Document:

Exhibit 10.1

 

 

COMMUNITY BANK OF THE CHESAPEAKE 

EXECUTIVE INCENTIVE COMPENSATION PLAN 

 

 

(as amended and restated effective January
1, 2016)

 

 

 

 

 

     

     

    

 

COMMUNITY BANK OF THE CHESAPEAKE

EXECUTIVE INCENTIVE COMPENSATION PLAN

(As, Amended and Restated Effective January
1, 2016) 

 

 

ARTICLE I

GENERAL PROVISIONS

 

           1.01           Purpose. This purpose of The Community
Bank of the Chesapeake Executive Incentive Compensation Plan, as amended and restated is to align the interests of Participants
with the interests of the Bank, the Company and Company shareholders by providing Participants with an opportunity to earn incentive
compensation upon the achievement of Company, Bank (branch/department), and/or individual performance goals.

 

It is intended that the Plan be an unfunded
plan maintained primarily to provide bonuses in the form of cash and non-cash compensation for a select group of management or
highly compensated employees within the meaning of Section 201(2) of ERISA and that benefits provided under the Plan be taxable
to Participants only when actually received. The Plan shall be administered, construed and interpreted in a manner consistent with
the purpose and intent set forth in this Section.

 

           1.02           Effective Date. The Plan was originally adopted
effective January 1, 1992 and subsequently amended and restated on January 1, 1998, December 23, 2002, December
31, 2008, January 1, 2010 and January 1, 2015. The effective date of this restatement is January 1, 2016 (“Effective Date”).

 

ARTICLE II

DEFINITIONS

 

           Unless the context clearly requires otherwise,
the terms defined in this Article II shall, for all purposes of this Plan, have the respective meanings specified in this
Article II.

 

           2.01           “Affiliate” means any company
that would be considered an affiliate of the Bank or the Corporation pursuant to Section 424 of the Code.

 

           2.02           “Bank” means Community Bank of
the Chesapeake.

 

           2.03           “Beneficiary” means the person
or persons designated as a Participant’s beneficiary or beneficiaries in accordance with Section 4.06 hereof.

 

           2.04           “Benefits” shall mean, as to
any Participant, any incentive compensation provided under Article IV hereof (also referred to as an Incentive Award in this
Plan).

 

           2.05           “Board” means the Board of Directors
of the Bank.

 

           2.06           Reserved.

 

           2.07           “Cause” means personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal profits, intentional failure to perform stated duties,
willful violation of a material provision of any law, rule or regulation (other than traffic violations or similar offenses), or
a material violation of a final cease-and-desist order or any other action which results in a material financial loss to the Bank.
A determination of “Cause” shall be made by the Board within its sole discretion.

 

    	 	1	 

     

    

 

           2.08           “Chairman” means the Chairman
of the Governance Committee who shall be responsible for coordinating all actions of the Committee.

 

           2.09           “Code” means the Internal Revenue
Code of 1986, as amended from time to time. References to a Code section shall include any comparable section or sections of future
legislation that amends, supplements or supersedes such section.

 

           2.10           “Committee” means the members
of the Compensation Committee of the Board who are appointed to serve on the Committee. In the absence at any time of a duly appointed
Committee, the Plan shall be administered by the Board.

 

           2.11           “Compensation” means a Participant’s
base salary for the calendar year, as adjusted from time to time. Base salary will include only amounts paid by the Bank (including
such amounts contributable to the Bank’s 401(k) plan by employees) and will exclude amounts paid by third party providers,
such as disability.

 

           2.12           “Corporation” means The Community
Financial Corporation.

 

           2.13           “Employee” means any individual
who performs service in the business of the Bank, the Corporation or any Affiliate, excluding any individual who performs such
services as a self-employed person.

 

           2.14           “ERISA” means the Employee Retirement
Income Security Act of 1974, as amended from time to time.

 

           2.15           “Good Standing” means an employee’s
overall performance meets expectations (as determined by the Bank) and the employee is not under corrective action or probation.

 

           2.16           “Incentive Award” means cash
or non-cash compensation paid to Participants pursuant to Article IV hereof (also referred to as a Benefit in this Plan).

 

           2.17           “Maximum Incentive” means
the maximum Incentive Award that can be earned under this Plan for maximum performance, subject to Committee discretion.

 

           2.18           “Multiplier” means for any calendar
year the percentage of the performance goals established by the Committee or the Board that the Bank has achieved.

 

The Committee shall work with management,
and independent consultants from time to time, to set appropriate performance goals under the Plan by the end of the first quarter
of each Performance Period. Once the goals are set, the Committee or its designee will communicate the performance goals to Participants
(for each Performance Period) through performance scorecards. The Company performance goals may include, but are not limited to,
NIATBI, Return on Assets (ROA), Return on Average Assets (ROAA), Return on Earnings (ROE), Earnings Per Share (EPS) or Non-Performing
Loans, subject to the Committee’s discretion to take into account or to disregard any extraordinary financial events.

 

           2.19           “NIATBI” means the net income
(after taxes and before Benefits accrued for the fiscal year) of the Bank and its Affiliates, and shall be determined by the Committee
in accordance with generally accepted accounting principles.

 

    	 	2	 

     

    

 

           2.20           “Participant” means an Employee
who has become a Participant in the Plan as provided for in Article III.

 

           2.21           “Performance Period” means January
1 – December 31st.

 

           2.22           “Plan” means the Community Bank
of the Chesapeake Executive Incentive Compensation Plan as herein set forth and as it may from time to time be amended.

 

           2.23           “Target Incentive”
means the Incentive Award that may be earned if level performance for each performance measure is satisfied (“Target Performance”),
subject to Committee discretion. Target performance is based upon historical data and management’s best judgement as to expected
performance during an applicable performance period.

 

           2.24           “Threshold Incentive”
means the Incentive Award determined by the Committee if Target Performance is not achieved, but the Committee determines a
level of incentive opportunity is present.

 

ARTICLE III

ELIGIBILITY AND PARTICIPATION

 

The Committee shall have sole discretion
to determine which Employees are eligible to participate in the Plan. The Committee may, in its sole discretion, limit eligibility
for any reason including, but not limited to, ensuring that the Plan at all times complies with ERISA. Eligibility may be subject
to fulfillment of conditions, if any, as the Committee, in its sole discretion, may impose. Employees are only eligible to participate
in the Plan if they are in “Good Standing”.

 

ARTICLE IV

BENEFITS/INCENTIVE AWARDS 

 

           4.01           Incentive Awards. Commencing
January 1, 2016, each Participant will have a pre-determined Threshold, Target and Maximum Incentive Award opportunity dependent
upon his/her level of responsibility within the Bank, that is expressed as a percentage of such Participant’s Compensation
as of the last day of the Performance Period (“Incentive Award Opportunity”). The Incentive Award Opportunities for
each Participant for the applicable Performance Period will be approved by the Committee on an annual basis. The Committee has
the authority to set and amend the Incentive Award Opportunity and the weighting of the criteria applicable to individual Participants
in the Plan. Incentive Award Opportunities will be determined based on a combination of performance measures as determined by the
Committee.

 

Unless otherwise specified in this Plan, Participants must be
employed by the Bank on the date an Incentive Award is to be distributed in order to earn the Incentive Award under this Plan.
In addition, all Participants must be in “Good Standing” in order for Incentive Awards to be earned under this
Plan.

 

           4.02           Recoupment. Notwithstanding anything herein
to the contrary, the Committee may, to the extent permitted by applicable law and stock exchange rules or by any policies adopted
by the Company or its affiliates, cancel or require reimbursement of an Incentive Award distributed under this Plan.

 

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           4.04           Payment of Incentive Awards/Benefits. Incentive
Awards/Benefits shall be determined by the Committee as soon as is practicable after the end of each Performance Period and will
be calculated using a ratable approach. For purposes of this Plan, the ratable approach shall mean that payouts may be calculated
as a proportion of the Threshold, Target and Maximum Incentive Award opportunities. If actual performance falls below between performance
levels, the payout will also fall between the pre-defined performance level on a pro-rate basis. The Benefits or Incentive Awards,
at the Committee’s discretion, will be in the form of cash and/or non-cash compensation. If an Incentive Award is distributed
in Company common stock, the Incentive Award will be valued at the fair market value of the Company common stock as determined
under The Community Financial Corporation 2015 Equity Compensation Plan or successor plans or such other method at the Committee’s
discretion for stock awards. Incentive Awards distributed in Company common stock may also be subject to a vesting condition upon
grant. Once the Benefits/Incentive Awards are determined by the Committee they will be paid in the payroll immediately following
the determination of the Benefits/Incentive Awards, but in no event later than 75 days after the end of the applicable Performance
Period. Employment on the distribution date is a condition of earning a Benefit/Incentive Award. In the event a Participant dies
after the determination of the Incentive Award/Benefit but prior to distribution, the Participant’s Beneficiary shall receive
the Benefit/Incentive Award.

 

           4.05           Source of Benefits. The cash Benefits payable
under the Plan shall be paid by the Bank out of its general assets and shall not be funded by trust or otherwise. Nothing contained
in this Plan shall constitute, or be treated as, a trust or create any fiduciary relationship. The Bank shall be under no obligation
to segregate any assets to provide Benefits under the Plan and no person or entity which is entitled to payment under the terms
of the Plan shall have any claim, right, security interest, or other interest in any fund, trust, account, insurance contract,
or asset of the Employer. To the extent that a Participant or any other person acquires a right to receive any Benefit under the
Plan, such right shall be limited to that of a recipient of an unfunded, unsecured promise to pay amounts in the future and the
Participant’s (or other person’s) position with respect to such amounts shall be that of a general unsecured creditor
of the Employer. The non-cash compensation Benefits payable under the Plan shall be granted to Participants by the Board of Directors
of the Corporation from The Community Financial Corporation 2015 Equity Compensation Plan or any other shareholder approved equity
plan, to the extent shares are available under the plan.

 

           4.06           Minority disability or Incompetency. If any
Benefit becomes payable under this Plan to a minor, to a person under legal disability or to a person not adjudicated incompetent
but who the Committee in its discretion determines to be incapable by reason of illness or mental or physical disability of managing
his or her financial affairs, the Committee may direct that such Benefit shall be paid to the legal representative or custodian
of such person or to any relative or friend of such person, or that such amount be paid directly for such person’s support
and maintenance. Payments so made in good faith shall completely discharge the Committee and the Bank of any and all obligations
and liabilities with respect to such payments.

 

           4.07           Designation of Beneficiary. A Participant
may file with the Committee a written designation of a Beneficiary who is to receive his or her vested benefits in the event of
the Participant’s death before his or her collection of said benefits. Such designation of Beneficiary may be changed at
any time by written notice to the Committee. The designation last filed with the Committee shall be controlling. In the event of
the death of a Participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of the
Participant’s death, the Participant’s estate shall be deemed to be the Beneficiary for purposes of this Plan.

  

    	 	4	 

     

    

 

ARTICLE V

PLAN ADMINISTRATION

 

           5.01            (a) Responsibilities of the Committee. The
Committee has the responsibility to approve, amend, or terminate the Plan as necessary. The actions of the Committee shall be final
and binding on all parties. The Committee shall also review the operating rules of the Plan on an annual basis and revise these
rules if necessary. The Committee also has the sole ability to decide if an extraordinary event totally outside of management’s
influence, be it a windfall or a shortfall, has occurred during the current Plan year, and whether the figures should be adjusted
to neutralize the effects of such events. After approval by the Committee, management shall, as soon as practical, inform each
of the Plan participants under the Plan of their potential Benefits/Incentive Awards under the operating rules adopted for the
Plan year.

 

(b) Responsibilities of the CEO.
Notwithstanding any provision to the contrary, the CEO of the Bank administers the program directly and provides liaison to the
Committee, including the following specific responsibilities: recommend the Participants to be included in the Plan each year (this
includes determining if additional Employees should be added to the Plan and if any Plan participants should be removed from participating
in the Plan); provide recommendations for the Incentive Award Opportunities amounts at Threshold, Target, and Maximum for Employees
other than himself; review the objectives and evaluations, adjust guideline awards for performance and recommend final payouts
to the Committee; and, provide other appropriate recommendations that may become necessary during the life of the Plan. This could
include such items as changes to Plan provisions.

 

           5.02           Claims Procedure. Claims for Benefits under
the Plan shall be filed in writing with the Committee. Written notice of the Committee’s disposition of a claim generally
shall be furnished to the claimant within 60 days after the application therefore is filed. However, if special circumstances
exist of which the Committee notifies the claimant within such 60 day period, the Committee may extend such period to the
extent necessary, but in no event beyond 180 days after the claim is filed. If the claim is denied, the reasons for the denial
shall be specifically set forth in writing, pertinent provisions of the Plan shall be cited, and, where appropriate, an explanation
as to how the claimant can perfect the claim will be provided. Any claimant who has been denied a Benefit shall be entitled, upon
request to the Committee, to appeal the denial of his claim within 60 days following the Committee’s determination described
in the preceding sentence. Upon such appeal, the claimant, or his representative, shall be entitled to examine pertinent documents,
submit issues and comments in writing to the Committee, and meet with the Committee. The Committee shall review its decision and
issue a final decision to the claimant in writing, generally within 60 days following such appeal. However, if special circumstances
exist of which the Committee notifies the claimant within such 60 day period, the Committee may extend such period to the
extent necessary, but in no event beyond 120 days following such appeal.

 

ARTICLE VI

AMENDMENT AND TERMINATION

 

           6.01           Right to Amend or Terminate. The Committee
has developed the Plan on the basis of existing business, market and economic conditions, current services and staff assignments.
Therefore, the Committee reserves the right at any time to terminate or amend the Plan in any manner and for any reason; provided,
that no amendment or termination shall, without the consent of the Participant or, if applicable, the Beneficiary, adversely affect
such Participant’s or Beneficiary’s rights with respect to Benefits earned as of the date of such amendment or termination.

  

    	 	5	 

     

    

 

ARTICLE VII

GENERAL PROVISIONS

 

           7.01           No Enlargement of Employment Rights. Nothing
contained in this Plan shall give or be construed as giving any Employee the right to be retained in the service of the Bank or
shall interfere with the right of the Bank to discharge or otherwise terminate any Employee’s employment at any time.

 

           7.02           Gender. Whenever any masculine terminology
is used in this Plan, it shall be taken to include the feminine, unless the context otherwise indicates.

 

           7.03           Applicable Law. This Plan shall be construed
and regulated, and its validity and effect and the rights hereunder of all parties interested shall at all times be determined
in accordance with the laws of the State of Maryland, except to the extent such state law is preempted by federal law.

 

           7.04           Titles and Headings. The titles and headings
included herein are included for convenience only and shall not be construed as in any way affecting or modifying the text of the
Plan, which text shall control.

 

           7.05           Withholding. The Bank reserves the right
to withhold from payments of Benefits/Incentive Awards such amounts of income, payroll, and other taxes as it deems advisable,
and if the amount of such cash payment is not sufficient, the Bank may require the Participant or Beneficiary to pay the Bank the
amount required to be withheld as a condition of delivering Benefits/Incentive Awards under the Plan.

 

           7.06           Successors.  All obligations of the Bank
and the Company under the Plan shall be binding upon and inure to the benefit of any successor to the Bank and/or the Company,
whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of
all or substantially all of the business and/or assets of the Bank and /or the Company.

 

           7.07           Section 409A. It is intended,
and the Plan will be so construed, that any amounts payable under the Plan shall be exempt from Code Section 409A a short-term
deferrals pursuant to Treasury Regulation §1.409A-1(b)(4). However, to the extent any amount payable under the Plan is not,
in fact, exempt from Code Section 409A, it is intended, and the Plan to be so construed, that such amount shall comply with the
provisions of Code Section 409A, then neither the Bank, the Company the Boards of Directors of the Bank and/or the Company, the
Committee nor its or other designees or agents shall be liable to any Participant or other persons for actions, decisions or determinations
made in good faith.

 

  

[signature page follows]

 

 

    	 	6	 

     

    

 

The Board of Directors of the Community
Bank of the Chesapeake adopted this Community Bank of the Chesapeake Executive Incentive Compensation Plan, as amended and restated
(the”Plan”) on February 4, 2016 and the Plan is effective as of the 1st day of January, 2016.

 

 

	ATTEST:	 	COMMUNITY BANK OF THE CHESAPEAKE	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	By: 	 	 
	 	 	 	William J. Pasenelli, President & CEO	 

 

 

 

    	 	7ex10-1.htm

PROMISSORY NOTE

(Bridge Note)

	
$300,000

	
Iselin, NJ

	  	
February 4, 2016

FOR VALUE RECEIVED, ECHO THERAPEUTICS INC., a Delaware corporation (together with its successors and assigns, the “Borrower”), with its principal place of business at 99 Wood Avenue South, Suite 302, Iselin, New Jersey 08830, promises to pay to the order of BEIJING YI  TANG BIO SCIENCE & TECHNOLOGY, LTD. together with any successors or assigns, the “Lender”) at the office of the Lender, ROOM 1107, No.1 Building, No29 Nanmofang Road, Chaoyang District, Beijing 100022 P.R. China, the sum of THREE HUNDRED THOUSAND DOLLARS and ZERO cents ($300,000.00), together with interest on the unpaid balance and all other charges, as provided below.  Commencing on the date hereof, interest shall accrue on the unpaid principal balance outstanding from time to time at a rate per annum equal to The Wall Street Journal Prime Rate, compounding monthly.   The Borrower shall pay all outstanding principal and interest on the Maturity Date.  “Maturity Date” is defined as earlier of (i) the consummation of the sale by the Borrower of equity securities in an offering, with gross proceeds to the Borrower (before deduction of underwriter’s commissions, offering expenses and the like) of not less than $3,000,000 and (ii) one hundred twenty (120) days from the date hereof.  To the extent permitted by applicable law, upon and after the occurrence of an Event of Default (whether or not the Lender has accelerated payment of this Note), interest on principal shall be payable on demand at a rate per annum equal to 12% per annum, compounding monthly.  This Note is unsecured and is subordinated and junior, in payment and priority, to the Secured Convertible Notes of the Borrower issued on January 29, 2016.

 

Default.  If (a) the interest hereon or any commitment or other fee shall not be paid in full punctually when due and payable, and/or (b) the principal hereof shall not be paid in full punctually when due and payable, it shall constitute an Event of Default (“Event of Default”) under this Note.  Upon an Event of Default, or at any time thereafter, at the option of the Lender, all obligations hereunder shall become immediately due and payable without notice or demand and the Lender shall then have in any jurisdiction where enforcement hereof is sought.  All rights and remedies of the Lender are cumulative and are not exclusive of any rights or remedies provided by laws or any other agreement, and may be exercised separately or concurrently.

 

Waiver; Amendment.  No delay or omission on the part of the Lender in exercising any right hereunder shall operate as a waiver of such right or of any other right under this Note.  No waiver of any right contained in, consent to any departure from, or amendment to any provision contained in this Note shall be effective unless in writing and signed by the Lender, nor shall a waiver on one occasion be construed as a waiver of any such right on any future occasion.  Without limiting the generality of the foregoing, the acceptance by the Lender of any late payment shall not be deemed to be a waiver of the Event of Default arising as a consequence thereof.  The Borrower waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and assents to any extensions or postponements of the time of payment or any and all other indulgences under this Note, or to any and all additions or releases of any other parties or persons primarily or secondarily liable under this Note, which from time to time be granted by the Lender in connection herewith regardless of the number or period of any extensions.

 

 

  

  

  

 

Governing Law; Consent to Jurisdiction.  This Note shall be governed by, and construed in accordance with, the laws of the State of New York without regard to any conflict of laws provisions that might result in the application of the laws of another state.  The Borrower agrees that any suit for the enforcement of this Note may be brought in the courts of the State of New York or any federal court sitting in such state and consents to the non-exclusive jurisdiction of each such court and to service of process in any such suit being made upon the Borrower by mail at the address set forth above.  The Borrower hereby waives any objection that it may now or hereafter have to the venue of any such suit or any such court or that such suit was brought in an inconvenient court.

 

WAIVER OF JURY TRIAL.  THE BORROWER AND THE LENDER, BY ITS ACCEPTANCE OF THIS NOTE, HEREBY WAIVE TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF:  (A) THIS NOTE OR ANY OTHER INSTRUMENT OR DOCUMENT DELIVERED IN CONNECTION WITH THE OBLIGATIONS HEREUNDER; (B) THE VALIDITY, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF; OR (C) ANY OTHER CLAIM OR DISPUTE HOWEVER ARISING BETWEEN THE BORROWER AND THE LENDER.

 

Severability; Authorization to Complete; Paragraph Headings.  If any provision of this Note shall be invalid, illegal or unenforceable, such provision shall be severable from the remainder

 

of this Note and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.  Paragraph headings are for the convenience of reference only and are not a part of this Note and shall not affect its interpretation. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person, persons, entity or entities may require.  The terms “herein,” “hereof” or “hereunder” or similar terms used in this Note refer to this entire Note and not only to the particular provision in which the term is used.

 

Exchange Right.  For so long as this Note is outstanding, if the Company enters into any subsequent equity or equity-linked financing on terms more favorable than the terms governing this Note (a “Subsequent Financing”), as determined by the Lender in its sole discretion, then the Lender in its sole discretion may exchange the outstanding principal and interest under this Note for the securities issued or to be issued in the Subsequent Financing.   In no event shall any such exchange be permitted to the extent such exchange results in the Lender beneficially owning (for purposes of Section 13(d) under the Securities Exchange Act of 1934) 9.99% or more of the outstanding Common Stock of the Company.

 

Assignments.  Neither this Note nor the proceeds hereof shall be assignable by the Borrower without the Lender’s prior written consent, and any attempted assignment without the Lender’s prior written consent shall create a default under this Note.  This Note may be assigned, in whole or in part, by the Lender and its successors or assigns.  The Borrower’s consent shall not be required for any such assignment.

 

IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed and delivered as of the date first above written.

	  	  
	  	
ECHO THERAPEUTICS INC.

 

By:      /s/ Alan W. Schoenbart

Name: Alan W. Schoenbart

Title: Chief Financial Officer

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