CERBCO, Inc. Supplemental Executive Retirement Income Agreement with Robert F. Hartman

Summary

This agreement between CERBCO, Inc. and executive Robert F. Hartman provides supplemental retirement and death benefits in recognition of his service. Upon retirement or termination after age 62, Hartman will receive a monthly benefit based on his final salary and years of service. If he dies before or after retirement, his beneficiary will receive monthly payments for up to 180 months. The agreement is unfunded and unsecured, and benefits are forfeited if Hartman is terminated for cause. Amendments require both parties' consent, except in certain board-approved situations.

EX-10.9 12 0012.txt CERBCO SERP AGREMENT Exhibit 10.9 CERBCO, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT INCOME AGREEMENT THIS AGREEMENT is made by and between CERBCO, Inc., a Delaware corporation ("CERBCO") and Robert F. Hartman ("Executive"). RECITALS A. This Agreement's purpose is to provide certain supplemental retirement and death benefits to the Executive and his Beneficiary in consideration of his services to CERBCO and its subsidiaries. B. This Agreement has been approved on CERBCO's behalf by resolution of CERBCO's Board of Directors. C. The benefits provided under this Agreement are to be determined by aggregating the Executive's employment by CERBCO and any one or more of its subsidiaries as though the employment by these companies were employment by CERBCO, and by aggregating the Executive's salaries paid by CERBCO and any one or more of its subsidiaries as though those salaries were all paid by CERBCO. NOW, THEREFORE, CERBCO and the Executive agree as follows: 1. Retirement Income: Beginning on the first day of the month next following the month in which occurs the Executive's Normal Retirement Date or, if later, his Termination Date, CERBCO shall pay to the Executive a monthly benefit (the "Supplemental Benefit") for the Executive's life equal to 25% of the Executive's Final Monthly Salary, multiplied by the ratio (not to exceed 1) of (i) his completed years (and any fractional year) of employment by CERBCO after 1992; (ii) the total number of years (and any fractional year) of employment by CERBCO after 1992 that he would have completed if he had continued in employment to his Normal Retirement Date. If the Executive's Termination Date occurs prior to his Normal Retirement Date, the Executive shall begin receiving his Supplemental Benefit payments as of the first day of the month next following the month in which occurs his 62nd birthday or, if later, his Termination Date, without actuarial reduction for early payment. In no event shall the Supplemental Benefit payments begin prior to the later of the Executive's 62nd birthday or his Termination Date. 2. Death Benefit: A. After Retirement. If the Executive dies after the commencement of his Supplemental Benefit payments but before he has received 180 monthly Supplemental Benefit payments, CERBCO shall pay to his Beneficiary a monthly Death Benefit beginning on the first day of the month next following the Executive's death and continuing until the combined number of monthly payments under this Agreement received by the Executive and his Beneficiary equals 180. Each monthly Death Benefit payment under this paragraph 2A is to be equal to the monthly Supplemental Benefit payment that the Executive was receiving at his death. B. Before Retirement. If the Executive dies before commencement of his Supplemental Benefit payments, CERBCO shall pay to his Beneficiary a monthly Death Benefit beginning on the first day of the month next following the Executive's death and continuing for 180 consecutive monthly payments. Each monthly Death Benefit payment under this paragraph 2B is to be equal to 25% of the Executive's Final Monthly Salary. 3. Funding: CERBCO's obligations under this Agreement are intended to be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended, and shall not be secured in any manner. No asset of CERBCO shall be placed in trust or in escrow or otherwise physically or legally segregated for the benefit of the Executive or his Beneficiary, other than under a funding vehicle intended not to cause the plan to be funded for such purposes. The eventual payment of the payments described in this Agreement to the Executive, his Beneficiary or any other person shall not be secured to him or them by the issuance of any negotiable instrument or other evidence of indebtedness of CERBCO or its subsidiaries. Neither the Executive, his Beneficiary, nor any other person shall be deemed to have any property interest, legal or equitable, in any specific asset of CERBCO or its subsidiaries, and, to the extent that any person acquires any right to receive payments under this Agreement, that right shall be no greater than, nor shall it have any preference or priority over, the rights of any unsecured general creditor. 4. Assignment: No payments, benefits or rights under this Agreement shall be subject in any manner to anticipation, sale, transfer, assignment, mortgage, pledge, encumbrance, charge or alienation by the Executive, his Beneficiary or any other person who could or might possibly receive payments under this Agreement. In the event of any attempted assignment, alienation, encumbrance or transfer, CERBCO shall have no further liability under this Agreement. 5. Amendment and Termination: This Agreement may be amended or terminated at any time and in any respect by the written agreement of CERBCO and the Executive. Notwithstanding the foregoing CERBCO's Board of Directors may amend or terminate this Agreement at any time without the Executive's consent by advance written notice delivered to the Executive, provided that the Board may not unilaterally: (i) reduce or modify the Executive's accrued benefit determined as of the date written notice of the amendment or termination is received by the Executive or (ii) amend or terminate this Agreement in any respect after a Change in Control has occurred. The Executive's accrued benefit as of any date is the Supplemental Benefit (and Death Benefit) that he and his Beneficiary would receive, under this Agreement, if that date were his Termination Date (but the Supplemental Benefit or Death Benefits payments are to be deferred until the earlier of the first day of the month next following the Executive's death, or the first day of the month next following the month in which occurs his 62nd birthday or, if later, his actual Termination Date, without actuarial increase). 6. Vesting and Forfeiture for Cause: The Executive's benefits under this Agreement (including any benefits payable to his Beneficiary) shall be fully vested unless his employment by CERBCO is terminated by CERBCO for Cause. If the Executive is terminated for Cause, all benefits under this Agreement shall be forfeited. Termination of the Executive's employment by CERBCO for "Cause" means termination upon: (i) the willful and continued failure by Executive to substantially perform his duties with CERBCO (other than any such failure resulting from his incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to Executive by CERBCO's Board of Directors, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed his duties, (ii) the willful engaging by the Executive in conduct that is demonstrably and materially injurious to CERBCO or its subsidiaries, monetarily or otherwise, or (iii) the Executive's conviction of, or plead of guilty or nolo contendere to, a felony in a court of competent jurisdiction in the U.S. No act or failure to act on the Executive's part shall be deemed "willful" unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that his action or omission was in CERBCO's and/or its subsidiaries' best interest. The Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of CERBCO's Board at a meeting called and held for that purpose (after reasonable notice to the Executive and an opportunity for the Executive and his counsel to be heard before the Board), finding that in the good faith opinion of the Board the Executive engaged in conduct described under clauses (i), (ii) or (iii) above and specifying the particulars thereof. 7. Other Retirement Benefits: This Agreement supersedes any other plan or agreement adopted prior to Agreement that provides retirement benefits to the Executive, except (i) any retirement or other deferred compensation plan intended to qualify under Section 401 or 403 of the Internal Revenue Code of 1986, (ii) any plan or agreement that expressly provides that its benefits are not to be superseded by this Agreement and (iii) any nonqualified plan or agreement to which the Executive has made contributions directly or by salary reduction. 8. Construction: This Agreement shall be construed according to the laws of Maryland, except where superseded by Federal law. Use of the masculine gender includes the feminine gender, use of the singular case includes the plural, and vice versa. The invalidity of any portion of this Agreement shall not invalidate the remainder of the Agreement, which shall continue in full force and effect. The Supplemental Benefits and the Death Benefits are to be payable in the same manner as salary payments are made by CERBCO to its executives. All payments are subject to applicable withholding and other taxes required by law. CERBCO's Board of Directors shall adopt procedures for consideration of, and action with respect to, any claims made hereunder. 9. Successors: This Agreement shall be binding upon the Executive and CERBCO and their successors, assigns, heirs, executors and beneficiaries. 10. Definitions: When used in this Agreement, the following terms have the meanings indicated below, unless a different meaning is clearly indicated by the context: "Beneficiary" means the person or persons (who may be named contingently or successively) designated by the Executive from time to time to receive the Death Benefits as may be payable under this Agreement upon or after the Executive's death. Any such beneficiary designation may be changed from time to time by the Executive by filing a new designation. Each designation by the Executive will revoke all prior designations by the Executive, shall be in the form prescribed by CERBCO and will be effective only when filed in writing with CERBCO during the Executive's lifetime. In the absence of a valid Beneficiary designation or, if at the time any Death Benefit payment is due to a Beneficiary, there is no living Beneficiary validly named by the Participant, CERBCO shall pay any such benefit to the Executive's spouse, if his spouse is then surviving or, if the spouse is not surviving, or the Executive has no spouse, to the Executive's estate. "Change in Control" means the occurrence of either of the following events: (1) a change of a nature that would be required to be reported, by persons or entities subject to the reporting requirements of Section 13(d) of the Securities and Exchange Act of 1934 (hereinafter called the "Exchange Act"), in Schedule 13D of Regulation 13D-G, or any successor provisions thereto, promulgated under the Exchange Act; provided that a Change in Control shall be deemed to have occurred only if (a) any "person" (as that term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 issued under the Exchange Act), directly or indirectly, of securities of CERBCO representing ten percent (10%) or more of the combined voting power of CERBCO's then outstanding securities; and (b) at any time during the period of thirty-six (36) months subsequent to the ownership change described above, individuals who at the beginning of such period constitute CERBCO's Board cease for any reason to constitute at least a majority thereof unless the election, or the nomination for election by CERBCO's shareholders, of each new Director was approved by a vote of at least two-thirds of the Directors still in office who were Directors at the beginning of such thirty-six (36) month period; or (2) any "person", as described above, is or becomes the "beneficial owner," directly or indirectly, of securities of CERBCO representing forty percent (40%) or more of the combined voting power of CERBCO's then outstanding securities. "Final Monthly Salary" means the monthly equivalent of the Executive's highest combined rate of base annual salary earned by him from CERBCO and all of its subsidiaries, before any salary reductions elected by the Executive; provided, however, that the Executive's "Final Monthly Salary" shall not exceed the amount of $7,500, increased by 2% (compounded annually) for each full calendar year that elapses between December 31, 1992 and the Executive's Termination Date. "Normal Retirement Date" means the Executive's 65th birthday. "Termination Date" means the date that the Executive's employment by the CERBCO group terminates for any reason, voluntarily or involuntarily. IN WITNESS WHEREOF, the Executive and CERBCO have entered into this Agreement, effective as of January 1, 1994. ATTEST: CERBCO, INC. Robert W. Erikson By: George Wm. Erikson Assistant Secretary Its Chairman [Corporate Seal] WITNESS: EXECUTIVE Robert W. Erikson Robert F. Hartman FIRST AMENDMENT TO THE CERBCO, INC. SUPPLEMENTAL EXECUTIVE RETIREMENT INCOME AGREEMENT WITH ROBERT F. HARTMAN THIS AGREEMENT is made by and between CERBCO, Inc., a Delaware corporation ("CERBCO") and Robert F. Hartman ("Executive"). A. WHEREAS, CERBCO and Executive entered into a Supplemental Executive Retirement Income Agreement, effective as of January 1, 1994 (the "Agreement") to provide certain supplemental retirement and death benefits to the Executive and his beneficiary in consideration of his services to CERBCO and its subsidiaries. B. CERBCO and the Executive now desire to amend the Agreement to substitute split-dollar death benefit arrangement for the death benefits provided under the Agreement. NOW, THEREFORE, CERBCO and the Executive agree as follows: Subsection B. (titled "Before Retirement") of Section 2 (titled "Death Benefit") of the Agreement shall be deleted in its entirety, effective as of July 1, 1997, and the following new Subsection 2.B is substituted therefor: B. Before Retirement. If the Executive dies before the commencement of his Supplemental Benefit payments hereunder, CERBCO shall pay to his Beneficiary a one-time, lump sum Death Benefit in the amount of Seven Hundred Thousand Dollars ($700,000.00) in lieu of all other benefits provided under this Agreement. The lump sum death benefit shall be paid to the Executive's beneficiary within 90 days after the date of the Executive's death. The Agreement, as amended by the foregoing change, is hereby ratified and confirmed in all respects. IN WITNESS WHEREOF, the Executive and CERBCO have entered into this Agreement effective as of July 1, 1997. ATTEST CERBCO, INC. Robert F. Hartman By: George Wm. Erikson Secretary Its: Chairman [Corporate Seal] WITNESS EXECUTIVE Sharon E. Lavelle Robert F. Hartman