been delivered by personal service, regular
mail, facsimile transmission or otherwise. Upon request from any party hereto,
all other parties agree to execute an original Agreement upon presentation
thereof if such Agreement has previously been executed and delivered in
photocopy form by personal delivery, facsimile transmission, regular mail
or
otherwise.
IN
WITNESS WHEREOF
,
the
parties set their hands and seals as of the date first above
written.
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ATTEST:
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The
Centreville National Bank of Maryland
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/s/
Lloyd L. Beatty
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/s/
Mark M. Freestate
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Chairman
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ATTEST:
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Shore
Bancshares, Inc
.
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/s/
Lloyd L. Beatty
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/s/
Christopher F. Spurry
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Chairman
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ATTEST:
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Shore
Bancshares, Inc.
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/s/
Lloyd L. Beatty
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/s/
W. Moorhead Vermilye
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Chief
Executive Officer
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“COMPANIES”
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/s/
Jeffrey E. Thompson
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/s/
Daniel T. Cannon
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Daniel
T. Cannon
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“EMPLOYEE”
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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 Daniel
T. Cannon, 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
W
HEREOF,
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 8
th
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/
Michael C. Shelton
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By:
/s/
Carol
Brownawell
EVP
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Witness
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Title
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/s/
Michael C. Shelton
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By:
/s/
Daniel T. Cannon
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Witness
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Daniel
T. Cannon
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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 Daniel T. Cannon,
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
23
rd
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/
Mary Catherine Quimly
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By:
/s/
Carol
Brownawell
EVP
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Witness
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Title
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/s/
Mary Catherine Quimly
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By:
/s/
Daniel T. Cannon
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Witness
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Daniel
T. Cannon
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DIRECTOR
INDEXED FEE CONTINUATION PLAN
AGREEMENT
This
Agreement, made and entered into this 7
th
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
Daniel
T.
Cannon, 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:
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.
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.
The
following benefits provided by the Bank to the Director are in the nature of
a
fringe benefit and sha
ll
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.
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.
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.
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/
Carol
Brownawell
EVP/CFO
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Title
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Witness
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