Document:

EX-10.4

Exhibit 10.4

COMMUNITY BANK OF TRI-COUNTY

EXECUTIVE INCENTIVE COMPENSATION PLAN

 
As Amended and Restated

Effective December 31, 2008 

 

 

COMMUNITY BANK OF TRI-COUNTY

AMENDED AND RESTATED

EXECUTIVE INCENTIVE COMPENSATION PLAN

ARTICLE I. General Provisions

     1.01 Purpose. This document sets forth the Amended and Restated Community Bank of
Tri-County Executive Incentive Compensation Plan. The Plan is maintained to provide certain
Employees with incentive compensation if the Bank meets certain 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 effective date of the Plan was January 1, 1992. The Plan was
subsequently amended and restated on January 1, 1998 and December 23, 2002. The effective date of
this amendment and restatement of the Plan is December 31, 2008 (“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 Tri- County.

     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.

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

     2.06 “Bonuses” means cash or non-cash compensation paid to Participants pursuant to
Article IV hereof.

     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

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which results in a material financial loss to the Bank. A determination of “Cause” shall be made
by the Board within its sole discretion.

     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 Governance 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 Tri-County 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 “Multiplier” means for any calendar year the percentage of the goals established
by the Committee or the Board that the Bank has achieved.

     The Committee shall make its determinations of the relevant goals where applicable such as
return on equity, earnings per share, or non-performing loans in accordance with generally accepted
accounting principles or other industry norms, subject to the Committee’s discretion to take into
account or to disregard any extraordinary financial events.

     2.16 “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, subject to the Committee’s discretion to take into
account or to disregard any extraordinary financial events.

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

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

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     2.19 Substitution or addition of criteria for calculation of Bonus may be made at the sole
discretion of the Committee subject to the Committee’s discretion to take into account or to
disregard any financial events that are extraordinary in the opinion of the Committee.

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 is a plan described in
Section 201(2) of ERISA. Eligibility may be subject to fulfillment of conditions, if any, as the
Committee, in its sole discretion, may impose.

ARTICLE IV. Benefits Schedule

     4.01 Bonuses. For each calendar year beginning on or after the Effective Date, the
total Bonuses that the Bank shall pay to Participants who are Employees on December 31st
of the year to which the Bonuses relate (or who retired, died or became disabled during the year in
which the Bonuses relate) shall equal the product of the Multiplier and some percentage of the
Bank’s NIATBI that shall be determined by the Committee before January 1 of the year to which the
Bonuses relate. The allocation of the total Bonuses to each Participant shall be determined by the
Committee in its sole discretion. Bonuses are considered to be the property of the Bank until paid
to the Participant, and consequently, all Bonuses are subject to forfeiture until actually paid to
the Participant.

     4.02 Revocation for Misconduct;Voluntary-Involuntary Departure. Notwithstanding
anything herein to the contrary, the Chairman, or any other Committee member designated by the
Chairman to act on the Chairman’s behalf if the Chairman is not available, may, immediately revoke,
rescind or terminate any Bonuses that have been determined by the Committee but not yet paid or
granted if the Participant voluntarily or involuntarily leaves the employ of the Bank or an
Affiliate for Cause, or is discovered after termination of employment to have engaged in conduct
that would have justified termination for Cause.

     4.03 Payment of Benefits. Bonuses shall be determined by the Committee as soon as is
practicable after the end of each calendar year. The Benefits, at the Committee’s discretion, will
be in the form of cash and/or non-cash compensation. Equity grants, if applicable, will be valued
based on the “Black-Scholes” or some other generally used method at the Committee’s discretion for
stock options and shall be the fair market value as determined under the Tri-County Financial
Corporation 2005 Equity Compensation Plan or successor plans or such other method at the
Committee’s stock discretion for stock grants. All Benefits under this Plan shall be provided by
the Bank (or the Corporation in the case of equity compensation) directly to Participants.

     4.04 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

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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 Tri-County Financial Corporation
2005 Equity Compensation Plan or any other shareholder approved equity plan, to the extent shares
are available under the plan.

     4.05 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.

     4.06 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.

ARTICLE V. Plan Administration

     5.01 The Committee. In its sole and absolute discretion, which discretion when
exercised shall be final and binding on all parties, the Committee shall have the responsibility
and authority to control the operation and administration of the Plan in accordance with its terms
including, without limiting the generality of the foregoing, the powers and duties: (i) to
interpret, apply and administer the Plan, to decide all questions of eligibility, participation,
status, benefits, and rights of Participants and Beneficiaries under the Plan; (ii) to establish
and amend such rules and procedures as it deems necessary or appropriate to the proper
administration of the Plan; (iii) to employ or retain such agents as it deems necessary or
advisable to assist in the administration of the Plan, and to delegate to the extent permitted by
applicable law such powers and duties as it deems necessary or advisable, (iv) to prepare and file
all statements, returns, and reports required to be filed by the Plan with any agency of
government; (v) to comply with all disclosure requirements of all applicable state and federal law;
and (vi) to perform all functions otherwise assigned to it under the terms of the Plan.

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     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 Bank 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 accrued as of the date of such
amendment or termination.

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.

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     7.05 Withholding. The Bank reserves the right to withhold from payments of Benefits
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 under the Plan.

     WHEREFORE, the Community Bank of Tri-County adopts this Amended and Restated Executive
Incentive Compensation Plan effective the 31st day of December, 2008.

	 	 	 	 	 	 	 	 	 
	ATTEST:	 	 	 	COMMUNITY BANK OF TRI-COUNTY	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ Gregory C. Cockerham 

	 	 	 	By:	 	/s/ Michael L. Middleton 	 	 
	 

	 	 
	 	 	 	 

	 	 
	Gregory C. Cockerham, Secretary

	 	 	 	 	 	Michael L. Middleton, President	 	 

6EX-10.20

Exhibit 10.20

Community Bank of Tri-County

Salary Continuation Agreement 

FIRST AMENDMENT

TO THE

COMMUNITY BANK OF TRI-COUNTY

SALARY CONTINUATION AGREEMENT

DATED AUGUST 21, 2006

FOR

GREGORY C. COCKERHAM

     THIS
FIRST AMENDMENT is adopted this 16 day of April, 2007, by and between Community
Bank of Tri-County, a state-chartered commercial bank located in Waldorf, Maryland (the “Company”)
and Gregory C. Cockerham (the “Executive”).

     The Company and the Executive executed the Salary Continuation Agreement on August 21, 2006
effective January 1, 2006 (the “Agreement”).

     The undersigned hereby amend the Agreement for the purpose of changing the Disability and
Change in Control benefit amounts. Therefore, the following changes shall be made:

     Section 2.3.1 of the Agreement shall be deleted in its entirety and replaced with the
following:

	2.3.1	 	Amount of Benefit. The benefit under this Section 2.3 is the Disability Benefit set
forth on Schedule A for the Plan Year ending prior to Separation from Service.

     Section 2.4.1 of the Agreement shall be deleted in its entirety and replaced with the
following:

	2.4.1	 	Amount of Benefit. The benefit under this Section 2.4 is the Change in Control
Benefit set forth on Schedule A for the Plan Year ending prior to Separation from Service.

     Section 2.4.2 of the Agreement shall be deleted in its entirety and replaced with the
following:

	2.4.2	 	Distribution of Benefit. The Company shall distribute the benefit to the Executive
in one hundred eighty (180) consecutive monthly installments commencing the first day of the
month following Separation from Service.

     Section 2.7 of the Agreement shall be deleted in its entirety and replaced with the following:

	2.7	 	Change in Form or Timing of Distributions. For distribution of benefits under this
Article 2, the Executive and the Company may, subject to the terms of Section 8.1,
amend the Agreement to delay the timing or change the form of distributions. Any such
amendment:

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Community Bank of Tri-County

Salary Continuation Agreement 

	 	(a)	 	may not accelerate the time or schedule of any distribution,
except as provided in Section 409A of the Code and the regulations thereunder;
	 
	 	(b)	 	must, for benefits distributable under Sections 2.2 and 2.3, be
made at least twelve (12) months prior to the first scheduled distribution;
	 
	 	(c)	 	must, for benefits distributable under Sections 2.1, 2.2, 2.3
and 2.4, delay the commencement of distributions for a minimum of five (5)
years from the date the first distribution was originally scheduled to be made;
and
	 
	 	(d)	 	must take effect not less than twelve (12) months after the
amendment is made.

     IN WITNESS OF THE ABOVE, the Company and the Executive hereby consent to this First Amendment.

	 	 	 	 	 	 	 
	Executive:	 	Community Bank of Tri-County
	 
	 	 	 	 	 	 
	/s/ Gregory C. Cockerman

	 	By	 	/s/ William J. Pasenelli
	 	 	 	 	 
	Gregory C. Cockerman

	 	 	 	Title	 	CFO
	 

	 	 	 	 	 	 

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