EXHIBIT 10.1
ESSEX SAVINGS BANK, FSB
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE I
PURPOSE
The Essex Savings Bank, FSB Supplemental Executive Retirement Plan
("Plan") is intended to advance the interest of Essex Savings Bank, FSB (the
"Bank") and its subsidiaries (collectively the "Employers") by aiding the
Employers in attracting and retaining key officers and management personnel and
by motivating senior management to enhance the value of the Employers through
achievement of corporate profit objectives. The Board of Directors of Essex
Savings Bank, FSB believes that the Plan is necessary to provide competitive
retirement benefits for key officers and will afford flexibility in delivering
retirement benefits in light of changing economic, competitive and regulatory
conditions.
ARTICLE II
DEFINITIONS
The following terms shall have the meanings set forth in this Article
unless the context requires a different meaning:
Administrator. The Bank.
Bank. Essex Savings Bank, FSB.
Change in Control. Except as provided below, a "Change in Control"
shall occur if any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934), other than Essex Financial
Partners, L.P. or a wholly owned subsidiary thereof, directly or indirectly,
becomes the "beneficial owner" (as that term is defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of securities of Employer, Essex Bancorp or
Essex Financial Partners, L.P., representing 20% or more of the combined voting
power of the then outstanding securities of such entity; or if a change in the
composition of a majority of the Board occurs within twelve months after such
"person" or "group" (other than Essex Financial Partners, L.P. or a wholly owned
subsidiary thereof) becomes the "beneficial owner", directly or indirectly, of
securities of Employer, Essex Bancorp or Essex Financial Partners, L.P.,
representing 5% or more of the combined voting power of the then outstanding
securities of such entity.
Code. The Internal Revenue Code of 1986, as amended.
Committee. The Executive Compensation Committee of the Bank, comprised
of outside directors and the Chief Executive Officer of the Bank as a non-voting
member.
Compensation. The total compensation paid to or for a Member during a
Plan Year, including "wages" under Code Section
3401. A Member's compensation shall be calculated prior to reduction for the
amount of the Member's pre-tax contributions to the Bank's Code Section 401(k)
plan and any cafeteria plan maintained by the Bank under Section 125 of the
Code, but reduced by the amount of any moving expenses or taxable
reimbursements. Amounts paid under the Bank's Key Employee Incentive
Compensation Plan shall be taken into account in the Plan Year in which actually
paid.
Effective Date. January 1, 1993.
Employee. An employee of an Employer, as determined under the common
law of Virginia, who is a key executive officer of the Employer.
Employer. The Bank and its subsidiaries.
Hardship. A sudden and unexpected illness or accident or other
unforeseeable emergency beyond the control of a Member suffered by the Member of
a member of this immediate family and causing a severe financial hardship to the
Member, as determined by the Administrator in its sole discretion.
Investment Adjustments. The adjustments to a Member's Retirement
Account made pursuant to Article IV to reflect the income and other items deemed
to be applicable thereto.
Member. Each Employee participating in the plan under Article III
below.
Plan Year. January 1, 1993 through December 31, 1993 and each fiscal
year of the Bank thereafter.
Pension Credits. The fixed percentage Employer contribution amounts
credited to a Member's Retirement Account under Article IV A below.
Profit-Sharing Credits. The discretionary Employer contribution
amounts, if any, credited to a Member's Retirement Account under Article IV B.
Retirement Account. The bookkeeping account maintained for each Member
under Article IV D below, consisting of his Pension Credits, Profit-Sharing
Credits and net Investment Adjustments thereto.
Vested Benefit. The vested portion of a Member's Retirement Account as
determined under Article V below.
Year of Service. A Plan Year during which a Member is continuously
employed by an Employer for the entire Plan Year.
ARTICLE III
PARTICIPATION
A. Membership. Each Employee who is eligible to participate as a Member
in the Plan is listed on Exhibit A attached hereto. The Board of Directors of
the Bank my designate other Employees as Members from time to time and shall
update Exhibit A to reflect such additional designations. Only those Employees
who are listed on Exhibit A shall participate in the Plan.
B. Termination. A Member's participation in the Plan shall terminate
than the Member has no Vested Benefit remaining under the Plan.
C. Termination of Employment. For all purposes under this Plan, a
transfer of employment from one Employer to another shall not be deemed a
termination of employment.
ARTICLE IV
CREDITS AND RETIREMENT ACCOUNT
A. Pension Credits. For each Plan Year in which a Member completes a
Year of Service, his Employer shall credit on behalf of the Member a Pension
Credit of five percent (5%) of the Member's Compensation for the Plan Year. No
Pension Credit will be provided to a Member for any Plan Year in which he fails
to complete a Year of Service. The Pension Credit will be credited to the
Member's Retirement Account and deemed invested under IV C below as of the last
day of the Plan Year to which it is attributable.
B. Profit-Sharing Credits. For each Plan Year during which the Bank has
a net profit before taxes and the granting of Profit-Sharing Credits hereunder,
as determined for financial accounting purposes, each Employer, at the
discretion of the Committee, may, but need not, also credit on behalf of each
Member employed by it who has completed a Year of Service for the Plan Year, a
discretionary Profit-Sharing Credit not in excess of
five percent (5%) of each such Member's Compensation for the Plan Year. No
Profit-Sharing Credit will be provided on behalf of any Member who fails to
complete a Year of Service for the Plan Year in question. Moreover, in no event
will the aggregate Profit-Sharing Credits for any Plan Year exceed ten percent
(10%) of the Employer's net profit before taxes and Profit-Sharing Credits
hereunder for the Plan Year. The Profit-Sharing Credits will be credited to each
applicable Member's Retirement Account and deemed invested under Article IV C
below as of the last day of the Plan Year to which it is attributable.
C. Deemed Investment and Investment Adjustments. As of the end of each
Plan Year, the Pension Credits and Profit-Sharing Credits in each Member's
Retirement Account (plus any accumulated Investment Adjustments from prior
years) shall be deemed to be invested (or reinvested, as the case may be) in one
year certificates of deposit of the Bank, at the interest rate in effect on the
last day of the Plan Year. The Employer shall cause annual Investment
Adjustments to be made to each Member's Retirement Account so as to reflect the
interest income and any other adjustments that would be applicable thereto if
the Retirement Accounts were actually invested in the certificates of deposit.
D. Bookkeeping Account. For bookkeeping purposes only, each Employer
shall maintain a Retirement Account reflecting a
Member's Pension Credits, Profit-Sharing Credits and all the Investment
Adjustments applicable thereto.
ARTICLE V
VESTING
A Member's Retirement Account shall fully vest and become
nonforfeitable upon the first to occur of the Member's death, permanent
disability within the meaning of Code Section 72(m)(7), retirement at or after
attainment of age 65, or any "Change in Control." In the event of the
termination of a Member's employment with the Employers prior to death,
permanent disability, attainment of age 65 or a Change in Control, the Member's
vested nonforfeitable interest in his Retirement Account shall be determined in
accordance with the following percentage vesting schedule based upon the
Member's number of complete Plan Years of Service with the Employers, excluding
years prior to the Effective Date.
Complete Plan Years Vested Percentage Forfeited Percentage
of Service With of Retirement of Retirement
Employer After 1992 Account Account
- ------------------- ------- -------
1 20% 80%
2 40% 60%
3 60% 40%
4 80% 20%
5 100% 0%
The non-vested portion of a Member's Retirement Account shall be forfeited upon
his termination of employment with the Employers
ARTICLE VI
DISTRIBUTIONS
A. Time of Payment. The vested portion of a Member's Retirement Account
shall be payable to the Member (or if applicable, to his Beneficiary) by the
Member's Employer within one hundred eighty days (180) after: (i) the close of
the Plan Year in which occurs his termination of employment with the Employers;
or (ii) any Change in Control, whichever occurs first.
B. Method of Payment. A Member's Retirement Account shall be paid to
the Member (or his Beneficiary, if applicable) by the Member's Employer in a
lump sum, net of all applicable withholding taxes.
C. Beneficiary Designation. A Member shall be entitled to designate a
beneficiary under the Plan by filing a designation in writing with the
Administrator on the form provided for that purpose. Any beneficiary designation
under the Plan shall remain effective until changed or revoked hereunder. Any
beneficiary designation may include multiple, contingent or successive
beneficiaries and may specify the proportionate distribution to each
beneficiary. A beneficiary designation may be changed by a Member at any time or
from time to time by filing a new designation in writing with the Administrator.
If a Member dies without having designated a beneficiary, or if the beneficiary
so designated has predeceased the Member, then the Member's surviving spouse, or
if none, his estate, shall be deemed to be his beneficiary. If a beneficiary of
a Member shall survive the Member but die before the Member's Retirement Account
has been distributed, than absent any other provision by the Member, the unpaid
amount thereof shall be distributed to the estate of the deceased beneficiary.
If multiple beneficiaries are designated, absent any other provision by the
Member, those named or the survivors of them shall share equally in any amounts
payable under the Plan.
D. Hardship Distributions. Notwithstanding the preceding paragraphs,
the Administrator may, in its sole discretion, at any time direct the payment of
all or a portion of a Member's vested Retirement Account to or on behalf of a
Member if the Administrator determines that the payment is necessary to
alleviate a Hardship; provided, however, that the amount so distributed shall
not exceed the amount reasonably needed to alleviate the Hardship after taking
into account the other financial resources available to the Member.
E. Regulatory Approval. Any provision herein to the contrary
notwithstanding, adoption of this Plan is contingent upon approval by the Office
of Thrift Supervision ("OTS"). In the event OTS approval is not obtained, the
Plan shall be terminated effective as if never adopted and all Retirement
Accounts shall be void ab initio. All payments hereunder are also subject to and
conditioned upon their compliance with Section 1828(k) of Title 12 of the United
States Code and any regulations promulgated thereunder.
ARTICLE VII
FUNDING
Nothing contained herein shall be deemed to create a trust of any kind
or create any fiduciary relationship, and the undertaking to pay Pension Credits
and Profit-Sharing Credits and to make Investment Adjustments hereunder shall be
an unfunded obligation payable solely from the general assets of the Employers
subject to the claims of the Employers' creditors. The Employers may, but shall
not be obligated to, invest an amount equal to a Member's Retirement Account
balance in the investment vehicles in which the Member's Retirement Account is
deemed to be invested under Article IV C. Any investment of a Member's
Retirement Account shall be a general asset of the applicable Employer, and no
Member or beneficiary shall have any property or security interest in any
specific asset of the Employer. To the extent that any person acquires a right
to receive payments under this Plan, that right shall be no greater than the
right of any unsecured general creditor of the Employers.
ARTICLE VIII
ADMINISTRATION
The Bank, by action of its Chief Executive Officer, shall serve as the
Administrator of the Plan. The Administrator shall have the authority and
responsibility to construe and interpret the Plan, to make determinations under
the Plan with respect to eligibility for, amount of and distribution of
benefits, and otherwise to manage the Plan's operation in accordance with its
provisions.
ARTICLE IX
TERMINATION OR AMENDMENT
The Plan may be terminated at any time by the Bank. The Plan may be
amended in whole or in part from time to time by the Bank effective as of any
date specified, but no amendment shall operate to decrease the vested Retirement
Account balance accrued on behalf of any Member as of the earlier of the date on
which the amendment or termination is approved by the Board of Directors of the
Bank or the date on which an instrument of amendment or termination is signed.
Nor shall any amendment lengthen the vesting schedules set forth in Article V
below. Any provision in Article V to the contrary notwithstanding, upon
termination of the Plan all Members shall be fully vested in their Retirement
Accounts.
The Chief Executive Officer of the Bank shall be authorized to adopt on
behalf of the Bank and to execute any technical amendment or amendments to the
Plan which in the opinion of counsel for the Bank is required by law and is
deemed advisable by him, and to so adopt and execute any other discretionary
amendment or amendments to the Plan which do not, in his view, materially affect
costs or the eligibility or benefit provisions of the Plan and which in his
opinion are deemed advisable.
ARTICLE X
EMPLOYMENT RELATIONSHIP
The action of the Employers in establishing or adopting this Plan, and
any action taken by any Employer shall not be construed as giving any Member or
other employee of the Employer the right to be retained in the Employer's
employ. The Plan shall not be construed as creating or modifying any contract of
employment relationship between an Employer and any person.
ARTICLE XI
SPENDTHRIFT
The interests of each Member under the Plan are not subject to the
claims of the Member's creditors and may not, in any way, be assigned, pledged,
alienated or encumbered.
ARTICLE XII
GOVERNING LAW
This Plan shall be established, construed and enforced according to the
laws of the Commonwealth of Virginia.
IN TESTIMONY WHEREOF, the Employers have caused this Plan to be signed
by their officers thereunto duly authorized this 26th day of August, 1993.
ESSEX SAVINGS BANK, FSB
By
Its
ESSEX FIRST MORTGAGE CORPORATION
By
Its
ESSEX HOME MORTGAGE
SERVICING CORPORATION
By
Its
EXHIBIT "A"
ESSEX SAVINGS BANK, FSB
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(List of Members - 1993)
Gene D. Ross
G. Wilson Thomas, II
Earl C. McPherson
Harvard R. Birdsong, II
Michael H. Harris
Donald R. Fisher, Jr.
Roy H. Rechkemmer, Jr.
Diane G. Scott