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Exhibit 17
SPLIT-DOLLAR AGREEMENT
THIS AGREEMENT, made as of the 11th day of JULY, 2002, by and between NATIONAL
COOPERATIVE BANK a Washington, District of Columbia corporation (hereinafter
referred to as the "Employer"), and CHARLES E. SNYDER of Alexandria, Virginia
(hereinafter referred to as the "Employee").
WITNESSETH THAT:
WHEREAS, the Employee is employed by the Employer as its President and Chief
Executive Officer; and
WHEREAS, the Employer is desirous of retaining the services of the Employee and
of assisting the Employee in paying for life insurance on his own life; and
WHEREAS, the Employer has determined that this assistance can be provided under
a split dollar life insurance arrangement; and
WHEREAS, the Employee has applied for, and is the owner of the insurance policy
or policies listed in the attached schedule hereto, hereinafter referred to as
the "Policy" and the issuer(s) of which are hereinafter referred to as the
"Insurer"; and
WHEREAS, the Employer and the Employee agree to make the Policy subject to this
Agreement; and
WHEREAS, the Employee has assigned the Policy to the Employer as collateral for
amounts to be advanced by the Employer under this Agreement by an instrument of
assignment filed with the Insurer (hereinafter referred to as the "Assignment");
NOW, THEREFORE, in consideration of the promises and of the mutual covenants
herein contained, the Parties hereto hereby agree as follows:
1. The Parties hereto agree that the Policy shall be subject to the terms and
conditions of this Agreement and of the Assignment. The Employee shall be
the sole and absolute owner of the Policy and may exercise all ownership
rights granted to the owner thereof by the terms of the Policy, except as
may be otherwise provided herein and in the Assignment.
2. The premium for the Policy will be paid by the Employer during the
Employee's employment. Part of the premium paid by the Employer (the term
insurance allocation) shall be paid by the Employer as agent for the
Employee and shall be charged to the Employee as cash compensation, and for
all purposes, including the Assignment, shall be deemed cash compensation
and not Employer paid premium.
3. The Assignment shall not be terminated, altered or amended by the Employee
without the express written consent of the Employer.
4. a. Except as otherwise provided herein, the Employee shall not sell,
assign, transfer, borrow against, surrender or cancel the Policy without
the express written consent of the Employer. Notwithstanding the forgoing,
the Employee may borrow against, or withdraw cash value of, the Policy, so
long as such borrowing or withdrawal does not reduce the collaterally
assigned interest of the Employer, without action of the Employer's Board
of Directors. However, Policy loan interest, if any, that may accrue
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on any such transaction shall not reduce the collaterally assigned interest
of the Employer, or if such may be the case, the Employee will pay such
Policy loan interest in cash to the Insurer.
b. The Employer shall not borrow against the Policy without the express
written consent of the Employee.
c. Upon the Employee's termination of employment, the Employee shall have
the right to take any action with regard to that portion of the cash value
of the Policy, if any, that is in excess of the collaterally assigned
interest of the Employer without action of the Employer's Board of
Directors.
5. In the event Employee's employment with the Employer is terminated for
reasons other than death, disability or Cause, or if the Employee
voluntarily terminates his employment with the Employer, the Employer shall
be entitled to recover by partial surrender of the policy a portion of the
cumulative Employer-paid premiums as follows:
o If such termination occurs before the first anniversary of this
Agreement, the Employer shall be entitled to recover 100% of the
cumulative premiums paid by the Employer on or before the date of such
termination.
o If such termination occurs after the first anniversary but before the
second anniversary of this Agreement, the Employer shall be entitled
to recover 80% of the cumulative premiums paid by the Employer on or
before the date of such termination.
o If such termination occurs after the second anniversary but before the
third anniversary of this Agreement, the Employer shall be entitled to
recover 60% of the cumulative premiums paid by the Employer on or
before the date of such termination.
o If such termination occurs after the third anniversary but before the
fourth anniversary of this Agreement, the Employer shall be entitled
to recover 40% of the cumulative premiums paid by the Employer on or
before the date of such termination.
o If such termination occurs after the fourth anniversary but before the
fifth anniversary of this Agreement, the Employer shall be entitled to
recover 20% of the cumulative premiums paid by the Employer on or
before the date of such termination.
o If such termination occurs after the fifth anniversary of this
Agreement, the Employer shall be entitled to recover 0% of the
cumulative premiums paid by the Employer on or before the date of such
termination.
Any portion of the cumulative Employer-paid premiums that are not
recoverable by the Employer as set forth above shall continue to be held in
the Policy subject to the provisions of this Agreement. For purposes of
this Agreement, the Employee shall be deemed to be disabled when he has
become unable, by reason of physical or mental disability, satisfactorily
to perform his duties for a period, after the expiration of any sick leave
accumulated by him, of ninety (90) consecutive days or for a total period
in any year of one hundred twenty (120) days, in either case as reasonably
determined by, or to the reasonable satisfaction, of the Board of Directors
of the Employer.
6. a. Anything to the contrary in this Agreement notwithstanding, in the event
Employee's employment with Employer is terminated for Cause, then the
Employer shall have the right to immediately recover all of the cumulative
Employer-paid premiums. For purposes of this Agreement, "Cause" means
Employer's termination of Mr. Snyder's employment based upon its reasonable
belief, after the
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exercise of due diligence, that Employee (i) consistently has failed to
perform substantial duties of his position, (ii) consistently has performed
substantial duties of his position in a grossly negligent manner, or (iii)
has been guilty of bad faith or willful misconduct in performing or failing
to perform substantial duties of his position and has failed to correct any
such condition identified in subsections (i), (ii) or (iii), above, within
a reasonable time after written notice by Employer of such condition; or
(iv) has been convicted of a misdemeanor that causes material injury to the
business or financial condition of Employer or (v) has been (A) convicted
of a felony or (B) the subject of an information or indictment charging a
felony; provided that, he shall be entitled to reinstatement, if requested,
in the event no conviction is entered. For purposes hereof, "conviction"
and "convicted" mean a final judgment on a verdict or finding of guilty, a
plea of guilty, or a plea of nolo contendere.
b. Anything to the contrary in this Agreement notwithstanding, in the event
that within three years of the date of termination of the Employee's
employment for any reason, Employee (a) acquires substantial ownership
interest in or becomes employed by, affiliated with, or acts on behalf of
any entity as an independent contractor in any form that is reasonably
determined to be in direct competition with Employer, including, without
limitation, the providing or arranging of blanket loans to housing
cooperatives or the public or private securitization thereof or the
securitization of loans in a manner similar to Employer's Capital Markets
Assurance Corporation ("Cap Mac") securitization; (b) entices or induces
any officer of Employer (including any of its affiliates) to leave the
Employer for the purpose of engaging in a business that is or may
reasonably be expected to become a direct competitor of Employer; or (c)
divulges trade secrets or any other confidential information of material
significance to Employer's business operations, the Employer shall have the
right immediately to recover all of the cumulative Employer-paid premiums
hereunder.
7. a. Upon the death of the Employee, the Employer shall promptly take all
action necessary to obtain from the death benefit provided under the Policy
all cumulative Employer-paid premiums that were not recovered by the
Employer pursuant to Section 5, Section 6.a., and/or Section 6.b. hereof..
b. The Employer shall have the unqualified right to receive a portion of
such death benefit equal to the total amount of all cumulative
Employer-paid premiums that were not recovered by the Employer pursuant to
Section 5, Section 6.a., and/or Section 6.b. hereof.. The balance of the
death benefit provided under the Policy, if any, shall be paid directly by
the Insurer to the Employee's beneficiary or beneficiaries and in the
manner designated by the Employee. No amount shall be paid from such death
benefit to the beneficiary or beneficiaries designated by the Employee
until the Employer or Insurer acknowledges in writing that the full amount
due to the Employer hereunder has been paid. The parties hereto agree that
the beneficiary designation provision of the Policy shall conform to the
provisions hereof.
8. This Agreement shall terminate upon the Employee's death and the payment of
proceeds pursuant to Section 7 of this Agreement.
9. a. If the Employee ceases to be employed by the Employer for whatever
reason, the Employer's obligation to pay premiums shall immediately cease,
but the Employee shall have the right to continue to keep the Policy in
force either individually or through a subsequent Employer, subject to the
requirement that the Policy cash value not be reduced through loans,
premium payment options, or in any other manner below the amount needed to
repay the Employer all cumulative Employer-paid premiums not previously
recovered by the Employer under other provisions of this Agreement.
b. If the Employee continues to keep the Policy in force until his death,
termination of this Agreement shall be pursuant to Section 7 of this
Agreement.
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c. If the Employee does not continue to keep the Policy in force until his
death, this Agreement will terminate upon the first day on which the Policy
is not in force and the Employer will be repaid an amount equal to the
lesser of the cumulative Employer-paid premiums not previously recovered by
the Employer under other provisions of this Agreement or the cash surrender
value as of the first date upon which the Policy is not in force.
10. The parties hereto agree that this Agreement shall take precedence over any
provisions of the Assignment. The Employer agrees not to exercise any right
possessed by it under the Assignment except in conformity with this
Agreement.
11. This Agreement may not be amended, altered or modified except by a written
instrument signed by both of the Parties hereto and may not be otherwise
terminated except as provided herein.
12. a. The split-dollar arrangement contemplated herein is an exempt welfare
plan under regulations promulgated under Title I of the Employee Retirement
Income Security Act of 1974 ("ERISA").
b. For purposes of ERISA, the Employer will be the "named fiduciary" and
"plan administrator" of the split-dollar arrangement contemplated herein,
and this Agreement is hereby designated as the written plan instrument.
c. The Employee or any beneficiary of his may file a request for benefits
with the plan administrator. If a claim request is wholly or partially
denied, the plan administrator will furnish to the claimant a notice of its
decision within ninety (90) days in writing, and in a manner to be
understood by the claimant, which notice will contain the following
information:
(i) the specific reason or reasons for the denial;
(ii) specific reference to pertinent plan provisions upon which the
denial is based;
(iii) a description of any additional material or information
necessary for the claimant to perfect the claim and an explanation as
to why such material or information is necessary.
(iv) an explanation of the plan's claim-review procedure describing
the steps to be taken by a claimant who wishes to submit his claim for
review.
d. A claimant or his authorized representative may, with respect to any
wholly or partially denied claim,
(i) request a review upon written application filed within sixty (60)
days after receipt by the claimant of written notice of the denial of
his claim;
(ii) obtain or otherwise review copies of documents, at no charge,
that are relevant to the denied claim; and
(iii) submit issues, documents, and comments in writing.
Any request or submission will be in writing and will be directed to the
plan administrator. The plan administrator will have the sole
responsibility for the review of any denied claim and will take all
appropriate steps in light of its findings. The plan administrator will
render a decision upon review of a denied claim within sixty (60) days
after receipt of a request for review. If special circumstances warrant
additional time, the decision will be rendered as soon as possible, but not
later than one hundred twenty (120) days after receipt of request for
review. Written notice of any such extension,
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the reasons for the extension, and the date by which the plan administrator
expects to render the decision, will be furnished to the claimant prior to
the commencement of the extension. The decision on review will be in
writing and will include specific reasons for the decision written in a
manner to be understood by the claimant, as well as the specific references
to the pertinent provisions of the plan on which the decision is based, and
a statement that the claimant is entitled to receive, upon request and at
no charge, reasonable access to and copies of all documents relevant to the
claim. If the decision on review is not furnished to the claimant within
the time limits described above, the claim will be deemed denied on review.
13. This Agreement shall be binding upon and inure to the benefit of the
Employer and its successors and assignees and the Employee and his
permitted successors or assignees, and his heirs, executors, administrators
and beneficiaries.
14. Except as may be preempted by ERISA, this Agreement, and the rights of the
Parties hereunder, shall be governed by and construed in accordance with
the laws of Washington, D.C.
IN WITNESS WHEREOF, the Employer has caused this Agreement to be executed by its
officer thereunto duly authorized and the Employee has hereunto set his hand and
seal, all as of the day and year first above written.
NATIONAL COOPERATIVE BANK
_______________________ By:______________________________________
Witness
Title:___________________________________
________________________ _________________________________________
Witness CHARLES E. SNYDER
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SCHEDULE A
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<Caption>
INSURANCE CARRIER POLICY NO. FACE AMOUNT
- ----------------- ---------- -----------
Nationwide Life Insurance Company N101253200 $4,976,117
</Table>
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