EXHIBIT 10(r)
FORM OF
XXXXX SPRING NATIONAL BANK OF MARYLAND
OFFICER GROUP TERM REPLACEMENT PLAN
[The following plan was established in 2001 for the President and CEO, Executive
Vice Presidents, and Senior Vice Presidents.]
THIS PLAN is hereby made and entered into this ________ day of
___________________, _________, by and between XXXXX SPRING NATIONAL BANK of
MARYLAND, a national bank located in Olney, Maryland (the "Bank") and , ,
selected to participate in this Plan (the "Participant").
INTRODUCTION
Xxxxx Spring National Bank of Maryland wishes to attract and retain
highly qualified executives. To further this objective, the Bank is willing to
divide the death proceeds of certain life insurance policies which are owned by
the Bank on the life of the participating executive with the designated
beneficiary of the participating executive. The Bank will pay the benefits and
the life insurance premiums from its general assets.
AGREEMENT
The Executive and the Bank agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following terms shall have the
meanings specified:
1.1 "Bank" means Xxxxx Spring National Bank of Maryland and any of its
subsidiaries.
1.2 "Base Annual Salary" means the current base annual salary of the
Participant at the earliest of: (1) the date of the Participant's death;
(2) the date of the Participant's Disability; or (3) the Participant's
Normal or Early Retirement Date.
1.3 "Change of Control" means the earliest of:
a. The acquisition by any entity, person, or group (other than the
acquisition by a tax-qualified retirement plan sponsored by
Xxxxx Spring Bancorp, Inc. ["Bancorp"] or the Bank) of
beneficial ownership, as that term is defined in Rule 13d-3
under the Securities Exchange Act of 1934, of more than 25% of
the outstanding capital stock of Bancorp or the bank entitled to
vote for the election of directors ("Voting Stock");
b. The commencement by any entity, person, or group (other than
Bancorp or the bank, a subsidiary of Bancorp or the Bank, or a
tax-qualified retirement plan sponsored by Bancorp or the Bank)
of a tender offer for more than 20% of the outstanding Voting
Stock of Bancorp or the Bank.
c. The effective time of (i) a merger or consolidation of Bancorp
or the Bank with one or more other corporations as a result of
holders of the outstanding Voting Stock of Bancorp or the Bank
immediately prior to such merger exercise voting control over
less than 80% of the Voting Stock of the surviving or resulting
corporation, or (ii) a transfer of substantially all of the
property of Bancorp or the Bank other than to an entity of which
Bancorp or the Bank owns at least 80% of the Voting Stock;
d. Upon the acquisition by any entity, person, or group of the
control of the election of a majority of the Bank's or Bancorp's
directors;
e. At such time that, during any period of two consecutive years,
individuals, who at the beginning of such period, constitute the
Board of Bancorp or the Bank (the "Continuing Directors") cease
for any reason to constitute at least two-thirds thereof,
provided that any individual whose election or nomination for
election as a member of the Board was approved by a vote of at
least two-thirds of the Continuing Directors then in office
shall be considered a Continuing Director.
1.4 "Disability" means a physical or mental infirmity that impairs the
Participant's ability to substantially perform his or her duties under
this Agreement and that results in the Participant's becoming eligible
for long-term disability benefits under a long-term disability plan
maintained for bank employees (or, if the Bank has no such plan in
effect, that impairs the Participant's ability to substantially perform
his or her duties for a period of one-hundred and eighty consecutive
days). The Human Resources Committee in its good faith and discretion
shall determine whether or not the participant is and continues to be
permanently disabled for purposes of this Agreement based upon competent
medical advice and other factors it believes to be relevant. As a
condition to any benefits, the Bank may require the Participant to
submit to such physical or mental evaluations and tests as the Human
Resources Committee deems appropriate.
1.5 "Early Retirement Date" means the date on which the Participant has both
(a) attained age sixty and (b) completed Ten Years of service.
1.6 "Human Resources Committee" means either the Human Resources Committee
designated from time to time by the Bank's Board of Directors or a
majority of the Bank's Board of Directors, either of which shall
hereinafter be referred to as the Human Resources Committee.
1.7 "Insured" means the individual whose life is insured.
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1.8 "Insurer" means the insurance company issuing the life insurance policy
on the life of the insured.
1.9 "Insurance Policy" means a single premium life insurance policy which
may be acquired by the Bank, in its sole discretion, as sole owner, on
the life of the Participant in connection with this Agreement.
1.10 "Just Cause" means, as determined in good faith by the Bank's Human
Resources Committee, the Participant's:
a. Personal dishonesty;
b. Incompetence;
c. Willful misconduct;
d. Breach of fiduciary duty involving personal profit;
e. Intentional failure to perform duties under this Agreement;
f. Other, continuing failure to perform his or her duties after
reasonable notification (which shall be stated in writing and
given a least fifteen days prior to termination) by the Bank of
such failure;
g. Willful violation of any law, rule, or regulation (other than
traffic violations or similar offenses) or final
cease-and-desist order; or
h. Material breach by the Participant of any provision of this
Agreement or an Employment Agreement to which the Participant
and the Bank are parties or material breach of Bank policy
committed in connection with the Participant's employment and
resulting in adverse effect on the bank.
1.11 "Normal Retirement Age" means the Participant attaining age 65.
1.12 "Normal Retirement Date" means the later of the Normal Retirement Age or
the date that the Participant terminates or is terminated for any reason
other than Termination for Cause.
1.13 "Other Group Term Coverage" means group term life insurance maintained
on a Participant's life owned by the Bank that is in addition to the
Policies covered under this Plan.
1.14 "Participant" means the employee who is designated by the Human
Resources Committee as eligible to participate in the Plan, elects in
writing to participate in the Plan using the form attached hereto as
Exhibit A, and signs a Split Dollar Endorsement for the Policy in which
the Participant is insured.
1.15 "Plan" means this instrument, including all amendments thereto.
1.16 "Termination of Employment" means the Participant's ceasing to be
employed by the Bank for any reason whatsoever, voluntary or
involuntary, other than by reason of an approved leave of absence.
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1.17 "Years of Service" means the total number of twelve-month periods during
which the Participant is employed on a full-time basis by the bank prior
to and after the date of this Agreement, inclusive of any approved
leaves of absence.
ARTICLE 2
PARTICIPATION
2.1 Eligibility to Participate. The Human Resources Committee in its
sole discretion shall designate from time to time Participant's that are
eligible to participate in the Plan.
2.2 Participation. The eligible executive may participate in this
Plan by executing an Election to Participate and a Split Dollar Endorsement. The
Split Dollar Endorsement shall bind the Participant and his or her
beneficiaries, assigns and transferees, to the terms and conditions of this
Plan. An executive's participation is limited to only Policies where he or she
is the Insured.
2.3 Termination of Participation. The Participant's rights under
this Plan shall cease and his or her participation in this Plan shall terminate
if either of the following events occur: (i) if there is a Termination for
Cause; or (ii) if the Participant's employment with the Bank is terminated prior
to Early Retirement Age for reasons other than Disability. In the event that the
Bank decides to maintain the Policy after the Participant's Termination of
Participation in the Plan, the Bank shall be the direct beneficiary of the
entire death proceeds of the Policy.
2.4 Disability. (A) Except as otherwise provided in paragraph (B) of
this section 2.4, if the Participant's employment with the Bank is terminated
because of the Participant's Disability, the Bank shall maintain the Policy in
full force and effect and, in no event, shall the Bank amend, terminate or
otherwise abrogate the Participant's interest in the Policy. However, the Bank
may replace the Policy with a comparable insurance policy to cover the benefit
provided under this Agreement and the Bank and the Participant shall execute a
new Split Dollar Policy Endorsement. The Policy or any comparable policy shall
be subject to the claims of the Bank's creditors.
(B) Notwithstanding the provisions of paragraph (A) of this
section 2.4, upon the disabled Participant's gainful employment with an entity
other than the Bank, the Bank shall have no further obligation to the disabled
Participant, and the disabled Participant's rights pursuant to the Plan shall
cease. In the event the disabled Participant's rights are terminated hereunder
and the Bank decides to maintain the Policy, the Bank shall be the direct
beneficiary of the entire death proceeds of the Policy.
2.5 Retirement. After the Participant's Normal or Early Retirement
Date, the Bank shall maintain the Policy in full force and effect and in no
event shall the Bank amend, terminate or otherwise abrogate the Participant's
interest in the Policy. However, the Bank may replace the Policy with a
comparable insurance policy to cover the benefit provided under this Agreement
and the Bank and the Participant shall execute a new Split Dollar Policy
Endorsement. The
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Policy or any comparable policy shall be subject to the claims of the Bank's
creditors.
ARTICLE 3
POLICY OWNERSHIP/INTERESTS
3.1 Participant's Interest. With respect to the Policy, the
Participant, or the Participant's assignee, shall have the right to designate
the beneficiary of an amount of death proceeds equal to [X*] TIMES BASE ANNUAL
SALARY OF THE PARTICIPANT. The Participant shall also have the right to elect
and change settlement options with the consent of the Bank and the Insurer.
[* THE MULTIPLE IS 3.5 FOR THE PRESIDENT AND CEO, 3.0 FOR EXECUTIVE VICE
PRESIDENTS, AND 2.5 FOR SENIOR VICE PRESIDENTS.]
3.2 Bank's Interest. The Bank shall own the Policy and shall have
the right to exercise all incidents of ownership except that the Bank shall not
sell, surrender or transfer ownership of a Policy so long as a Participant has
an interest in the Policy as described in section 3.1. This provision shall not
impair the right of the Bank to terminate this Plan. With respect to each
Policy, the Bank shall be the direct beneficiary of the remaining death proceeds
of the Policy after the Participant's Interest is determined according to
section 3.1.
ARTICLE 4
PREMIUMS
4.1 Premium Payment. The Bank shall pay all premiums due on all
Policies.
4.2 Imputed Income. The Bank shall impute income to the Participant
in an amount equal to the current term rate for the Participant's age multiplied
by the aggregate death benefit payable to the Participant's beneficiary during
the Participant's active employment with the Bank. The "current term rate" is
the minimum amount required to be imputed under Revenue Rulings 64-328 and
66-110, or any subsequent applicable authority.
4.3 Cash Payment. Upon the Participant's normal or early retirement,
the Bank shall annually pay to the Participant an amount necessary to pay the
federal and state income taxes attributable to the imputed income and to the
additional cash payments under this section. In calculating the cash payments
due from the Bank, the Bank shall use the Participant's actual marginal income
tax bracket for the calendar year immediately preceding the payment to the
Participant. The cash payments shall continue until the Participant's death.
ARTICLE 5
ASSIGNMENT
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The Participant may assign without consideration all interests in his or
her Policy and in this Plan to any person, entity or trust. In the event a
Participant shall transfer all of his or her interest in the Policy, then all of
that Participant's interest in his or her Policy and in the Plan shall be vested
in his or her transferee, who shall be substituted as a party hereunder, and
that Participant shall have no further interest in his or her Policy or in this
Plan.
ARTICLE 6
INSURER
The Insurer shall be bound only by the terms of their corresponding
Policy. Any payments the Insurer makes or actions it takes in accordance with a
Policy shall fully discharge it from all claims, suits and demands of all
persons relating to that Policy. The Insurer shall not be bound by the
provisions of this Plan. The Insurer shall have the right to rely on the Bank's
representations with regard to any definitions, interpretations, or Policy
interests as specified under this Plan.
ARTICLE 7
CLAIMS PROCEDURE
7.1 Claims Procedure. The Bank shall notify any person or entity
that makes a claim under this Agreement (the "Claimant") in writing, within 90
days of Claimant's written application for benefits, of his or her eligibility
or non-eligibility for benefits under the Agreement. If the Bank determines that
the Claimant is not eligible for benefits or full benefits, the notice shall set
forth (1) the specific reasons for such denial, (2) a specific reference to the
provisions of the Agreement on which the denial is based, (3) a description of
any additional information or material necessary for the Claimant to perfect his
or her claim, and a description of why it is needed, and (4) an explanation of
this Agreement's claims review procedure and other appropriate information as to
the steps to be taken if the Claimant wishes to have the claim reviewed. If the
Bank determines that there are special circumstances requiring additional time
to make a decision, the Bank shall notify the Claimant of the special
circumstances and the date by which a decision is expected to be made, and may
extend the time for up to an additional 90 days.
7.2 Review Procedure. If the Claimant is determined by the Bank not
to be eligible for benefits, or if the Claimant believes that he or she is
entitled to greater or different benefits, the Claimant shall have the
opportunity to have such claim reviewed by the Bank by filing a petition for
review with the Bank within 60 days after receipt of the notice issued by the
Bank. Said petition shall state the specific reasons, which the Claimant
believes entitle him or her to benefits or to greater or different benefits.
Within 60 days after receipt by the Bank of the petition, the Bank shall afford
the Claimant (and counsel, if any) an opportunity to present his or her position
to the Bank verbally or in writing, and the Claimant (or counsel) shall have the
right to review the pertinent documents. The Bank shall notify the Claimant of
its decision in writing within the
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60-day period, stating specifically the basis of its decision, written in a
manner calculated to be understood by the Claimant and the specific provisions
of the Agreement on which the decision is based. If, because of the need for a
hearing, the 60-day period is not sufficient, the decision may be deferred for
up to another 60 days at the election of the Bank, but notice of this deferral
shall be given to the Claimant.
ARTICLE 8
AMENDMENTS AND TERMINATION
8.1 Amendment or Termination of Plan. Except as otherwise provided
in sections 2.3, 2.4, 2.5 and 8.2: (i) the Bank may amend or terminate the Plan
at any time, and (ii) the Bank may amend or terminate a Participant's rights
under the Plan at any time prior to a Participant's death by written notice to
the Participant.
8.2 Amendment or Termination of Plan Upon Change of Control.
Notwithstanding the provisions of section 8.1, in the event of a Change of
Control, the Bank, or its successor, shall maintain in full force and effect
each Policy that is in existence on the date the Change of Control occurs and
shall not terminate or otherwise abrogate a Participant's interest in the
Policy, unless the Bank replaces the Policy with a comparable insurance policy
to cover the benefit provided under this Agreement and the Bank and the
Participant shall execute a new Split Dollar Policy Endorsement. The Policy or
any comparable policy shall be subject to the claims of the Bank's creditors.
This section 8.2 shall apply to all Participants in the Plan on the date the
Change of Control occurs, including but not limited to (i) a retired Participant
who has an interest in a Policy pursuant to section 2.5; (ii) a disabled
Participant who has an interest in the Policy pursuant to section 2.4; and (iii)
a Participant whose employment is terminated as a result of a Change of Control.
8.3 A Participant may, in the Participant's sole and absolute
discretion, waive his or her rights under the Plan at any time. Any waiver
permitted under this section 8.3 shall be in writing and delivered to the Human
Resources Committee of the Bank.
ARTICLE 9
MISCELLANEOUS
9.1 Binding Effect. This Plan in conjunction with each Split Dollar
Endorsement shall bind each Participant and the Bank, their beneficiaries,
survivors, executors, administrators and transferees and any Policy beneficiary.
9.2 No Guarantee of Employment. This Plan is not an employment
policy or contract. It does not give a Participant the right to remain an
employee of the Bank, nor does it interfere with the Bank's right to discharge a
Participant. It also does not require a Participant to remain an employee nor
interfere with a Participant's right to terminate employment at any time.
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9.3 Applicable Law. The Plan and all rights hereunder shall be
governed by and construed according to the laws of the State of Maryland, except
to the extent preempted by the laws of the United States of America.
9.4 Notice. Any notice, consent or demand required or permitted to
be given under the provisions of this Plan by one party to another shall be in
writing, shall be signed by the party giving or making the same, and may be
given either by delivering the same to such other party personally, or by
mailing the same, by United States certified mail, postage prepaid, to such
party, addressed to his/her last known address as shown on the records of the
Bank. The date of such mailing shall be deemed the date of such mailed notice,
consent or demand.
9.5 Entire Agreement. This Plan constitutes the entire agreement
between the Bank and the Participant as to the subject matter hereof. No rights
are granted to the Participant by virtue of this Plan other than those
specifically set forth herein.
9.6 Administration The Bank shall have powers which are necessary to
administer this Plan, including but not limited to:
(a) Interpreting the provisions of the Plan;
(b) Establishing and revising the method of accounting for
the Plan;
(c) Maintaining a record of benefit payments; and
(d) Establishing rules and prescribing any forms necessary
or desirable to administer the Plan.
9.7 Designated Fiduciary. For purposes of the Employee Retirement
Income Security Act of 1974, if applicable, the Bank shall be the named
fiduciary and plan administrator under the Agreement. 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 ministerial duties to qualified individuals.
IN WITNESS WHEREOF, the Bank executes this Plan as of the date indicated
above.
XXXXX SPRING NATIONAL BANK OF MD.
BY
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TITLE
--------------------------------
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EXHIBIT A
ELECTION TO PARTICIPATE
I, __________________________________________, an eligible employee as
determined in section 2.1 of the Xxxxx Spring National Bank of Maryland Group
Term Replacement Plan (the "Plan") dated ___________________________, hereby
elect to become a Participant of the Plan in accordance with Section 2.2 of the
Plan. Additionally, I acknowledge that I have read the Plan document and agree
to be bound by its terms.
Executed this _____________ day of ____________________, _____.
--------------------------------- ------------------------------------
Witness Participant
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SPLIT DOLLAR POLICY ENDORSEMENT
XXXXX SPRING NATIONAL BANK OF MARYLAND
GROUP TERM REPLACEMENT PLAN
Policy No. ___________________ Insured: __________________
Supplementing and amending the application for insurance to
_____________________________ __________________________ (the "Insurer"), on
____________________, _______, the applicant requests and directs that:
BENEFICIARIES
1. The beneficiary designated by the Insured, or his/her transferee
shall be the beneficiary of Two and One Half (2.5) Times Base Annual Salary of
the Participant.
2. The beneficiary of any remaining death proceeds shall be Xxxxx
Spring National Bank of Maryland, a nationally chartered commercial bank located
in Olney, Maryland (the "Bank").
OWNERSHIP
3. The Owner of the policy shall be the Bank. The Owner shall have
all ownership rights in the Policy except as may be specifically granted to the
Insured or his/her transferee in paragraph (4) of this endorsement.
4. The Insured or his/her transferee shall have the right to assign
all rights and interests in the policy with respect to that portion of the death
proceeds designated in paragraph (1) of this endorsement, and to exercise all
settlement options with respect to such death proceeds.
5. Notwithstanding the provisions of paragraph (4) above, the
Insured or the Insured's transferee shall have no rights or interests in the
Policy with respect to that portion of the death proceeds designated in
paragraph (1) of this endorsement if the Insured ceases to be employed by the
Bank prior to the Normal or Early Retirement Age or for any reason whatsoever
(other than by reason of a leave of absence which is approved by the Bank),
unless otherwise agreed to by the Bank and the Participant.
MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY
Upon the death of the Insured, the interest of any collateral assignee of the
Owner of the policy designated in paragraph (3) above shall be limited to the
portion of the proceeds described in
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paragraph (2) above.
OWNERS AUTHORITY
The Insurer is hereby authorized to recognize the Owner's claim to rights
hereunder without investigating the reason for any action taken by the Owner,
including its statement of the amount of premiums it has paid on the policy. The
signature of the Owner shall be sufficient for the exercise of any rights under
this Endorsement and the receipt of the Owner for any sums received by it shall
be a full discharge and release to the Insurer.
Any transferee's rights shall be subject to this Endorsement.
The owner accepts and agrees to this split dollar endorsement.
Signed at Olney, Maryland, this _____ day of _________________, ____
Xxxxx Spring National Bank of Maryland
By__________________________________
Its__________________________________
Acceptance and Beneficiary Designation
The Insured accepts and agrees to the foregoing and, subject to the rights of
the Owner as stated above, designates
_________________________________________________________________ (relationship:
_____________________________________________) as primary beneficiary and
____________________________________________________________ (relationship:
_______ ______________________________) as secondary/contingent beneficiary of
the portion of the proceeds described in paragraph (1) above.
Signed at ________________, Maryland, this ______ day of ________________, ____.
INSURED:
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(print name)
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