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EXHIBIT 10.1
EMPLOYMENT TERMINATION
AGREEMENT
THIS EMPLOYMENT TERMINATION AGREEMENT
, is entered into this 7 th day of
December, 2006, (this " Termination Agreement
") by and between The Centreville
National Bank of Maryland (the "
Bank ") and Shore
Bancshares, Inc. (" SHBI
", and with the Bank, collectively, the "
Companies ") and Daniel T.
Cannon (the " Employee
").
WHEREAS , the Companies and
Employee entered into a "Form of Employment Agreement", dated
November 30, 2000 (the " Employment Agreement
"); and
WHEREAS , Employee has announced
his intention to retire on or before the expiration of the current
term of the Employment Agreement, i.e. November 30, 2010;
and
WHEREAS , the Companies and
Employee agree that it would be in their mutual best interests to
terminate the employment relationship in a manner which provides
for an orderly transition period recognizing that Employee, with
more than 37 years of service, has been an integral part of the
Bank; and
WHEREAS , the parties hereto
desire by writing to set forth their agreement to terminate the
employment relationship upon the terms and conditions hereinafter
provided.
NOW, THEREFORE , in
consideration of the mutual promises and covenants set forth
herein, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1.
Resignation -
Employee hereby resigns/retires
effective January 1, 2007, as the Executive Vice President of SHBI,
as a Director of SHBI, and as the President and Chief Executive
Officer of the Bank. Employee will retain his position as a
Director of the Bank and assist in the transition, as hereinafter
provided, to ensure that his successor(s) are positioned to best
serve the Companies. The parties acknowledge that such
resignation/retirement is intended to constitute a "separation from
service" within the meaning of Section 409A(a)(2)(A)(i) of the
Internal Revenue Code of 1986, as amended (the "Code"), and any
related regulations or other guidance promulgated with respect to
Section 409A of the Code (and any successor section or
regulations).
2.
Transition Services -
Commencing on the execution day of this Termination Agreement, the
parties will begin a transition period wherein a mutually agreed
upon public announcement will be made regarding Employee’s
resignation; provided, however, that the foregoing sentence shall
not restrict the content or timing of any disclosure required by
law. It is the intention of the parties to ensure that customer and
employee relationships are transitioned smoothly to
Employee’s successor(s).
Employee will provide up to a total of twenty
(20) hours per month of administrative and/or operational support,
for a period of five (5) months following the date of his
resignation, as and if requested by Companies. Thereafter, and
continuing until December
31, 2008, Employee will provide up to a total of
ten (10) hours per month of administrative and/or operational
support, as and if requested by Companies. Employee has purchased a
home in Delaware. Accordingly, unless impractical, Employees
support services may be provided via telephone, e-mail and/or in
person, as Employee may elect.
3.
Employee Severance Benefits -
Employee will receive severance benefits, as follows:
a. Employee will receive
his current salary and all employee benefits attributable to the
positions held by him through December 31, 2006.
b. Accounting from January
1, 2007 and ending on December 31, 2008, the Companies agree to pay
Employee his current annual salary of $205,000, payable not less
frequently than twice monthly, through the Bank’s normal
payroll processing procedures, with all appropriate statutory
withholding, including FICA (matched by Bank), to be reported as
wages.
c. Beginning January 1,
2007:
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i.
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Employee shall not be eligible to make additional
salary deferrals in the Companies’ 401(k) Plan. Any matching
funds due for the year ended December 31, 2006 will, however, be
paid.
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ii.
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Employee shall not be eligible to participate in
additional discretionary contributions made to the Companies’
Profit Sharing Plan. Any contributions made for the year ended
December 31, 2006 will be paid on behalf of Employee as if he were
still employed
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iii.
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Except for Cobra coverage available at
Employee’s expense, employer paid health insurance benefits
shall cease.
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d. Employee is 100% vested
in, and shall be entitled to receive, all current benefits and
balances in the Companies 401(k) Plan and Profit Sharing
Plan.
e. Notwithstanding any
provision of this Agreement to the contrary, if the Employee is
deemed to be a "key employee" (as defined in Section 416(i) of the
Code (applied in accordance with Section 416 regulations and
disregarding Section 416(i)(5) of the Code)) at any time during the
12-month period ending on December 31, 2006, no distribution of any
severance benefits under Section 3(c) or any other benefit
contemplated by this Agreement that constitutes
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