THE
CANANDAIGUA NATIONAL BANK AND TRUST COMPANY
SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN #1
(as
amended and restated effective January 1, 2009)
1.
Purpose, Amendment
and Restatement of Plan . The
Canandaigua National Bank and Trust Company (the
“Bank”) established The Canandaigua National Bank and
Trust Company Supplemental Executive Retirement Plan #1 (the
“Plan”) effective January 1, 1994. The primary
purpose of the Plan is to attract and retain qualified personnel by
permitting them to defer compensation until retirement.
Effective, January 1, 2009, the Plan is amended and restated
to comply with Section 409A of the Internal Revenue Code of 1986
(the “Code”).
2.
Administration
.
The Plan shall be administered by the Compensation Committee
of the Bank’s Board of Directors (the
“Committee”). The Committee shall have no
authority to amend or modify the terms of the Plan, but shall have
authority and discretion to interpret the Plan, adopt and revise
rules relating to the Plan, and make any other determinations which
it believes are necessary or advisable for the proper
administration of the Plan; provided, however, such authority and
discretion shall be exercised in a manner consistent with the
requirements of Section 409A of the Code and Treasury Regulations
issued thereunder. Any interpretation or determination by the
Committee shall, unless overruled or modified by the Board, be
final, conclusive and binding upon all Plan participants and any
person claiming benefits or rights under the Plan by or through a
Plan participant. The Committee may, in its discretion,
designate a person or persons to carry out such duties or functions
as the Committee so determines.
Notwithstanding the
above or any other provision of the Plan: (i) no member of the
Committee shall interpret the Plan with respect to, or exercise any
discretion, act on, or decide, any matter relating to himself or
any of his rights or benefits under the Plan; and (ii) any duty or
function which may be performed by the Committee or its delegates
under the Plan may instead be performed by the Board if the Board
so determines in its sole discretion.
3.
Eligibility
.
a)
An
Employee shall become a participant in this Plan on the first day
of the year on which The Canandaigua National Bank and Trust
Company Profit Sharing and 401(k) Plan operates (the “Profit
Sharing Plan Year”) immediately following the first Profit
Sharing Plan Year in which he:
(i)
is a
participant in The Canandaigua National Bank and Trust Company
Profit Sharing and 401(k) Plan (the “Profit Sharing
Plan”); and
(ii)
accrues
a benefit under the Profit Sharing Plan which is less than the
benefit he would have accrued under the Profit Sharing Plan
if
1
that
benefit were determined without regard to the annual compensation
limitation imposed under Code Section 401(a)(17).
For
purposes of this Plan, “Employee” means any person who
is employed by the Bank. Persons not employed by the Bank,
but employed by any entity related to or affiliated with the Bank,
are not eligible to participate in this Plan even if they are
eligible to participate in the Profit Sharing Plan.
Furthermore, persons providing services to the Bank through
temporary agencies, leasing organizations, or independent
contractor arrangements, and any other person who is not treated by
the Bank as a common law employee of the Bank, are not eligible to
participate in the Plan, even though they subsequently may be
classified as employees of the Bank for employment tax,
unemployment insurance, or other purposes by a government agency or
a court.
b)
A
person who becomes a participant in this Plan shall be eligible to
continue to participate in the Plan until the earlier of the date:
(i) he is no longer an Employee and all amounts credited to his
Account (as defined in Section 5) are paid to him; or (ii) he
dies.
4.
Amount of Deferred
Compensation . A
participant shall accrue deferred compensation under this Plan of
an amount equal to the excess of: (i) the benefit he would have
accrued under, and attributable to Bank contributions made to, the
Profit Sharing Plan without regard to the annual compensation
limitation imposed under Code Section 401(a)(17), over (ii) the
benefit he actually accrues under, and attributable to Bank
contributions made to, the Profit Sharing Plan, determined with
regard to the annual compensation limitation imposed under Code
Section 401(a)(17). Notwithstanding the above or any other
provision of this Plan, a person shall not accrue deferred
compensation under this Plan with respect to any such excess
occurring in a Profit Sharing Plan Year in which he is not an
Employee. All deferred compensation shall be adjusted for
interest, earnings, appreciation, depreciation, losses, and
expenses, as provided in Section 6 below. A
participant’s deferred compensation shall become vested and
non-forfeitable as provided in Section 7 below.
5.
Plan
Accounts . Each
participant’s deferred compensation under this Plan shall be
credited to a bookkeeping entry maintained in the records of the
Bank for purposes of recording the benefit payable to the
participant under the Plan (an “Account”). At
least annually, each participant shall receive an annual statement
showing the amount credited to his Account.
6.
Deemed Investments
and Earnings .
a)
Each
participant’s Account shall be deemed invested in the portion
of the Profit Sharing Plan Trust which is not subject to investment
direction of individual Profit Sharing Plan participants (such
portion of the Profit Sharing Plan Trust is referred to herein as
the “Predetermined
2
Investment”).
As of the end of each annual period, and as of such other
dates as may be determined by the Committee in its discretion, each
Account shall be adjusted to reflect all interest, earnings,
appreciation, depreciation, losses, and expenses that the Account
would have experienced had the Account actually been invested in
such Predetermined Investment during that period. The
Committee may change the Predetermined Investment at any time, but
only prospectively. Unless the context indicates otherwise,
all references in this Plan to deferred compensation include any
deemed earnings on that deferred compensation.
b)
Notwithstanding
Subsection (a) above, the Bank is obligated only to pay an amount
which reflects the investment returns of the Predetermined
Investment, and has no obligation to actually invest any portion of
any participant’s Account, to invest or continue to invest in
any specific investment asset, to liquidate any particular
investment, or to apply the proceeds from the sale, liquidation, or
maturity of any particular investment in any specific manner.
Any investment that the Bank actually does make in connection
with this Plan will be deemed made solely for the purpose of aiding
the Bank in measuring and meeting its obligations under the Plan.
The Bank will be the sole owner of all such investments and
of all rights and privileges conferred by the terms of the
instruments evidencing such investments. Nothing stated
herein shall cause such investments to be treated as anything but
the general assets of the Bank, or cause such investments to
represent the vested, secured or preferred interest of the
participant or his beneficiaries designated under this Plan.
7.
Vesting
.
Each participant shall be fully vested in a percentage of his
Account equal to his vested percentage in that portion of his
account under the Profit Sharing Plan attributable to Bank
contributions. Any portion of a participant’s Account
which is not vested as of his separation from service (as described
in Section 8 below) shall be forfeited on that date.
8.
Payment of
Accounts . A
participant’s vested deferred compensation shall be paid to
him in accordance with this Section 8.
a)
Subject
to Subsections (b) through (f) below, a participant’s vested
deferred compensation will be paid to him on the first day of the
third calendar quarter following the date of his “separation
from service” (within the meaning of Code Section 409A).
A participant shall be considered separated from service when
he dies, retires, or otherwise has a termination of employment with
the Bank and all related entities. For purposes of this Plan,
his employment relationship will be treated as continuing intact
while he is on military leave, sick leave, or other bona fide leave
of absence if the period of such leave does not exceed six months
or, if longer, so long as the individual retains a right to
reemployment under an applicable statute or contract. A leave
of absence
3
constitutes a bona
fide leave of absence only if there is a reasonable expectation
that the participant will return to perform services. If the
period of leave exceeds six months and the participant does not
retain a right to reemployment under an applicable statute or by
contract, the employment relationship is deemed to terminate on the
first date immediately following such six-month period; provided,
however, that where a leave of absence is due to any medically
determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period
of not less than six months, where such impairment causes the
participant to be unable to perform the duties of his or her
position of employment or any substantially similar position of
employment, a 29-month period of absence shall be substituted for
such six-month period. For this purpose, “related
entity” means any entity that, with the Bank, is part of a
controlled group within the meaning of Code Section 414(b) or Code
Section 414(c), and the accompanying regulations, but substituting
a 50 percent ownership level for the 80 percent ownership level in
Code Section 414(b) and (c) and the accompanying
regulations.
b)
A
participant may elect to receive, or commence to receive, his
vested deferred compensation any time after the time specified in
Subsection (a) or to change the form of payment to another form of
payment permitted under the Plan during the thirty (30) day period
following the date he is initially eligible to participate in this
Plan. Thereafter, a participant may elect to receive, or
commence to receive, his vested deferred compensation any time
after the time specified in Subsection (a) or to change the form of
payment to another form of payment permitted under the Plan,
provided such new election: (i) shall not take effect for at least
12 months after it is made; (ii) must defer payment for a period of
at least five years from the date the payment would otherwise have
been paid (or, in the case of installment payments, for a period of
at least five years from the date the first amount was scheduled to
be paid); and (iii) must be made at least 12 months before the
payment would otherwise be paid (or, in the case of installment
payments, at least 12 months before the first amount was scheduled
to be paid).
The
forms of payment permitted under the Plan are limited to: (i) a
single sum; or (ii) a series of substantially equal monthly,
quarterly or annual installments paid over a predetermined period
not longer than ten (10 years), except to the extent any increase
(or decrease) in the amount reflects reasonable earnings (or
losses) through the date the amount is paid. All installment
payments shall be treated as a single payment for purposes of the
Plan and Section 409A of the Code. Each installment payment
shall equal the participant’s vested Account balance prior to
the distribution divided by the number of installment payments
remaining prior to the distribution.
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c)
A
participant’s election to change the time or form of payment
of his vested deferred compensation must be in writing, on a form
provided by the Committee, and shall be deemed made when filed with
the Committee. The Committee shall establish uniform
procedures for participants to elect to change the time or form of
payment of their vested deferred compensation, and shall make its
best effort to ensure that such procedures minimize any unintended
taxation under the constructive receipt rule or Section 409A of the
Code. Notwithstanding any provisions in the Plan to the
contrary, the Committee shall not honor any election, to the extent
it would violate any provision of the Plan or Section 409A of the
Code and, if any such potential violation would occur by honoring
such election, the deferred compensation shall be paid as if no
election had been made. In applying this Subsection, the
Committee and Bank shall treat all payments to similarly situated
participants on a reasonably consistent basis.
d)
Notwithstanding the
above:
(i)
A
participant is permitted to change the time or form of payment of
deferred compensation at any time such election is required to
satisfy the requirements of the Uniformed Services Employment and
Reemployment Rights Act of 1994, as amended.
(ii)
Payment
of a participant’s deferred compensation may be delayed where
the Committee reasonably anticipates that making the payment will
violate Federal securities laws or other applicable law (provided
that the payment is made at the earliest date at which the
Committee reasonably anticipates that making the payment will not
cause such violation, and provided further that the making of a
payment that would cause inclusion in gross income or the
application of any penalty provision or other provision of the Code
shall not be treated as a violation of applicable law).
(iii)
Payment
of a participant’s deferred compensation may be delayed to
the extent that the Committee reasonably anticipates that if the
payment were made
