LIFE INSURANCE
ENDORSEMENT METHOD SPLIT DOLLAR PLAN
AGREEMENT
Insurer: Jefferson Pilot Life Insurance Company
Massachusetts Mutual Life Insurance Company
Policy Number: JP5296192
▇▇▇▇▇▇▇
Bank: BUCS Federal
Insured: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Relationship of Insured to Bank: Executive
Trust: Rabbi Trust for the Executive Supplemental
Retirement Plan Agreement and the Life
Insurance Endorsement Method Split Dollar
Plan Agreement
The respective rights and duties of the Bank and the Insured in the
above-referenced policy shall be pursuant to the terms set forth below:
I. DEFINITIONS
Refer to the policy contract for the definition of any terms in this
Agreement that are not defined herein. If the definition of a term in
the policy is inconsistent with the definition of a term in this
Agreement, then the definition of the term as set forth in this
Agreement shall supersede and replace the definition of the terms as
set forth in the policy.
II. POLICY TITLE AND OWNERSHIP
Title and ownership shall reside in the Trustee for the Rabbi Trust for
the Executive Supplemental Retirement Plan Agreement and the Life
Insurance Endorsement Method Split Dollar Plan Agreement for its use
and for the use of the Insured all in accordance with this Agreement.
The Trustee at the direction of the Bank may, to the extent of its
interest, exercise the right to borrow or withdraw on the policy cash
values. Where the Trustee at the direction of the Bank and the Insured
(or assignee, with the consent of the Insured) mutually agree to
exercise the right to increase the coverage under the subject
Split Dollar policy, then, in such event, the rights, duties and
benefits of the parties to such increased coverage shall continue to
be subject to the terms of this Agreement.
III. BENEFICIARY DESIGNATION RIGHTS
The Insured (or assignee) shall have the right and power to designate a
beneficiary or beneficiaries to receive the Insured's share of the
proceeds payable upon the death of the Insured, and to elect and change
a payment option for such beneficiary, subject to any right or interest
the Trustee at the direction of the Bank or the Trust may have in such
proceeds, as provided in this Agreement.
IV. PREMIUM PAYMENT METHOD
Subject to the Bank's absolute right to surrender or terminate the
policy at any time and for any reason, the Bank or the Trustee at the
direction of the Bank shall pay an amount equal to the planned premiums
and any other premium payments that might become necessary to keep the
policy in force.
V. TAXABLE BENEFIT
Annually the Insured will receive a taxable benefit equal to the
assumed cost of insurance as required by the Internal Revenue Service.
The Bank (or its administrator) will report to the Insured the amount
of imputed income each year on Form W-2 or its equivalent.
VI. DIVISION OF DEATH PROCEEDS
Subject to Paragraphs VII and IX herein, the division of the death
proceeds of the policy is as follows:
A. Should the Insured be employed by the Bank at the time of
death, the Insured's beneficiary(ies), designated in
accordance with Paragraph III, shall be entitled to an amount
equal to eighty percent (80%) of the net-at-risk insurance
portion of the proceeds. The net-at-risk insurance portion is
the total proceeds less the cash value of the policy.
B. Should the Insured not be employed by the Bank at the time of
his or her death, the Insured's beneficiary(ies), designated
in accordance with Paragraph III, shall be entitled to the
percentage as set forth hereinbelow of the proceeds described
in Subparagraph VI (A) above that corresponds to the number of
full years the Insured has been employed by the Bank since the
date of first employment.
2
Total Years
of Employment
with the Bank Vested (to a maximum of 100%)
------------- -----------------------------
1 10%
2 20%
3 30%
4 40%
5 50%
6 60%
7 70%
8 80%
9 90%
10+ 100%
C. The Bank shall be entitled to the remainder of such proceeds.
D. The Bank and the Insured (or assignees) shall share in any
interest due on the death proceeds on a pro rata basis as the
proceeds due each respectively bears to the total proceeds,
excluding any such interest.
VII. DIVISION OF THE CASH SURRENDER VALUE OF THE POLICY
The Bank or the Trust shall at all times be entitled to an amount equal
to the policy's cash value, as that term is defined in the policy
contract, less any policy loans and unpaid interest or cash withdrawals
previously incurred by the Bank or the Trustee at the direction of the
Bank and any applicable surrender charges. Such cash value shall be
determined as of the date of surrender or death as the case may be.
VIII. RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY ELECTION EXISTS
In the event the policy involves an endowment or annuity element, the
Bank's or the Trust' right and interest in any endowment proceeds or
annuity benefits, on expiration of the deferment period, shall be
determined under the provisions of this Agreement by regarding such
endowment proceeds or the commuted value of such annuity benefits as
the policy's cash value. Such endowment proceeds or annuity benefits
shall be considered to be like death proceeds for the purposes of
division under this Agreement.
IX. TERMINATION OF AGREEMENT
This Agreement shall terminate upon the occurrence of any one of the
following:
A. The Insured shall leave the employment of the Bank
(voluntarily or involuntarily) prior to one year of employment
with the Bank from the date of first service;
3
B. Should the Executive be discharged for Just Cause at anytime,
all benefits under this Executive Plan Shall be forfeited.
Discharge for "Just Cause" shall include termination because
of the Executive's personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful
violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist
order, or material breach of any provision of this Agreement.
C. Surrender, lapse, or other termination of the Policy by the
Bank.
Upon such termination, the Insured (or assignee) shall have a fifteen
(15) day option to receive from the Bank or the Trustee at the
direction of the Bank an absolute assignment of the policy in
consideration of a cash payment to the Bank or the Trustee at the
direction of the Bank, whereupon this Agreement shall terminate. Such
cash payment referred to hereinabove shall be the greater of:
A. The Bank's or the Trust' share of the cash value of the policy
on the date of such assignment, as defined in this Agreement;
or
B. The amount of the premiums that have been paid by the Bank or
the Trustee at the direction of the Bank prior to the date of
such assignment.
If, within said fifteen (15) day period, the Insured fails to exercise
said option, fails to procure the entire aforestated cash payment, or
dies, then the option shall terminate and the Insured (or assignee)
agrees that all of the Insured's rights, interest and claims in the
policy shall terminate as of the date of the termination of this
Agreement.
The Insured expressly agrees that this Agreement shall constitute
sufficient written notice to the Insured of the Insured's option to
receive an absolute assignment of the policy as set forth herein.
Except as provided above, this Agreement shall terminate upon
distribution of the death benefit proceeds in accordance with Paragraph
VI above.
X. INSURED'S OR ASSIGNEE'S ASSIGNMENT RIGHTS
The Insured may not, without the written consent of the Bank, assign to
any individual, trust or other organization, any right, title or
interest in the subject policy nor any rights, options, privileges or
duties created under this Agreement.
XI. AGREEMENT BINDING UPON THE PARTIES
This Agreement shall bind the Insured and the Bank or the Trustee at
the direction of the Bank, their heirs, successors, personal
representatives and assigns.
4
XII. ERISA PROVISIONS
The following provisions are part of this Agreement and are intended to
meet the requirements of the Employee Retirement Income Security Act of
1974 ("ERISA"):
A. Named Fiduciary and Plan Administrator.
---------------------------------------
The "Named Fiduciary and Plan Administrator" of this
Endorsement Method Split Dollar Agreement shall be BUCS
Federal until its resignation or removal by the Board of
Directors. As Named Fiduciary and Plan Administrator, the Bank
or the Trustee at the direction of the Bank shall be
responsible for the management, control, and administration of
this Split Dollar Plan as established herein. The Named
Fiduciary may delegate to others certain aspects of the
management and operation responsibilities of the Plan,
including the employment of advisors and the delegation of any
ministerial duties to qualified individuals.
B. Funding Policy.
---------------
Subject to the Bank's absolute right to surrender or terminate
the policy at any time and for any reason, the funding policy
for this Split Dollar Plan shall be to maintain the subject
policy in force by paying, when due, all premiums required.
C. Basis of Payment of Benefits.
-----------------------------
Direct payment by the Insurer is the basis of payment of
benefits under this Agreement, with those benefits in turn
being based on the payment of premiums as provided in this
Agreement.
D. Claim Procedures.
-----------------
Claim forms or claim information as to the subject policy can
be obtained by contacting Benmark, Inc. (800-544-6079). When
the Named Fiduciary has a claim which may be covered under the
provisions described in the insurance policy, they should
contact the office named above, and they will either complete
a claim form and forward it to an authorized representative of
the Insurer or advise the named Fiduciary what further
requirements are necessary. The Insurer will evaluate and make
a decision as to payment. If the claim is payable, a benefit
check will be issued in accordance with the terms of this
Agreement.
In the event that a claim is not eligible under the policy,
the Insurer will notify the Named Fiduciary of the denial
pursuant to the requirements under the terms of the policy. If
the Named Fiduciary is dissatisfied with the denial of the
claim and wishes to contest such claim denial, they should
contact the office named above and they will assist in making
an inquiry to the Insurer. All objections to the
Insurer's actions should be in writing and submitted to the
office named above for transmittal to the Insurer.
5
XIII. GENDER
Whenever in this Agreement words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine, feminine
or neuter gender, whenever they should so apply.
XIV. INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT
The Insurer shall not be deemed a party to this Agreement, but will
respect the rights of the parties as herein developed upon receiving an
executed copy of this Agreement. Payment or other performance in
accordance with the policy provisions shall fully discharge the Insurer
from any and all liability.
XV. CHANGE OF CONTROL
"Change in Control" shall mean: (i) the sale of all, or a material
portion, of the assets of the BUCS Financial Corp. ("Company") or the
Bank; (ii) the merger or recapitalization of the Company or the Bank
whereby the Company or the Bank is not the surviving entity; (iii) a
change in control of the Company or the Bank, as otherwise defined or
determined by the Office of Thrift Supervision or regulations
promulgated by it; or (iv) the acquisition, directly or indirectly, of
the beneficial ownership (within the meaning of that term as it is used
in Section 13(d) of the Securities Exchange Act of 1934 and the rules
and regulations promulgated thereunder) of twenty-five percent (25%) or
more of the outstanding voting securities of the Company by any person,
trust, entity or group. This limitation shall not apply to the purchase
of shares by underwriters in connection with a public offering of
Company stock, or the purchase of shares of up to twenty-five percent
(25%) of any class of securities of the Company by a tax-qualified
employee stock benefit plan which is exempt from the approval
requirements, set forth under 12 C.F.R. '574.3(c)(1)(vi) as now in
effect or as may hereafter be amended. The term "person" refers to an
individual or a corporation, partnership, trust, association, joint
venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed
herein.
Upon a Change of Control, if the Insured's employment is subsequently
terminated, except for cause, then the Insured shall be one hundred
percent (100%) vested in the benefits promised in this Agreement and,
therefore, upon the death of the Insured, the Insured's
beneficiary(ies) (designated in accordance with Paragraph III) shall
receive the death benefit provided herein as if the Insured had died
while employed by the Bank (see Subparagraphs VI [A]).
6
XVI. AMENDMENT OR REVOCATION
Subject to the Bank's absolute right to surrender or terminate the
policy at any time and for any reason, it is agreed by and between the
parties hereto that, during the lifetime of the Insured, this Agreement
may be amended or revoked at any time or times, in whole or in part, by
the mutual written consent of the Insured and the Bank.
XVII. EFFECTIVE DATE
The Effective Date of this Agreement shall be July 21, 2003.
XVIII. SEVERABILITY AND INTERPRETATION
If a provision of this Agreement is held to be invalid or
unenforceable, the remaining provisions shall nonetheless be
enforceable according to their terms. Further, in the event that any
provision is held to be overbroad as written, such provision shall be
deemed amended to narrow its application to the extent necessary to
make the provision enforceable according to law and enforced as
amended.
XIX. APPLICABLE LAW
The validity and interpretation of this Agreement shall be governed by
the laws of the state of Maryland.
7
BENEFICIARY DESIGNATION FORM
FOR LIFE INSURANCE ENDORSEMENT METHOD
SPLIT DOLLAR PLAN AGREEMENT
I. PRIMARY DESIGNATION
-------------------
(You may refer to the beneficiary designation information prior to
completion of this form.)
A. Person(s) as a Primary Designation:
-----------------------------------
(Please indicate the percentage for each beneficiary.)
Name___________________________________ Relationship______________ / _______%
Address:________________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________ Relationship______________ / _______%
Address:________________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________ Relationship______________ / _______%
Address:________________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________ Relationship______________ / _______%
Address:________________________________________________________________________
(Street) (City) (State) (Zip)
B. Estate as a Primary Designation:
--------------------------------
My Primary Beneficiary is The Estate of _____________________________________ as
set forth in the last will and testament dated the _____ day of _______________,
_____ and any codicils thereto.
C. Trust as a Primary Designation:
-------------------------------
Name of the Trust: ____________________________________________________________
Execution Date of the Trust: _____ / _____ / _________
Name of the Trustee: __________________________________________________________
Beneficiary(ies) of the Trust (please indicate the percentage for each
beneficiary):
________________________________________________________________________________
________________________________________________________________________________
's this an Irrevocable Life Insurance Trust? ________ Yes ________ No
(If yes and this designation is for a Split Dollar agreement, an Assignment of
Rights form should be completed.)
8
II. SECONDARY (CONTINGENT) DESIGNATION
----------------------------------
A. Person(s) as a Secondary (Contingent) Designation: (Please indicate the
percentage for each beneficiary.)
Name___________________________________ Relationship______________ / _______%
Address:________________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________ Relationship______________ / _______%
Address:________________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________ Relationship______________ / _______%
Address:________________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________ Relationship______________ / _______%
Address:________________________________________________________________________
(Street) (City) (State) (Zip)
B. Estate as a Secondary (Contingent) Designation:
-----------------------------------------------
My Secondary Beneficiary is The Estate of ___________________________________ as
set forth in my last will and testament dated the ____ day of ___________, _____
and any codicils thereto.
C. Trust as a Secondary (Contingent) Designation:
----------------------------------------------
Name of the Trust: ____________________________________________________________
Execution Date of the Trust: _____ / _____ / _________
Name of the Trustee: __________________________________________________________
Beneficiary(ies) of the Trust (please indicate the percentage for each
beneficiary):
________________________________________________________________________________
________________________________________________________________________________
All sums payable under the Life Insurance Endorsement Method Split Dollar Plan
Agreement by reason of my death shall be paid to the Primary Beneficiary(ies),
if he or she survives me, and if no Primary Beneficiary(ies) shall survive me,
then to the Secondary (Contingent) Beneficiary(ies). This beneficiary
designation is valid until the participant notifies the bank in writing.
_____________________________________ _________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Date
9
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
AGREEMENT
THIS AGREEMENT is made and entered into this ____ day of
______________, 2003, by and between BUCS Federal, a bank organized and existing
under the laws of the United States of America (hereinafter referred to as the
"Bank"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an Executive of the Bank (hereinafter referred
to as the "Executive").
WHEREAS, the Executive is now in the employ of the Bank and has for
many years faithfully served the Bank. It is the consensus of the Board of
Directors (hereinafter referred to as the "Board") that the Executive's services
have been of exceptional merit, in excess of the compensation paid and an
invaluable contribution to the profits and position of the Bank in its field of
activity. The Board further believes that the Executive's experience, knowledge
of corporate affairs, reputation and industry contacts are of such value, and
the Executive's continued services so essential to the Bank's future growth and
profits, that it would suffer severe financial loss should the Executive
terminate their services;
ACCORDINGLY, the Board has adopted the BUCS Federal Executive
Supplemental Retirement Plan (hereinafter referred to as the "Executive Plan")
and it is the desire of the Bank and the Executive to enter into this Agreement
under which the Bank will agree to make certain payments to the Executive upon
the Executive's retirement or to the Executive's beneficiary(ies) in the event
of the Executive's death pursuant to the Executive Plan;
FURTHERMORE, it is the intent of the parties hereto that this Executive
Plan be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Executive, and be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Executive is fully advised of
the Bank's financial status and has had substantial input in the design and
operation of this benefit plan; and
NOW THEREFORE, in consideration of services the Executive has performed
in the past and those to be performed in the future, and based upon the mutual
promises and covenants herein contained, the Bank and the Executive agree as
follows:
I. DEFINITIONS
A. Effective Date:
---------------
The Effective Date of the Executive Plan shall be July 21, 2003.
B. Plan Year:
----------
Any reference to the "Plan Year" shall mean a calendar year from
January 1st to December 31st. In the year of implementation, the
term "Plan Year" shall mean the period from the Effective Date to
December 31st of the year of the Effective Date.
C. Retirement Date:
----------------
Retirement Date shall mean retirement from service with the Bank
that becomes effective on the first day of the calendar month
following the month in which the Executive reaches age sixty-five
(65) or such later date as the Executive may actually retire.
D. Termination of Service:
-----------------------
Termination of Service shall mean the Executive's voluntary
resignation of service by the Executive or the Bank's discharge
of the Executive without cause, prior to the Normal Retirement
Age (Subparagraph I [J]).
E. Pre-Retirement Account:
-----------------------
A Pre-Retirement Account shall be established as a liability
reserve account on the books of the Bank for the benefit of the
Executive. Prior to the Executive's Termination of Service or the
Executive's retirement, whichever event shall first occur, such
liability reserve account shall be increased or decreased each
Plan Year, until the aforestated event occurs, by the Index
Retirement Benefit (Subparagraph I [F]). The Pre-Retirement
Account shall be credited interest at a rate of prime plus two
hundred (200) basis points until said account is paid in full and
the account balance is zero.
F. Index Retirement Benefit:
-------------------------
The Index Retirement Benefit for each Executive in the Executive
Plan for each Plan Year shall be equal to the excess (if any) of
the Index (Subparagraph I [G]) for that Plan Year over the Cost
of Funds Expense (Subparagraph I [H]) for that Plan Year.
G. Index:
------
The Index for any Plan Year shall be the aggregate annual
after-tax income from the life insurance contract(s) described
hereinafter as defined by FASB Technical Bulletin 85-4. This
Index shall be applied as if such
2
insurance contract(s) were purchased on the Effective Date of the
Executive Plan.
Insurance Company: Jefferson Pilot Life Insurance Company
Policy Form: Flexible Premium Adjustable Life Insurance
Policy Name: ESP100
Insured's Age and Sex: 58 / Male
Riders: None
Ratings: None
Option: Level
Face Amount: $1,049,000
Premiums Paid: $500,000
Number of Premium Payments: Single Premium Payment
Assumed Purchase Date: July 1, 2003
Insurance Company: Massachusetts Mutual Life Insurance Company
Policy Form: Flexible Premium Adjustable Life Insurance
Policy Name: SL11B-9900
Insured's Age and Sex: 58 / Male
Riders: None
Ratings: None
Option: Level
Face Amount: $1,010,000
Premiums Paid: $500,000
Number of Premium Payments: Single Premium Payment
Assumed Purchase Date: July 1, 2003
If such contracts of life insurance are actually purchased by
the Bank, then the actual policies as of the dates they were
actually purchased shall be used in calculations under this
Executive Plan. If such contracts of life insurance are not
purchased or are subsequently surrendered or lapsed, then the
Bank shall receive annual policy illustrations that assume the
above-described policies were purchased or had not
subsequently surrendered or lapsed. Said illustration shall be
received from the respective insurance companies and will
indicate the increase in policy values for purposes of
calculating the amount of the Index.
In either case, references to the life insurance contracts are
merely for purposes of calculating a benefit. The Bank has no
obligation to purchase such life insurance and, if purchased,
the Executive and the Executive's beneficiary(ies) shall have
no ownership interest in such policy and shall always have no
greater interest in the benefits under this Executive Plan
than that of an unsecured creditor of the Bank.
3
H. Cost of Funds Expense:
----------------------
The Cost of Funds Expense for any Plan Year shall be calculated
by taking the sum of the amount of premiums for the life
insurance policies described in the definition of "Index" plus
the amount of any after-tax benefits paid to the Executive
pursuant to the Executive Plan (Paragraph II hereinafter) plus
the amount of all previous years' after-tax Cost of Funds
Expense, and multiplying that sum by the Average After-Tax Cost
of Funds (Subparagraph I [K]).
I. Change of Control:
------------------
"Change in Control" shall mean: (i) the sale of all, or a
material portion, of the assets of the BUCS Financial Corp.
("Company") or the Bank; (ii) the merger or recapitalization of
the Company or the Bank whereby the Company or the Bank is not
the surviving entity; (iii) a change in control of the Company or
the Bank, as otherwise defined or determined by the Office of
Thrift Supervision or regulations promulgated by it; or (iv) the
acquisition, directly or indirectly, of the beneficial ownership
(within the meaning of that term as it is used in Section 13(d)
of the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder) of twenty-five percent (25%)
or more of the outstanding voting securities of the Company by
any person, trust, entity or group. This limitation shall not
apply to the purchase of shares by underwriters in connection
with a public offering of Company stock, or the purchase of
shares of up to twenty-five percent (25%) of any class of
securities of the Company by a tax-qualified employee stock
benefit plan which is exempt from the approval requirements, set
forth under 12 C.F.R. '574.3(c)(1)(vi) as now in effect or as may
hereafter be amended. The term "person" refers to an individual
or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization
or any other form of entity not specifically listed herein.
J. Normal Retirement Age:
----------------------
Normal Retirement Age shall mean the date on which the Executive
attains age sixty-five (65).
K. Average After-Tax Cost of Funds:
--------------------------------
Average After-Tax Cost of Funds means, the total amount the Bank
would have earned on the "overnight" investments, per current
overnight portfolio, times the inverse of the Bank's combined
marginal income tax rate.
4
L. Net Interest / Net Income:
--------------------------
Net interest shall be defined as the amount of interest proceeds
remaining after all fees associated with the plan have been paid
and the Bank has recouped its opportunity costs (the amount BUCS
Federal would have earned on "overnight" investments, per current
overnight portfolio) and has designated the contribution to the
Chief Executive Officer's retirement fund. Net interest proceeds
are to be used to fund a Chief Executive Officer retirement fund
provided that the Chief Executive Officer generally meets the
major performance standards established for the Chief Executive
Officer's annual bonus. Up to Fifty Thousand and 00/100th Dollars
($50,000.00) per year shall be allocated to the retirement fund
for the Chief Executive Officer. Should the net income from the
investment fall below Fifty Thousand and 00/100th Dollars
($50,000.00), only the remaining amount of income will be
credited to the retirement fund. The contribution to the fund is
to be made each year at the time of Chief Executive Officer's
compensation review. Any income proceeds remaining will be used
to fund and or offset the cost of other benefits provided to
employees of the Bank as designated by the Chief Executive
Officer with Compensation Committee approval.
II. INDEX BENEFITS
A. Retirement Benefits:
--------------------
Subject to Subparagraph II (D) hereinafter, an Executive who
remains in the employ of the Bank until the Normal Retirement Age
(Subparagraph I [J]) shall be entitled to receive the balance in
the Pre-Retirement Account in one hundred fifty-six (156) equal
monthly installments commencing thirty (30) days following the
Executive's retirement. Such employment of the Bank shall include
years of service with BUCS Federal as a federal mutual bank and a
stock bank; such service does not include service with BUCS
Federal Credit Union. In addition to these payments and
commencing subsequent to the Pre-Retirement Account being paid in
full and said account balance is zero, the Index Retirement
Benefit (Subparagraph I [F]) for each Plan Year subsequent to the
year in which the Executive begins receiving the Index Retirement
Benefit hereunder, and including the remaining portion of the
Plan Year of the year in which the Executive begins receiving the
Index Retirement Benefit hereunder, shall be paid to the
Executive until the Executive's death.
B. Termination of Service:
-----------------------
Subject to Subparagraph II (D), should an Executive suffer a
Termination of Service the Executive shall be entitled to receive
ten percent (10%)
5
times the number of full years of employment with the Bank from
the date of first employment with the Bank (to a maximum of
100%), times the balance in the Pre-Retirement Account payable to
the Executive in one hundred fifty-six (156) equal monthly
installments commencing thirty (30) days following the
Executive's Normal Retirement Age (Subparagraph I [J]). In
addition to these payments and commencing subsequent to the
Pre-Retirement Account being paid in full and said account
balance is zero, ten percent (10%) times the number of full years
of employment with the Bank from the date of first employment
with the Bank, (to a maximum of 100%), times the Index Retirement
Benefit for each Plan Year subsequent to the year in which the
Executive begins receiving the Index Retirement Benefit
hereunder, and including the remaining portion of the Plan Year
in which the Executive begins receiving the Index Retirement
Benefit hereunder, shall be paid to the Executive until the
Executive's death. Such employment of the Bank shall include
years of service with BUCS Federal as a federal mutual bank and a
stock bank; such service does not include service with BUCS
Federal Credit Union.
C. Death:
------
Should the Executive die while there is a balance in the
Executive's Pre-Retirement Account (Subparagraph I [E]), said
unpaid balance of the Executive's Pre-Retirement Account shall be
paid in a lump sum to the individual or individuals the Executive
may have designated in writing and filed with the Bank. In the
absence of any effective beneficiary designation, the unpaid
balance shall be paid as set forth herein to the duly qualified
executor or administrator of the Executive's estate. Said payment
due hereunder shall be made the first day of the second month
following the decease of the Executive.
D. Discharge for Just Cause:
-------------------------
Should the Executive be discharged for Just Cause at anytime, all
benefits under this Executive Plan Shall be forfeited. Discharge
for "Just Cause" shall include termination because of the
Executive's personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation
of any law, rule or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement.
E. Death Benefit:
--------------
Except as set forth above, there is no death benefit provided
under this Agreement.
6
III. RESTRICTIONS UPON FUNDING
The Bank shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Executive
Plan. The Executive, their beneficiary(ies), or any successor in
interest shall be and remain simply a general creditor of the Bank in
the same manner as any other creditor having a general claim for
matured and unpaid compensation.
The Bank reserves the absolute right, at its sole discretion, to
either fund the obligations undertaken by this Executive Plan or to
refrain from funding the same and to determine the extent, nature and
method of such funding. Should the Bank elect to fund this Executive
Plan, in whole or in part, through the purchase of life insurance,
mutual funds, disability policies or annuities, the Bank reserves the
absolute right, in its sole discretion, to terminate such funding at
any time, in whole or in part. At no time shall any Executive be
deemed to have any lien nor right, title or interest in or to any
specific funding investment or to any assets of the Bank.
If the Bank elects to invest in a life insurance, disability or
annuity policy upon the life of the Executive, then the Executive
shall assist the Bank by freely submitting to a physical exam and
supplying such additional information necessary to obtain such
insurance or annuities.
IV. CHANGE OF CONTROL
Upon a Change of Control (Subparagraph I [I]), if the Executive
subsequently suffers a Termination of Service (Subparagraph I [D]),
then the Executive shall receive the one hundred percent (100%) of the
balance in the Pre-Retirement Account upon attaining Normal Retirement
Age, as if the Executive had been continuously employed by the Bank
until the Executive's Normal Retirement Age. The Executive will also
remain eligible for all promised death benefits in this Executive Plan.
In addition, no sale, merger, or consolidation of the Bank shall take
place unless the new or surviving entity expressly acknowledges the
obligations under this Executive Plan and agrees to abide by its terms.
V. DISABILITY
In the event that there is a finding of any qualified period of
disability for the Executive, the Bank will deposit into the Contingent
Disability Trust for the Executive (hereafter "Trust") an amount equal
to the accrued liability retirement account established on the
Executive's behalf pursuant to this Agreement. No other benefits will
be owed to the Executive under this Agreement during the Period of
Disability.
An Executive is considered under a Period of Disability only if he has
a condition that satisfies the definition of disability as defined in
the Mass Mutual disability
7
policy purchased by the Bank in conjunction with the implementation of
this benefit agreement. If the Bank has no such policy, the Executive
will be considered to be disabled based on the definition of
disability in the Bank's long-term group disability policy. If there
is a dispute regarding whether the Executive is disabled, such dispute
shall be resolved by a physician selected by the Bank and such
resolution shall be binding upon all parties to this Agreement.
If the Executive is under a Period of Disability on the date that he
reaches Normal Retirement Age, this agreement shall automatically
terminate and the Executive shall not be entitled to any further
benefits under this Agreement.
If the Period of Disability ends prior to Normal Retirement Age and the
Executive returns to active employment with the Bank, the Bank will pay
the Executive a reduced retirement benefit amount. The retirement
benefit amount shall be reduced by the thirteen year annual annuity
that would be payable at Normal Retirement Age from the Trust assuming
the trust assets earned a net rate of four percent (4%) annually
starting from the date of the existence of said Trust.
VI. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
----------------------------------------
Neither the Executive, nor the Executive's surviving spouse, nor
any other beneficiary(ies) under this Executive Plan shall have
any power or right to transfer, assign, anticipate, hypothecate,
mortgage, commute, modify or otherwise encumber in advance any of
the benefits payable hereunder nor shall any of said benefits be
subject to seizure for the payment of any debts, judgments,
alimony or separate maintenance owed by the Executive or the
Executive's beneficiary(ies), nor be transferable by operation of
law in the event of bankruptcy, insolvency or otherwise. In the
event the Executive or any beneficiary attempts assignment,
commutation, hypothecation, transfer or disposal of the benefits
hereunder, the Bank's liabilities shall forthwith cease and
terminate.
B. Binding Obligation of the Bank and any Successor in Interest:
-------------------------------------------------------------
The Bank shall not merge or consolidate into or with another bank
or sell substantially all of its assets to another bank, firm or
person until such bank, firm or person expressly agree, in
writing, to assume and discharge the duties and obligations of
the Bank under this Executive Plan. This Executive Plan shall be
binding upon the parties hereto, their successors, beneficiaries,
heirs and personal representatives.
8
C. Amendment or Revocation:
------------------------
Subject to Paragraph VII, it is agreed by and between the parties
hereto that, during the lifetime of the Executive, this Executive
Plan may be amended or revoked at any time or times, in whole or
in part, by the mutual written consent of the Executive and the
Bank.
D. Gender:
-------
Whenever in this Executive Plan words are used in the masculine
or neuter gender, they shall be read and construed as in the
masculine, feminine or neuter gender, whenever they should so
apply.
E. Effect on Other Bank Benefit Plans:
-----------------------------------
Nothing contained in this Executive Plan shall affect the right
of the Executive to participate in or be covered by any qualified
or non-qualified pension, profit-sharing, group, bonus or other
supplemental compensation or fringe benefit plan constituting a
part of the Bank's existing or future compensation structure.
F. Headings:
---------
Headings and subheadings in this Executive Plan are inserted for
reference and convenience only and shall not be deemed a part of
this Executive Plan.
G. Applicable Law:
---------------
The laws of the State of Maryland shall govern the validity and
interpretation of this Agreement.
H. 12 U.S.C. ss. 1828(k):
----------------------
Any payments made to the Executive pursuant to this Executive
Plan, or otherwise, are subject to and conditioned upon their
compliance with 12 U.S.C. ss. 1828(k) or any regulations
promulgated thereunder.
I. Partial Invalidity:
-------------------
If any term, provision, covenant, or condition of this Executive
Plan is determined by an arbitrator or a court, as the case may
be, to be invalid, void, or unenforceable, such determination
shall not render any other term, provision, covenant, or
condition invalid, void, or unenforceable, and the Executive Plan
shall remain in full force and effect notwithstanding such
partial invalidity.
9
J. Employment:
-----------
No provision of this Executive Plan shall be deemed to restrict
or limit any existing employment agreement by and between the
Bank and the Executive, nor shall any conditions herein create
specific employment rights to the Executive nor limit the right
of the Employer to discharge the Executive with or without cause.
In a similar fashion, no provision shall limit the Executive's
rights to voluntarily sever the Executive's employment at any
time.
VI. ERISA PROVISION
A. Named Fiduciary and Plan Administrator:
---------------------------------------
The "Named Fiduciary and Plan Administrator" of this Executive
Plan shall be BUCS Federal until its resignation or removal by
the Board. As Named Fiduciary and Plan Administrator, the Bank
shall be responsible for the management, control and
administration of the Executive Plan. The Named Fiduciary may
delegate to others certain aspects of the management and
operation responsibilities of the Executive Plan including the
employment of advisors and the delegation of ministerial duties
to qualified individuals.
B. Claims Procedure and Arbitration:
---------------------------------
In the event a dispute arises over benefits under this Executive
Plan and benefits are not paid to the Executive (or to the
Executive's beneficiary(ies) in the case of the Executive's
death) and such claimants feel they are entitled to receive such
benefits, then a written claim must be made to the Named
Fiduciary and Plan Administrator named above within sixty (60)
days from the date payments are refused. The Named Fiduciary and
Plan Administrator shall review the written claim and if the
claim is denied, in whole or in part, they shall provide in
writing within sixty (60) days of receipt of such claim the
specific reasons for such denial, reference to the provisions of
this Executive Plan upon which the denial is based and any
additional material or information necessary to perfect the
claim. Such written notice shall further indicate the additional
steps to be taken by claimants if a further review of the claim
denial is desired. A claim shall be deemed denied if the Named
Fiduciary and Plan Administrator fail to take any action within
the aforesaid sixty-day period.
If claimants desire a second review they shall notify the Named
Fiduciary and Plan Administrator in writing within sixty (60)
days of the first claim denial. Claimants may review this
Executive Plan or any documents relating thereto and submit any
written issues and comments it may feel
10
appropriate. In their sole discretion, the Named Fiduciary and
Plan Administrator shall then review the second claim and provide
a written decision within sixty (60) days of receipt of such
claim. This decision shall likewise state the specific reasons
for the decision and shall include reference to specific
provisions of the Plan Agreement upon which the decision is
based.
If claimants continue to dispute the benefit denial based upon
completed performance of this Executive Plan or the meaning and
effect of the terms and conditions thereof, then claimants may
submit the dispute to an arbitrator for final arbitration. The
arbitrator shall be selected by mutual agreement of the Bank and
the claimants. The arbitrator shall operate under any generally
recognized set of arbitration rules. The parties hereto agree
that they and their heirs, personal representatives, successors
and assigns shall be bound by the decision of such arbitrator
with respect to any controversy properly submitted to it for
determination.
Where a dispute arises as to the Bank's discharge of the
Executive "for cause," such dispute shall likewise be submitted
to arbitration as above described and the parties hereto agree to
be bound by the decision thereunder.
VII. TERMINATION OR MODIFICATION OF AGREEMENT BY REASON OF CHANGES IN THE LAW,
RULES OR REGULATIONS
The Bank is entering into this Agreement upon the assumption that certain
existing tax laws, rules and regulations will continue in effect in their
current form. If any said assumptions should change and said change has a
detrimental effect on this Executive Plan, then the Bank reserves the right
to terminate or modify this Agreement accordingly. Upon a Change of Control
(Subparagraph I [I]), this paragraph shall become null and void effective
immediately upon said Change of Control.
11
BENEFICIARY DESIGNATION FORM
FOR THE EXECUTIVE SUPPLEMENTAL
RETIREMENT PLAN AGREEMENT
I. PRIMARY DESIGNATION
-------------------
(You may refer to the beneficiary designation information prior to
completion of this form.)
A. Person(s) as a Primary Designation:
-----------------------------------
(Please indicate the percentage for each beneficiary.)
Name___________________________________ Relationship______________ / _______%
Address:________________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________ Relationship______________ / _______%
Address:________________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________ Relationship______________ / _______%
Address:________________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________ Relationship______________ / _______%
Address:________________________________________________________________________
(Street) (City) (State) (Zip)
B. Estate as a Primary Designation:
--------------------------------
My Primary Beneficiary is The Estate of _____________________________________ as
set forth in the last will and testament dated the _____ day of _________, _____
and any codicils thereto.
C. Trust as a Primary Designation:
-------------------------------
Name of the Trust: ____________________________________________________________
Execution Date of the Trust: _____ / _____ / _________
Name of the Trustee: ___________________________________________________________
Beneficiary(ies) of the Trust (please indicate the percentage for each
beneficiary):
________________________________________________________________________________
________________________________________________________________________________
Is this an Irrevocable Life Insurance Trust? ________ Yes ________ No
(If yes and this designation is for a Split Dollar agreement, an Assignment of
Rights form should be completed.)
II. SECONDARY (CONTINGENT) DESIGNATION
----------------------------------
A. Person(s) as a Secondary (Contingent) Designation:
--------------------------------------------------
(Please indicate the percentage for each beneficiary.)
Name___________________________________ Relationship______________ / _______%
Address:________________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________ Relationship______________ / _______%
Address:________________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________ Relationship______________ / _______%
Address:________________________________________________________________________
(Street) (City) (State) (Zip)
Name___________________________________ Relationship______________ / _______%
Address:________________________________________________________________________
(Street) (City) (State) (Zip)
B. Estate as a Secondary (Contingent) Designation:
-----------------------------------------------
My Secondary Beneficiary is The Estate of ___________________________________ as
set forth in my last will and testament dated the _____ day of __________, _____
and any codicils thereto.
C. Trust as a Secondary (Contingent) Designation:
----------------------------------------------
Name of the Trust: ____________________________________________________________
Execution Date of the Trust: _____ / _____ / _________
Name of the Trustee: ___________________________________________________________
Beneficiary(ies) of the Trust (please indicate the percentage for each
beneficiary):
________________________________________________________________________________
________________________________________________________________________________
All sums payable under the Executive Supplemental Retirement Plan Agreement by
reason of my death shall be paid to the Primary Beneficiary(ies), if he or she
survives me, and if no Primary Beneficiary(ies) shall survive me, then to the
Secondary (Contingent) Beneficiary(ies). This beneficiary designation is valid
until the participant notifies the bank in writing.
________________________________________ ____________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Date