UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 4, 2016
THE COMMUNITY FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
| Maryland | 0-18279 | 52-1652138 |
|
(State or other Jurisdiction of incorporation or organization) |
(Commission File Number) |
(IRS Employer Identification No.) |
3035 Leonardtown Road, Waldorf, Maryland 20601
(Address of principal executive offices)
(301) 645-5601
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On February 4, 2016, the Board of Directors of The Community Financial Corporation (the “Company”) and its wholly-owned subsidiary, Community Bank of the Chesapeake (the “Bank”), approved an amendment and restatement of the Community Bank of the Chesapeake Executive Incentive Compensation Plan (the “Plan”).
The amended and restated Plan is designed to better align the interests of Plan 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 certain Company, Bank and/or individual performance goals. In addition to certain administrative revisions, the Plan was amended to permit incentive compensation to be paid in the form of Company stock authorized under The Community Financial Corporation 2015 Equity Compensation Plan or successor plan.
The foregoing summary of the Plan is not complete and is qualified in its entirety by reference to the complete text of the Plan, which is filed as Exhibit 10.1 to this Form 8-K and which is incorporated herein by reference.
| Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
Effective February 4, 2016, the Board of Directors of the Company amended the Company’s Bylaws to remove Section 15 of Article III related to the age limitation for directors and amended Section 16 of Article III to eliminate the residency requirements for members of the Board of Directors. A copy of the Company’s Amended and Restated Bylaws is attached to this Report as Exhibit 3.2 and is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
| Number | Description |
| 3.2 | Amended and Restated Bylaws of The Community Financial Corporation |
| 10.1 | Community Bank of the Chesapeake Executive Incentive Compensation Plan, as amended and restated |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: February 10, 2016 | By: | /s/ William J. Pasenelli | |
| William J. Pasenelli | |||
| President and Chief Executive Officer |
Exhibit 3.2
AMENDED AND RESTATED BYLAWS
OF
THE COMMUNITY FINANCIAL CORPORATION
ARTICLE I
Home Office
The home office of The Community Financial Corporation (herein the “Corporation”) shall be at Route 5 in Waldorf.
ARTICLE II
Stockholders
SECTION 1. Place of Meetings. All annual and special meetings of stockholders shall be held at the home office of the Corporation or at such other place within or without the State in which the home office of the Corporation is located as the board of directors may determine and as designated in the notice of such meeting.
SECTION 2. Annual Meeting. A meeting of the stockholders of the Corporation for the election of directors and for the transaction of any other business of the Corporation shall be held annually at such date and time as the board of directors may determine.
SECTION 3. Special Meetings. Special meetings of the stockholders for any purpose or purposes may be called at any time by the majority of the board of directors or by a committee of the board of directors in accordance with the provisions of the Corporation’s Articles of Incorporation or a special meeting may be called by the Secretary of the Corporation upon the written request of the holders of not less than 25% of all votes entitled to be cast at the meeting. Such written request shall state the purpose or purposes of the meeting and the matters proposed to be acted on at the meeting and shall be delivered at the home office of the Corporation addressed to the chairman of the board, the president or the secretary. The secretary shall inform the stockholders who make the request of the reasonably estimated cost of preparing and mailing a notice of the meeting and upon payment of these costs to the Corporation, the secretary shall then notify each stockholder entitled to notice of the meeting.
SECTION 4. Conduct of Meetings. Annual and special meetings shall be conducted in accordance with the rules and procedures established by the board of directors. The board of directors shall designate, when present, either the chairman of the board or president to preside at such meetings.
SECTION 5. Notice of Meeting. Written notice stating the place, day and hour of the meeting and the purpose or purposes for which the meeting is called shall be mailed by the secretary or the officer performing his duties, not less than ten days nor more than ninety days before the meeting to each stockholder of record entitled to vote at such meeting and to each other stockholder entitled to notice of the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the stockholder at his address as it appears on the stock transfer books or records of the Corporation as of the record date prescribed in Section 6 of this Article II, with postage thereon prepaid. If a stockholder be present at a meeting, or in writing waives notice thereof before or after the meeting and such waiver is filed with the records of the stockholders meeting, notice of the meeting to such stockholder shall be unnecessary. When any stockholders’ meeting, either annual or special, is adjourned for thirty days, notice of the adjourned meeting shall be given as in the case of an original meeting. It shall not be necessary to give any notice of the time and place of any meeting adjourned for less than thirty days or of the business to be transacted at such adjourned meeting, other than an announcement at the meeting at which such adjournment is taken.
SECTION 6. Fixing of Record Date. For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders, or any adjournment thereof, or stockholders entitled to receive payment of any dividend, or in order to make a determination of stockholders for any other proper purpose, the board of directors shall fix in advance a date as the record date for any such determination of stockholders. Such date in any case shall be not more than ninety days, and in case of a meeting of stockholders, not less than ten days prior to the date on which the particular action, requiring such determination of stockholders is to be taken. When a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this section, such determination shall apply to any adjournment thereof.
SECTION 7. Voting Lists. The officer or agent having charge of the stock transfer books for shares of the Corporation shall make, at least ten days before each meeting of stockholders, a complete record of the stockholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each. The record, for a period of ten days before such meeting, shall be kept on file at the principal office of the Corporation.
SECTION 8. Quorum. A majority of the outstanding shares of the Corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders. If less than a majority of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The stockholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.
SECTION 9. Proxies. At all meetings of stockholders, a stockholder may vote by proxy executed in writing by the stockholder or by his duly authorized attorney in fact. Proxies solicited on behalf of the management shall be voted as directed by the stockholder or, in the absence of such direction, as determined by a majority of the board of directors. No proxy shall be valid after eleven months from the date of its execution unless otherwise provided in the proxy.
SECTION 10. Voting. At each election for directors every stockholder entitled to vote at such election shall be entitled to one vote for each share of stock held by him. Unless otherwise provided in the Articles of Incorporation, by statute, or by these Bylaws, a majority of those votes cast by stockholders at a lawful meeting shall be sufficient to pass on a transaction or matter.
SECTION 11. Voting of Shares in the Name of Two or More Persons. When ownership of stock stands in the name of two or more persons, in the absence of written directions to the Corporation to the contrary, at any meeting of the stockholders of the Corporation any one or more of such stockholders may cast, in person or by proxy, all votes to which such ownership is entitled. In the event an attempt is made to cast conflicting votes, in person or by proxy, by the several persons in whose name shares of stock stand, the vote or votes to which these persons are entitled shall be cast as directed by a majority of those holding such stock and present in person or by proxy at such meeting, but no votes shall be cast for such stock if a majority cannot agree.
SECTION 12. Voting of Shares by Certain Holders. Shares standing in the name of another corporation may be voted by any officer, agent or proxy as the bylaws of such corporation may provide, or, in the absence of such provision, as the board of directors of such corporation may determine. Shares held by an administrator, executor, guardian or conservator may be voted by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his name. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority to do so is contained in an appropriate order of the court or other public authority by which such receiver was appointed.
A stockholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee and thereafter the pledgee shall be entitled to vote the shares so transferred.
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Neither treasury shares of its own stock held by the Corporation, nor shares held by another corporation, if a majority of the shares entitled to vote for the election of directors of such other corporation are held by the Corporation, shall be voted at any meeting or counted in determining the total number of outstanding shares at any given time for purposes of any meeting.
SECTION 13. Inspectors of Election. In advance of any meeting of stockholders, the board of directors may appoint any persons, other than nominees for office, as inspectors of election to act at such meeting or any adjournment thereof. The number of inspectors shall be either one or three. If the board of directors so appoints either one or three inspectors, that appointment shall not be altered at the meeting. If inspectors of election are not so appointed, the chairman of the board or the president may make such appointment at the meeting. In case any person appointed as inspector fails to appear or fails or refuses to act, the vacancy may be filled by appointment by the board of directors in advance of the meeting or at the meeting by the chairman of the board or the president.
Unless otherwise prescribed by applicable law, the duties of such inspectors shall include: determining the number of shares of stock and the voting power of each share, the shares of stock represented at the meeting, the existence of a quorum, the authenticity, validity and effect of proxies; receiving votes, ballots or consents; hearing and determining all challenges and questions in any way arising in connection with the right to vote; counting and tabulating all votes or consents; determining the result; and such acts as may be proper to conduct the election or vote with fairness to all stockholders.
SECTION 14. Nominating Committee. The board of directors shall act as a nominating committee for selecting the management nominees for election as directors. Except in the case of a nominee substituted as a result of the death or other incapacity of a management nominee, the nominating committee shall deliver written nominations to the secretary at least twenty days prior to the date of the annual meeting. Provided such committee makes such nominations, no nominations for directors except those made by the nominating committee shall be voted upon at the annual meeting unless other nominations by stockholders are made in writing and delivered to the secretary of the Corporation in accordance with the provisions of the Corporation’s Articles of Incorporation.
SECTION 15. New Business. Any new business to be taken up at the annual meeting shall be stated in writing and filed with the secretary of the Corporation in accordance with the provisions of the Corporation’s Articles of Incorporation. This provision shall not prevent the consideration and approval or disapproval at the annual meeting of reports of officers, directors and committees, but in connection with such reports no new business shall be acted upon at such annual meeting unless stated and filed as provided in the Corporation’s Articles of Incorporation.
ARTICLE III
Board of Directors
SECTION 1. General Powers. The business and affairs of the Corporation shall be under the direction of its board of directors. The board of directors shall annually elect a chairman of the board and a president from among its members and shall designate, when present, either the chairman of the board or the president to preside at its meetings.
SECTION 2. Number, Term and Election. The board of directors shall consist of nine (9) members and shall be divided into three classes as nearly equal in number as possible. The members of each class shall be elected for a term of three years and until their successors are elected or qualified. The board of directors shall be classified in accordance with the provisions of the Corporation’s Articles of Incorporation.
SECTION 3. Regular Meetings. A regular meeting of the board of directors shall be held without other notice than this Bylaw within two weeks after the annual meeting of stockholders. The board of directors may provide, by resolution, the time and place for the holding of additional regular meetings without other notice than such resolution.
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SECTION 4. Special Meetings. Special meetings of the board of directors may be called by or at the request of the chairman of the board or the president, or a majority of the directors. The persons authorized to call special meetings of the board of directors may fix any place as the place for holding any special meeting of the board of directors called by such persons.
Members of the board of directors may participate in special meetings by means of conference telephone or similar communications equipment by which all persons participating in the meeting can hear each other. Such participation shall constitute presence in person.
SECTION 5. Notice. Written notice of any special meeting shall be given to each director at least two days previous thereto delivered personally or by telegram or at least seven days previous thereto delivered by mail at the address at which the director is most likely to be reached. Such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid if mailed or when delivered to the telegraph company if sent by telegram. Any director may waive notice of any meeting by a writing filed with the secretary. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting of the board of directors need be specified in the notice or waiver of notice of such meeting.
SECTION 6. Quorum. A majority of the number of directors fixed by Section 2 of this Article III shall constitute a quorum for the transaction of business at any meeting of the board of directors, but if less than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time. Notice of any adjourned meeting shall be given in the same manner as prescribed by Section 5 of this Article III.
SECTION 7. Manner of Acting. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors, unless a greater number is prescribed by these Bylaws, the Articles of Incorporation, or the General Laws of the State of Maryland.
SECTION 8. Action Without a Meeting. Any action required or permitted to be taken by the board of directors at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors and filed with the minutes of the proceedings of the board.
SECTION 9. Resignation. Any director may resign at any time by sending a written notice of such resignation to the home office of the Corporation addressed to the chairman of the board or the president. Unless otherwise specified herein such resignation shall take effect upon receipt thereof by the chairman of the board or the president.
SECTION 10. Vacancies. Any vacancy occurring in the board of directors shall be filled in accordance with the provisions of the Corporation’s Articles of Incorporation. Any directorship to be filled by reason of an increase in the number of directors may be filled by the affirmative vote of two-thirds of the directors then in office. The term of such director shall be in accordance with the provisions of the Corporation’s Articles of Incorporation.
SECTION 11. Removal of Directors. Any director or the entire board of directors may be removed only in accordance with the provisions of the Corporation’s Articles of Incorporation.
SECTION 12. Compensation. Directors, as such, may receive a stated salary for their services. By resolution of the board of directors, a reasonable fixed sum, and reasonable expenses of attendance, if any, may be allowed for actual attendance at each regular or special meeting of the board of directors. Members of either standing or special committees may be allowed such compensation for actual attendance at committee meetings as the board of directors may determine. Nothing herein shall be construed to preclude any director from serving the Corporation in any other capacity and receiving remuneration therefor.
SECTION 13. Presumption of Assent. A director of the Corporation who is present at a meeting of the board of directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent or abstention shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who votes in favor of such action.
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SECTION 14. Advisory Directors. The board of directors may by resolution appoint advisory directors to the board, who may also serve as directors emeriti, and shall have such authority and receive such compensation and reimbursement as the board of directors shall provide. Advisory directors or directors emeriti shall not have the authority to participate by vote in the transaction of business.
SECTION 15. Qualifications. A person is not qualified to serve as a director if he or she: (1) is under indictment for, or has ever been convicted of, a criminal offense involving dishonesty or breach of trust and the penalty for such offense could be imprisonment for more than one year, (2) is a person against who a banking agency has issued a cease and desist order for conduct involving dishonesty or breach of trust and that order is final and not subject to appeal, or (3) has been found either by a regulatory agency whose decision is final and not subject to appeal or by a court to have (i) breached a fiduciary duty involving personal profit or (ii) committed a willful violation of any law, rule or regulation governing banking, securities, commodities or insurance, or any final cease and desist order issued by a banking, securities, commodities or insurance regulatory agency.
ARTICLE IV
Committees of the Board of Directors
The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, as they may determine to be necessary or appropriate for the conduct of the business of the Corporation, and may prescribe the duties, constitution and procedures thereof. Each committee shall consist of one or more directors of the Corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee.
The board of directors shall have power, by the affirmative vote of a majority of the authorized number of directors, at any time to change the members of, to fill vacancies in, and to discharge any committee of the board. Any member of any such committee may resign at any time by giving notice to the Corporation; provided, however, that notice to the board, the chairman of the board, the chief executive officer, the chairman of such committee, or the secretary shall be deemed to constitute notice to the Corporation. Such resignation shall take effect upon receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, acceptance of such resignation shall not be necessary to make it effective. Any member of any such committee may be removed at any time, either with or without cause, by the affirmative vote of a majority of the authorized number of directors at any meeting of the board called for that purpose.
ARTICLE V
Officers
SECTION 1. Positions. The officers of the Corporation shall be a chairman, a president, one or more vice presidents, a secretary and a treasurer, each of whom shall be elected by the board of directors. The chairman shall be the chief executive officer, unless the board of directors designates another person as the chief executive officer. The offices of the secretary and treasurer may be held by the same person and a vice president may also be either the secretary or the treasurer. The board of directors may designate one or more vice presidents as executive vice president or senior vice president. The board of directors may also elect or authorize the appointment of such other officers as the business of the Corporation may require. The officers shall have such authority and perform such duties as the board of directors may from time to time authorize or determine. In the absence of action by the board of directors, the officers shall have such powers and duties as generally pertain to their respective offices.
SECTION 2. Election and Term of Office. The officers of the Corporation shall be elected annually by the board of directors at the first meeting of the board of directors held after each annual meeting of the shareholders. If the election of officers is not held at such meeting, such election shall be held as soon thereafter as possible. Each officer shall hold office until his successor shall have been duly elected and qualified or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. Election or appointment of an officer, employee or agent shall not of itself create contract rights. The board of directors may authorize the Corporation to enter into an employment contract with any officer in accordance with state law; but no such contract shall impair the right of the board of directors to remove any officer at any time in accordance with Section 3 of this Article V.
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SECTION 3. Removal. Any officer may be removed by vote of two-thirds of the board of directors whenever, in its judgment, the best interests of the Corporation will be served thereby, but such removal, other than for cause, shall be without prejudice to the contract rights, if any, of the person so removed.
SECTION 4. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the board of directors for the unexpired portion of the term.
SECTION 5. Remuneration. The remuneration of the officers shall be fixed from time to time by the board of directors and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation.
ARTICLE VI
Contracts, Loans, Checks and Deposits
SECTION 1. Contracts. To the extent permitted by applicable law, and except as otherwise prescribed by the Corporation’s Articles of Incorporation or these Bylaws with respect to certificates for shares, the board of directors may authorize any officer, employee, or agent of the Corporation to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation. Such authority may be general or confined to specific instances.
SECTION 2. Loans. No loans shall be contracted on behalf of the Corporation and no evidence of indebtedness shall be issued in its name unless authorized by the board of directors. Such authority may be general or confined to specific instances.
SECTION 3. Checks, Drafts, Etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by one or more officers, employees or agents of the Corporation in such manner as shall from time to time be determined by resolution of the board of directors.
SECTION 4. Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in any of its duly authorized depositories as the board of directors may select.
ARTICLE VII
Certificates for Shares and Their Transfer
SECTION 1. Certificates for Shares. The shares of the Corporation shall be represented by certificates signed by the chairman or vice chairman of the board of directors or by the president or a vice president and by the treasurer or an assistant treasurer or by the secretary or an assistant secretary of the Corporation, and may be sealed with the seal of the Corporation or a facsimile thereof. Any or all of the signatures upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the Corporation itself or an employee of the Corporation. If any officer who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer before the certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of its issue.
Notwithstanding anything to the contrary herein, the Board of Directors may provide by resolution that some or all of any or all classes or series of the Corporation’s capital stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation.
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SECTION 2. Form of Share Certificates. All certificates representing shares issued by the Corporation shall set forth upon the face or back that the Corporation will furnish to any stockholder upon request and without charge a full statement of the designations, preferences, limitations, and relative rights of the shares of each class authorized to be issued, the variations in the relative rights and preferences between the shares of each such series so far as the same have been fixed and determined, and the authority of the board of directors to fix and determine the relative rights and preferences of subsequent series.
Each certificate representing shares shall state upon the face thereof: that the Corporation is organized under the laws of the State of Maryland; the name of the person to whom issued; the number and class of shares; the date of issue; the designation of the series, if any, which such certificate represents; the par value of each share represented by such certificate, or a statement that the shares are without par value. Other matters in regard to the form of the certificates shall be determined by the board of directors.
SECTION 3. Payment for Shares. No shares, whether in certificated or uncertificated form, shall be issued until such sharesare fully paid.
SECTION 4. Form of Payment for Shares. The consideration for the issuance of shares shall be paid in accordance with the provisions of the Corporation’s Articles of Incorporation.
SECTION 5. Transfer of Shares. Transfer of shares of capital stock of the Corporation shall be made only on its stock transfer books. Authority for such transfer shall be given only by the holder of record thereof or by his legal representative, who shall furnish proper evidence of such authority, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Corporation. Such transfer shall be made only, in the case of certificated shares, on surrender for cancellation of the certificate for such shares or, in the vase of uncertificated shares, on delivery of proper transfer instructions for the number of shares involved. The person in whose name shares of capital stock stand on the books of the Corporation shall be deemed by the Corporation to be the owner thereof for all purposes.
SECTION 6. Stock Ledger. The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 7 of Article II or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders.
SECTION 7. Lost Certificates. The board of directors may direct a new certificate or uncertifacted shares to be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen, or destroyed. When authorizing such issue of a new certificate uncertifacted shares, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen, or destroyed certificate, or his legal representative, to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen, or destroyed.
SECTION 8. Beneficial Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not the Corporation shall have express or other notice thereof, except as otherwise provided by law.
ARTICLE VIII
Fiscal Year; Annual Audit
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The fiscal year of the Corporation shall end on the 31st day of December of each year. The Corporation shall be subject to an annual audit as of the end of its fiscal year by independent public accountants appointed by and responsible to the board of directors.
ARTICLE IX
Dividends
Subject to the provisions of the Articles of Incorporation and applicable law, the board of directors may, at any regular or special meeting, declare dividends on the Corporation’s outstanding capital stock. Dividends may be paid in cash, in property or in the Corporation’s own stock.
ARTICLE X
Corporate Seal
The corporate seal of the Corporation shall be in such form as the board of directors shall prescribe.
ARTICLE XI
Amendments
In accordance with the Corporation’s Articles of Incorporation, these Bylaws may be repealed, altered, amended or rescinded by the stockholders of the Corporation only by vote of not less than 80% of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) cast at a meeting of the stockholders called for that purpose (provided that notice of such proposed repeal, alteration, amendment or rescission is included in the notice of such meeting). In addition, the board of directors may repeal, alter, amend or rescind these Bylaws by vote of two-thirds of the board of directors at a legal meeting held in accordance with the provisions of these Bylaws.
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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.
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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.
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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.
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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.
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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]
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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 | ||||
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