AMENDED
AND RESTATED DIRECTOR INDEXED FEE
CONTINUATION
PLAN AGREEMENT
This
Amended and Restated Director Indexed Fee Continuation Plan Agreement is made
and entered into this 31
st
day of
December, 2008 (the “Effective Date”), by and between The Centreville National
Bank of Maryland, a national banking association (the “Bank”), and
_________________ (the “Director”).
Recitals
WHEREAS,
the Bank and the Director are parties to a Director Indexed Fee Continuation
Plan Agreement effective as of January 7, 1997 (the “Original Agreement”),
which, in consideration of the Director’s faithful service to the Bank, is
intended to provide for the payment of a benefit by the Bank to the Director
and/or his beneficiaries upon the Director’s retirement from the Board of
Directors of the Bank.
WHEREAS,
the Original Agreement was amended on July 8, 1997 and on June 23,
1998.
WHEREAS,
the parties wish to further amend the Original Agreement to ensure that it
complies with Section 409A of the Internal Revenue Code and the Treasury
Regulations and other guidance issued by the Internal Revenue Service adopted or
issued thereunder, and to restate the Original Agreement as
amended.
Therefore,
in consideration of the foregoing premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Bank and the Director agree to amend and restate the Original Agreement to read
as follows:
Agreement
The
effective date of this Agreement shall be Effective Date.
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 the first day of the month coincident with or
next following the date the Director retires from service as a Bank director on
or after his sixty-fifth (65th) birthday.
|
|
D.
|
Early Retirement
Date
:
|
Early
Retirement Date shall mean the date the Director retires from service as a Bank
director on or after his fifty-fifth (55
th
)
birthday but before his sixty-fifth (65
th
)
birthday.
|
|
E.
|
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, less the Cost of
Funds Expense for that year.
|
|
F.
|
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 for that year over the Cost
of Funds Expense for that year.
The Index
for any year shall be the aggregate annual after-tax income from the life
insurance contract described hereinafter as defined by FASB Technical Bulletin
85-4.
Insurance
Company:
Policy
Form:
Policy
Name:
Insured's
Age and Sex:
Riders:
Ratings:
Option:
Face
Amount:
Premiums
Paid:
Number of
Premiums Paid:
Assumed
Purchase Date:
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.
|
|
H.
|
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.
Change of
Control shall means a change in the ownership of a corporation, a change in the
effective control of a corporation, or a change in the ownership of a
substantial portion of a corporation’s assets, as such terms are defined in
Treasury Reg. §1.409A-3(i)(5).
|
|
J.
|
Separation from
Service
:
|
Notwithstanding
anything to the contrary in this Agreement, to the extent that any benefit under
this Agreement is payable upon a Director’s retirement or other event
involving the Director’s cessation of services as a Bank director, such
payment(s) shall not be made unless such event constitutes a
“Separation from Service” as defined in Treasury Reg.
§1.409A-1(h).
|
II.
|
NO
EMPLOYMENT RIGHTS CREATED
|
This
Agreement does not create, and shall not be deemed to create, any legal or
equitable right of the Director to serve as an employee of or to continue
service as a director of the Bank, nor shall it restrict or limit any existing
employment agreement by and between the Bank and the Director.
Upon his
Normal Retirement Date, the Director shall be entitled to receive the balance in
his Pre-Retirement Account in fifteen (15) equal annual installments commencing
within thirty (30) days following the Normal Retirement Date and with subsequent
installments paid within thirty (30) days following each anniversary of the
Normal Retirement Date. In addition to these payments, the Index Retirement
Benefit for each year shall be paid to the Director in annual installments,
commencing within thirty (30) days following the Normal Retirement Date and with
subsequent installments paid within thirty (30) days following each anniversary
of the Normal Retirement Date, until the Director’s death.
Upon his
Early Retirement Date, the Director shall be entitled to receive the balance in
his Pre-Retirement Account in fifteen (15) equal annual installments commencing
within thirty (30) days following his sixty-fifth (65
th
)
birthday and with subsequent installments paid within thirty (30) days following
each anniversary of his sixty-fifth (65
th
)
birthday. In addition to these payments, the Index Retirement Benefit for each
year shall be paid to the Director in annual installments, commencing within
thirty (30) days following his sixty-fifth (65
th
)
birthday and with subsequent installments paid within thirty (30) days following
each anniversary of his sixty-fifth (65
th
)
birthday, until the Director’s death.
Should
the Director die after his fifty-fifth (55
th
)
birthday, while serving as a Bank director or having retired from service as a
Bank director on or after his fifty-fifth (55
th
)
birthday, but before having received his entire Pre-Retirement Account, 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. In either
case, such lump sum shall be paid within (60) days after the Director’s
death.
Except as
set forth above, there is no death benefit provided under this
Agreement.
|
|
E.
|
Restriction on Timing
of Distribution
:
|
Notwithstanding
any provision of this Agreement to the contrary, distributions to the Director
on account of a Separation from Service may not commence earlier than six (6)
months after the date of a Separation from Service if, pursuant to Internal
Revenue Code Section 409A, the Director is considered a “specified
employee” (under Code Section 416(i), disregarding Code Section 416(i) and
using the definition of compensation under Treasury Reg. §1.415(c)-2(d)(4)) of
the Bank and if, on the date of such Separation from Service, any stock of the
Bank is publicly traded. In the event a distribution is delayed
pursuant to this subparagraph, the originally scheduled distribution shall be
delayed for six (6) months, and shall commence instead on the first (1
st
) day of
the seventh (7
th
) month
following Separation from Service. If payments are scheduled to be
made in installments, the first six (6) months of installment payments shall be
delayed, aggregated, and paid instead on the first (1
st
) day of
the seventh (7
th
) month,
after which all installment payments shall be made on their regular
schedule. If payment is scheduled to be made in a lump sum, the lump
sum payment shall be delayed for six (6) months and instead be made on the
(1
st
) day of
the seventh (7
th
)
month.
|
|
F.
|
Certain Accelerated
Payments
:
|
The Bank
may make any accelerated distribution permissible under Treasury Reg.
§1.409A-3(j)(4) to the Director of deferred amounts (including a lump sum
distribution upon revocation of the Agreement under Section VI.C.), provided
that such distribution(s) meets the requirements of
§1.409A-3(j)(4).
|
|
G.
|
Subsequent Changes to
Time and Form of Payment
:
|
The Bank
may permit a subsequent change to the time and form of benefit
distributions. Any such change shall be considered made only when it
becomes irrevocable under the terms of the Agreement. Any change will
be considered irrevocable not later than thirty (30) days following acceptance
of the change by the Bank, subject to the following rules:
|
|
(1)
|
the
subsequent deferral election may not take effect until at least twelve
(12) months after the date on which the election is
made;
|
|
|
(2)
|
the
payment (except in the case of death) upon which the subsequent deferral
election is made is deferred for a period of not less than five (5) years
from the date such payment would otherwise have been paid;
and
|
|
|
(3)
|
in
the case of a payment made at a specified time, the election must be made
not less than twelve (12) months before the date the payment is scheduled
to be paid.
|
|
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 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.
If the
Director’s employment is involuntarily terminated following a Change of Control
and before his sixty-fifth (65
th
)
birthday, he shall receive the benefits described in Section III.A. as if he had
continuously served as a Bank director until his sixty-fifth (65
th
)
birthday. Such benefits shall be paid in the form of payment described in
Section III.A., with installments commencing within thirty (30) days of the
Director’s sixty-fifth (65
th
)
birthday and with subsequent installments paid within thirty (30) days following
each anniversary of his sixty-fifth (65
th
birthday). If a Director described in the preceding sentence dies before having
received his entire Pre-Retirement Account, 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 (or, in the absence of such beneficiary,
to the personal representative of his estate) within sixty (60) days after the
Director’s death. 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.
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. Upon revocation of the Agreement, payment of benefits will be
made only when they would otherwise become payable under the provisions of the
Agreement. Notwithstanding the preceding sentence, payment of
benefits will be made in one lump sum payment of cash upon revocation of the
Agreement if the Agreement is revoked and liquidated in accordance with the
Treasury Reg. §1.409A-3(j)(4)(ix).
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.
|
Entire Agreement;
Effect on Other Bank Benefit
Plans
:
|
This
Agreement embodies and constitutes the entire agreement of the parties with
respect to the subject matter hereof. Any and all prior agreements or
understandings with respect to such matters are hereby superseded.
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.
Headings
and subheadings in this Agreement are inserted for reference and convenience
only and shall not be deemed a part of this Agreement.
The
validity and interpretation of this Agreement shall be governed by the laws of
the State of Maryland to the extent not preempted by federal law.
|
|
A.
|
Treatment under
ERISA
.
|
This
Agreement is intended to be 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 was fully
advised of the Bank’s financial status and had substantial input in the design
and operation of this Agreement.
|
|
B.
|
Named Fiduciary and
Plan Administrator
:
|
The
“Named Fiduciary and Plan Administrator” of this plan shall be The Centreville
National Bank of Maryland. As Named Fiduciary and Administrator, The
Centreville National Bank of Maryland shall be responsible for the management,
control and administration of the 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.
|
|
C.
|
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, each of the parties has caused this Agreement to be executed as
of the day first above written.
|
ATTEST:
|
|
|
THE
CENTREVILLE NATIONAL
BANK
OF MARYLAND:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/
Carol E. Brownawell
|
|
|
|
|
|
Carol
E. Brownawell, EVP/CFO
|
|
|
|
|
|
|
|
|
WITNESS:
|
|
|
DIRECTOR:
|
|
|
|
|
|
|
|
|
|
|
|
|
|