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 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 8th day of July, 1997 and that, upon execution,
each party has received a conforming copy.
 

   
THE CENTREVILLE NATIONAL BANK OF MARYLAND
     
/s/ Michael C. Shelton
 
By: /s/ Carol Brownawell                                                    EVP
Witness
 
                                                                                              
Title

/s/ Michael C. Shelton
By: /s/ Daniel T. Cannon
Witness
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 23rd day of June, 1998 and that, upon execution,
each party has received a conforming copy.
 

   
THE CENTREVILLE NATIONAL BANK OF MARYLAND
           
/s/ Mary Catherine Quimly
 
By: /s/ Carol Brownawell                                          EVP
Witness
 
                                                                                     Title
     
/s/ Mary Catherine Quimly
 
By: /s/ Daniel T. Cannon
Witness
 
Daniel T. Cannon

 

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DIRECTOR INDEXED FEE CONTINUATION PLAN
 
AGREEMENT
 
This Agreement, made and entered into this 7th 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:
 
I.
DEFINITIONS

 
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.

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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.
 
Insurance Company:
Massachusetts Mutual Life Insurance
Policy Form:
Whole Life Endowment at Age 95
Policy Name:
Executive Benefit life III
Insured's Age and Sex: Riders:
48, Male

 
 

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Ratings:
None
Option:
None
Face Amount:
$785,476
Premiums Paid:
$130,000
Number of Premiums Paid:
One
Assumed Purchase Date:
January 7, 1997

 
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.

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II.
EMPLOYMENT

 
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.
 
III.
INDEX BENEFITS

 
The following benefits provided by the Bank to the Director are in the nature of
a fringe benefit and shall 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
 

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[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.
 
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.
 
V.
CHANGE OF CONTROL

 
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

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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.
 
VI.
MISCELLANEOUS

 
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.

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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 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.

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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.
 

     
/s/ Connie L. Crossman
 
/s/ Carol Brownawell                                            EVP/CFO
Witness
 
                                                                                     Title
     
/s/ Connie L. Crossman
 
/s/ Daniel T. Cannon
Witness
 
Daniel T. Cannon

 

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