exv10w6






Exhibit 10.6




FRATERNITY FEDERAL SAVINGS AND LOAN ASSOCIATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN




     THIS SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AGREEMENT (this “Agreement”) is
entered into as of this September 15, 2009, by and between Fraternity Federal Savings and Loan
Association (hereinafter referred to as the “Association”) and Thomas K. Sterner, an individual
resident of the State of Maryland (hereinafter referred to as the “Executive”).



     WHEREAS, the Executive has contributed substantially to the success of the Association and the
Association desires that the Executive continue in its employ; and



     WHEREAS, to encourage the Executive to remain an employee of the Association, the Association
is willing to provide supplement executive retirement benefits to the Executive, payable out of the
Association’s general assets; and



     WHEREAS, the parties hereto intend that this Agreement shall be considered an unfunded
arrangement maintained primarily to provide supplemental retirement benefits for the Executive, and
shall be considered a plan described in Section 301(a)(3) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”); and



     WHEREAS this Plan is intended to comply with the requirements of Internal Revenue Code Section
409A. Accordingly, the intent of the parties hereto is that the Plan shall be operated and
interpreted consistent with the requirements of Section 409A.



     NOW THEREFORE, in consideration of the foregoing premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows.



ARTICLE 1

DEFINITIONS





	 	 	Whenever used in this Agreement, the following terms have the meanings specified —





     1.1 “Accrual Balance” means the liability that should be accrued by the Association under
accounting principles generally accepted in the United States (“GAAP”) for the Association’s
obligation to the Executive under this Agreement, by applying Accounting Principles Board Opinion
No. 12, as amended by Statement of Financial Accounting Standards No. 106, and the calculation
method and discount rate specified hereinafter. The projected Accrual Balance is detailed on
Schedule A including annual accruals. The Accrual Balance shall be calculated assuming a level
principal amount and interest as the discount rate is accrued each period. The principal accrual
is determined such that when it is credited with interest each month, the Accrual Balance at Normal
Retirement Age equals the present value of the normal retirement benefits described in Section
2.1.1. At the end of each Plan Year, the Accrual Balance shall be adjusted to reflect the
Association’s obligation under Sections 2.1.1. The discount rate means the rate used by the Plan
Administrator for determining the Accrual Balance. The initial discount rate is 6.00%. In its
sole discretion, the Plan Administrator may adjust the discount rate to maintain the rate within
reasonable standards according to GAAP and consistent with the Interagency Advisory



 









 




on Accounting for Deferred Compensation Agreements which states that the “cost of those
benefits shall be accrued over that period of the employee’s service in a systematic and rational
manner.”




     1.2 “Association” means Fraternity Federal Savings and Loan Association.



     1.3 “Beneficiary” means each designated person, or the estate of the deceased Executive,
entitled to benefits, if any, upon the death of the Executive, determined according to Article 4.



     1.4 “Beneficiary Designation Form” means the form established from time to time by the Plan
Administrator that the Executive completes, signs, and returns to the Plan Administrator to
designate one or more Beneficiaries.



     1.5 “Board of Directors” means the Board of Directors of the Association.



     1.6 “Change in Control” For the purposes of this Agreement, the term Change in Control means a
change in the ownership or effective control of the Company, or in the ownership of a substantial
portion of the assets of the Company, as such change is defined in Treasury Regulation
§1.409A-3(i)(5) or any subsequently applicable Treasury Regulation. The term “Change in Control”
shall not include any conversion of the Association from the mutual to stock form or any
reorganization of the Association into a mutual holding company structure of ownership.



     1.7 “Disability” means the Executive suffers a sickness, accident or injury that is determined
by the carrier of any individual or group disability insurance policy covering the Executive to be
a disability rendering the Executive totally and permanently disabled, as certified by a physician
chosen by the Association and reasonably acceptable to the Executive, or as later defined by the
Internal Revenue Service in IRS Notice 2005 — 1.



     1.8 “Early Retirement Date” means the date of the Executive’s Separation from Service with the
Association for reasons other than death, Disability or Termination for Cause, prior to Normal
Retirement Age.



     1.9 “Effective Date” means January 1, 2009.



     1.10 “Normal Retirement Age” means age sixty-five (65).



     1.11 “Plan Administrator” means the Association as defined herein.



     1.12 “Plan Year” means a twelve-month period commencing on January 1 and ending on December 31
of each year. The initial Plan Year shall commence on the Effective Date of this Agreement and end
on December 31 of the year in which occurs the Effective Date.



     1.13 “Separation from Service” with the Association means that the Executive shall have ceased
to be employed by the Association for reasons other than death or excepting a leave of absence
approved by the Association. Whether a Separation from Service has occurred is determined based on
whether the facts and circumstances indicate that the Association and the



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Executive reasonably anticipated that no further services would be performed after a certain
date or that the level of bona fide services the Executive would perform after such date (whether
as an employee or as an independent contractor) would permanently decrease to no more than twenty
percent (20%) of the average level of bona fide services performed (whether as an employee or an
independent contractor) over the immediately preceding thirty-six (36) month period (or the full
period of services to the Association if the Executive has been providing services to the
Association less than thirty-six (36) months).




     1.14 “Specified Employee” means an employee who at the time of Separation from Service is a
key employee of the Association, if any stock of the Association is publicly traded on an
established securities market or otherwise. For purposes of this Agreement, an employee is a key
employee if the employee meets the requirements of Code Section 416(i)(1)(A)(i), (ii), or (iii)
(applied in accordance with the regulations thereunder and disregarding section 416(i)(5)) at any
time during the 12-month period ending on December 31 (the “identification period”). If the
employee is a key employee during an identification period, the employee is treated as a key
employee for purposes of this Agreement during the twelve (12) month period that begins on the
first day of April following the close of the identification period.



     1.15 “Termination for Cause” shall have the same definition specified in any effective
severance or employment agreement existing on the date hereof or hereafter entered into between the
Executive and the Association. If the Executive is not a party to a severance or employment
agreement containing a definition of termination for cause, Termination for Cause means the
Association terminates the Executive’s employment because of:




	 	(1)	 	Personal dishonesty;
	 
	 	(2)	 	Incompetence;
	 
	 	(3)	 	Willful misconduct;
	 
	 	(4)	 	Breach of fiduciary duty involving personal profit;
	 
	 	(5)	 	International failure to perform stated duties; or
	 
	 	(6)	 	Willful violation of any law, rule or regulation (other than
traffic violations or similar offenses) or final cease-and-desist order.





ARTICLE 2

RETIREMENT BENEFITS




     2.1 Normal Retirement Benefit. Upon the Executive’s Separation from Service on or after
attaining his Normal Retirement Age for any reason other than death or a Termination for Cause, the
Executive shall be eligible to receive the benefit described in this Section 2.1 in lieu of any
other benefit under Article 2 of this Agreement.




	 	2.1.1.	 	Amount of Benefit. The annual normal retirement benefit under this Section 2.1 is
ninety thousand one hundred fifteen dollars ($90,115).




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	 	2.1.2.	 	Payment of Benefit. The Association shall pay the aggregate annual benefit described
in Section 2.1.1 to the Executive in equal monthly installments for fifteen (15) years
(a total of one hundred eighty (180) monthly installments) beginning on the first day
of the month after the month following the Executive’s Separation from Service.





     2.2 Early Retirement Benefit. Upon the Executive’s Early Retirement Date, the Executive shall
be eligible to receive the benefit described in this Section 2.2 in lieu of any other benefit under
Article 2 of this Agreement.




	 	2.2.1.	 	Amount of Benefit. The benefit under this Section 2.2 is an amount equal to the
Accrual Balance earned as of the last day of the Plan Year immediately preceding the
Executive’s Early Retirement Date.
	 
	 	2.2.2.	 	Payment of Benefit. The Association shall pay the early retirement benefit to the
Executive in 180 equal monthly installments beginning on the first day of the month
after the month in which the Executive attains Normal Retirement Age.





     2.3 Disability Benefit. Upon the Executive’s Separation from Service due to a Disability
before reaching Normal Retirement Age, the Executive shall be eligible to receive the benefit
described in this Section 2.3 in lieu of any other benefit under this Agreement.




	 	2.3.1.	 	Amount of Benefit. The benefit under this Section 2.3 is an amount equal to the
Accrual Balance earned as of the last day of the Plan Year immediately preceding the
effective date of the Executive’s Separation from Service.
	 
	 	2.3.2.	 	Payment of Benefit. The Association shall pay the Disability benefit to the
Executive in 180 equal monthly installments beginning on the first day of the month
after the month in which the Executive attains Normal Retirement Age.





     2.4 Change in Control Benefit. Notwithstanding any contrary provision contained herein, upon a
Separation from Service at any time following a Change of Control, the Executive shall be eligible
to receive the benefit described in this Article 2.4 in lieu of any other benefit under this
Agreement.




	 	2.4.1	 	Amount of Benefit. The benefit under this Section 2.4 is an amount equal to
the present value of the Normal Retirement benefit set forth in Section 2.1.1. The
present value shall be calculated using the number of installments provided for in
Section 2.1.1 and the discount rate under Section 1.1 and shall be made without regard
to the Executive’s age at the time of the payment of the Change in Control benefit.






	 	2.4.1.1	 	Payment of Benefit. The Association shall pay the Change in Control benefit
under Section 2.4 of this Agreement to the Executive in one lump sum within
thirty (30) days after the Executive’s Separation from Service.




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     2.5 Contradiction in Terms of Agreement and Schedule A. If there is a contradiction in the
terms of this Agreement and Schedule A attached hereto concerning the actual amount of a particular
benefit amount due the Executive under Sections 2.2, 2.3 or 2.4 hereof, then the actual amount of
the benefit set forth in the Agreement shall control.



     2.6 Restriction on Timing of Distributions. Notwithstanding any provision of this Agreement
to the contrary, if Executive is a Specified Employee of the Association as that term is defined in
Section 1.14, then benefit distributions that are made upon Separation from Service may not
commence earlier than six (6) months after the date of such Separation from Service. Therefore, in
the event this Section 2.6 is applicable to the Executive, any distribution which would otherwise
be paid to the Executive within the first six months following the Separation from Service shall be
accumulated and paid to the Executive in a lump sum on the first business day of the seventh month
following the Separation from Service. All subsequent distributions shall be paid in the manner
specified.



     2.7 Distributions Upon Income Inclusion Under Section 409A of the Code. Upon the inclusion of
any amount into the Executive’s income as a result of the failure of this non-qualified deferred
compensation plan to comply with the requirements of Section 409A of the Internal Revenue Code of
1986 (the “Code”), as amended, and applicable regulations and guidance thereunder, to the extent
such tax liability can be covered by the amount the Association has accrued with respect to the
Association’s obligations hereunder, a distribution shall be made as soon as is administratively
practicable following the discovery of the plan failure.



     2.8 Change in Form or Timing of Distributions. Any changes in the form or timing of
distributions hereunder must comply with the following requirements. The changes:




	 	(a)	 	may not accelerate the time or schedule of any distribution,
except as provided in Section 409A of the Code and the regulations there under;
	 
	 	(b)	 	must, for benefits distributable under Sections 2.1, 2.2, 2.3
and 2.4, be made at least twelve (12) months prior to the first scheduled
distribution;
	 
	 	(c)	 	must, for benefits distributable under Sections 2.1, 2.2, 2.3
and 2.4, delay the commencement of distributions for a minimum of five (5)
years from the date the first distribution was originally scheduled to be made;
and
	 
	 	(d)	 	must take effect not less than twelve (12) months after the
election is made.





     2.9 One Benefit Only. Despite any contrary provision of this Agreement, the Executive and any
Beneficiary are entitled to one benefit only under Article 2 of this Agreement, which shall be
determined by the first event to occur that is dealt with by Article 2 of this Agreement.
Subsequent occurrence of events dealt with by this Article 2 shall not entitle the Executive or the
Executive’s Beneficiary to other or additional benefits under Article 2.



     2.10 Compliance with Section 409A. This Agreement shall be interpreted and administered
consistent with Code Section 409A.



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ARTICLE 3

DEATH BENEFITS




     3.1 Death During Active Service. If the Executive dies while employed by the Association, no
benefits of any type will be payable under Article 2 of this Plan.




	 	3.1.1	 	Death Benefit upon Death While Employed. Upon the Executive’s
death while employed by the Association, the Association shall pay to the
Executive’s designated beneficiary(ies) in a single lump sum the benefit
described in Sections 3.1.2 and 3.1.3. The Association will pay the benefits
from its general assets, but only so long as one of the Association’s general
assets is an enforceable life insurance policy on the Executive’s life.
	 
	 	3.1.2	 	Amount of Benefits. Subject to Sections 3.1, and 3.1.1, the
Association shall pay an amount equal to the lesser of one hundred percent
(100%) of the portion of the insurance proceeds received by the Association on
the life of the Executive and designated as the “Net Amount at Risk” by the
insurance carrier or one million dollars ($1,000,000). The “Net Amount at
Risk” refers to the difference in the death benefit payable by the insurance
carrier and the cash value of the policy(ies) owned by the Association on the
Executive’s life.
	 
	 	3.1.3	 	Payment of Benefit. The Association shall pay the benefit due
to the Executive’s Beneficiary(ies) in a single lump sum within 90 days after
receipt by the Association of the insurance proceeds payable on the life
insurance policy(ies) owned by the Association on the Executive’s life.





     3.2 Death During Benefit Period. If the Executive dies after benefit payments under Article 2
of this Agreement commences but before receiving all such payments, or if the Executive is entitled
to benefit payments under Article 2 but dies before payments commence, the present value of the
benefits or the remaining benefits that would have been paid to the Executive had he survived, as
the case may be, shall be payable to the Executive’s Beneficiary in a single lump sum within 90
days.



ARTICLE 4

BENEFICIARIES




     4.1 Beneficiary Designations. The Executive shall have the right to designate at any time a
Beneficiary to receive any benefits payable under this Agreement upon the death of the Executive.
The Beneficiary designated under this Agreement may be the same as or different from the
beneficiary designation under any other benefit plan of the Association in which the Executive
participates.



     4.2 Beneficiary Designation: Change. The Executive shall designate a Beneficiary by
completing and signing the Beneficiary Designation Form and delivering it to the Plan Administrator
or its designated agent. The Executive’s Beneficiary designation shall be deemed automatically
revoked if the Beneficiary predeceases the Executive or if the Executive names a



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spouse as Beneficiary and the marriage is subsequently dissolved. The Executive shall have
the right to change a Beneficiary by completing, signing, and otherwise complying with the terms of
the Beneficiary Designation Form and the Plan Administrator’s rules and procedures, as in effect
from time to time. Upon the acceptance by the Plan Administrator of a new Beneficiary Designation
Form, all Beneficiary designations previously filed shall be cancelled. The Plan Administrator
shall be entitled to rely on the last Beneficiary Designation Form filed by the Executive and
accepted by the Plan Administrator before the Executive’s death.




     4.3 Acknowledgment. No designation or change in designation of a Beneficiary shall be
effective until received in writing by the Plan Administrator or its designated agent.



     4.4 No Beneficiary Designation. If the Executive dies without a valid beneficiary
designation, or if all designated Beneficiaries predecease the Executive, then the Executive’s
spouse shall be the designated Beneficiary. If the Executive has no surviving spouse, the benefits
shall be distributed to the personal representative of the Executive’s estate.



     4.5 Facility of Payment. If a benefit is payable to a minor, to a person declared
incapacitated, or to a person incapable of handling the disposition of his or her property, the
Association may pay such benefit to the guardian, legal representative, or person having the care
or custody of the minor, incapacitated person, or incapable person. The Association may require
proof of incapacity, minority, or guardianship as it may deem appropriate before distribution of
the benefit. Distribution shall completely discharge the Association from all liability for the
benefit.



ARTICLE 5

GENERAL LIMITATIONS




     5.1 Termination for Cause. If the Executive experiences a Separation from Service which is a
Termination for Cause, notwithstanding any provision of this Agreement to the contrary, this
Agreement and the Association’s obligations under this Agreement shall terminate as of the
effective date of the Termination for Cause.



     5.2 Suicide or Misstatement. No benefits shall be paid under this Agreement if the Executive
commits suicide within two years after the Effective Date of this Agreement or if the Executive
makes any material misstatement of fact on any application for life insurance purchased by the
Association.



     5.3 Removal. Despite any contrary provision of this Agreement, if the Executive is removed
from office or permanently prohibited from participating in the Association’s affairs by an order
issued under section 8(e) (4) or (g) (1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)
(4) or (g) (1), all obligations of the Association under this Agreement shall terminate as of the
effective date of the order.



     5.4 Regulatory Provisions. Any payments made to the Executive pursuant to this Agreement, or
otherwise, are subject to, and conditional upon, their compliance with 12 U.S.C. Section 1828(k)
and FDIC Regulation 12 C.F.R. Part 359, Golden Parachute and Indemnification Payments.



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ARTICLE 6

CLAIMS AND REVIEW PROCEDURES




     6.1 Claims Procedure. A person or beneficiary (a “claimant”) who has not received benefits
under the Agreement that he or she believes should be paid shall make a claim for such benefits as
follows —




	 	6.1.1	 	Initiation — Written Claim. The claimant initiates a claim by submitting to
the Association a written claim for the benefits. If the claim relates to the contents
of a notice received by the claimant, the claim must be made within 60 days after the
notice was received by the claimant. All other claims must be made within 180 days
after the date of the event that caused the claim to arise. The claim must state with
particularity the determination desired by the claimant.
	 
	 	6.1.2	 	Timing of Association Response. The Association shall respond to such
claimant within ninety (90) days after receiving the claim. If the Association
determines that special circumstances require additional time for processing the claim,
the Association can extend the response period by an additional ninety (90) days by
notifying the claimant in writing, prior to the end of the initial ninety (90)-day
period, that an additional period is required. The notice of extension must set forth
the special circumstances and the date by which the Association expects to render its
decision.
	 
	 	6.1.3	 	Notice of Decision. If the Association denies part or all of the claim, the
Association shall notify the claimant in writing of such denial. The Association shall
write the notification in a manner calculated to be understood by the claimant. The
notification shall set forth:






	 	6.1.3.1	 	The specific reasons for the denial,
	 
	 	6.1.3.2	 	A reference to the specific provisions of the Agreement on which the denial
is based,
	 
	 	6.1.3.3	 	A description of any additional information or material necessary for the
claimant to perfect the claim and an explanation of why it is needed,
	 
	 	6.1.3.4	 	An explanation of the Agreement’s review procedures and the time limits
applicable to such procedures, and
	 
	 	6.1.3.5	 	A statement of the claimant’s right to bring a civil action under ERISA
section 502(a) following an adverse benefit determination on review.





     6.2 Review Procedure. If the Association denies part or all of the claim, the claimant shall
have the opportunity for a full and fair review by the Association of the denial, as follows



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	 	6.2.1	 	Initiation — Written Request. To initiate the review, the claimant, within 60
days after receiving the Association’s notice of denial, must file with the Association
a written request for review.
	 
	 	6.2.2	 	Additional Submissions — Information Access. The claimant shall then have the
opportunity to submit written comments, documents, records and other information
relating to the claim. The Association shall also provide the claimant, upon request
and free of charge, reasonable access to, and copies of, all documents, records and
other information relevant (as defined in applicable ERISA regulations) to the
claimant’s claim for benefits.
	 
	 	6.2.3	 	Considerations on Review. In considering the review, the Association shall
take into account all materials and information the claimant submits relating to the
claim, without regard to whether such information was submitted or considered in the
initial benefit determination.
	 
	 	6.2.4	 	Timing of Association Response. The Association shall respond in writing to
such claimant within sixty (60) days after receiving the request for review. If the
Association determines that special circumstances require additional time for
processing the claim, the Association can extend the response period by an additional
sixty (60) days by notifying the claimant in writing, prior to the end of the initial
sixty (60)-day period, that an additional period is required. The notice of extension
must set forth the special circumstances and the date by which the Association expects
to render its decision.
	 
	 	6.2.5	 	Notice of Decision. The Association shall notify the claimant in writing of
its decision on review. The Association shall write the notification in a manner
calculated to be understood by the claimant. The notification shall set forth —






	 	6.2.5.1	 	The specific reasons for the denial,
	 
	 	6.2.5.2	 	A reference to the specific provisions of the Agreement on which the denial
is based,
	 
	 	6.2.5.3	 	A statement that the claimant is entitled to receive, upon request and free
of charge, reasonable access to, and copies of, all documents, records and
other information relevant (as defined in applicable ERISA regulations) to the
claimant’s claim for benefits, and
	 
	 	6.2.5.4	 	A statement of the claimant’s right to bring a civil action under ERISA
Section 502(a).





ARTICLE 7

MISCELLANEOUS




     7.1 Amendments and Termination. Subject to Section 7.13 of this Agreement, (a) this Agreement
may be amended solely by a written agreement signed by the Association and



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by the Executive, and (b) except for termination occurring under Article 5, this Agreement may
be terminated solely by a written agreement signed by the Association and by the Executive.




     7.2 Binding Effect. This Agreement shall bind the Executive and the Association and their
beneficiaries, survivors, executors, successors, administrators, and transferees.



     7.3 No Guarantee of Employment. This Agreement is not an employment policy or contract. It
does not give the Executive the right to remain an employee of the Association, nor does it
interfere with the Association’s right to discharge the Executive. It also does not require the
Executive to remain an employee nor interfere with the Executive’s right to terminate employment at
any time.



     7.4 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned,
pledged, attached, or encumbered in any manner.



     7.5 Tax Withholding. The Association shall withhold any taxes that are required to be
withheld from the benefits provided under this Agreement.



     7.6 Applicable Law. Except to the extent preempted by the laws of the United States of
America, the validity, interpretation, construction, and performance of this Agreement shall be
governed by and construed in accordance with the laws of the State of Maryland, without giving
effect to the principles of conflict of laws of such state.



     7.7 Unfunded Arrangement. The Executive and the Executive’s Beneficiary are general unsecured
creditors of the Association for the payment of benefits under this Agreement. The benefits
represent the mere promise by the Association to pay such benefits. The rights to benefits are not
subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors. Any insurance on the Executive’s life is a general asset
of the Association to which the Executive and Beneficiary have no preferred or secured claim.



     7.8 Severability. If any provision of this Agreement is held invalid, such invalidity shall
not affect any other provision of this Agreement, and each such other provision shall continue in
full force and effect to the full extent consistent with law. If any provision of this Agreement
is held invalid in part, such invalidity shall not affect the remainder of the provision, and the
remainder of such provision together with all other provisions of this Agreement shall continue in
full force and effect to the full extent consistent with law.



     7.9 Headings. The headings of sections herein are included solely for convenience of
reference and shall not affect the meaning or interpretation of any provision of this Agreement.



     7.10 Notices. All notices, requests, demands, and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by hand or mailed, certified or
registered mail, return receipt requested, with postage prepaid. Unless otherwise changed by
notice, notice shall be properly addressed to the Executive if addressed to the address of the
Executive on the books and records of the Association at the time of the delivery of such



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notice, and properly addressed to the Association if addressed to the Board of Directors, at
764 Washington Boulevard, Baltimore, Maryland 21230-2398.




     7.11 Entire Agreement. This Agreement constitutes the entire agreement between the
Association and the Executive concerning the subject matter hereof. No rights are granted to the
Executive under this Agreement other than those specifically set forth herein.



     7.12 Payment of Legal Fees. In the event litigation ensues between the parties concerning the
enforcement of the obligations of the parties under this Agreement, the Association shall pay all
costs and expenses in connection with such litigation until such time as a final determination
(excluding any appeals) is made with respect to the litigation. If the Association prevails on the
substantive merits of the each material claim in dispute in such litigation, the Association shall
be entitled to receive from the Executive all reasonable costs and expenses, including without
limitation attorneys’ fees, incurred by the Association on behalf of the Executive in connection
with such litigation, and the Executive shall pay such costs and expenses to the Association
promptly upon demand by the Association.



     7.13 Termination or Modification of Agreement Because of Changes in Law, Rules or Regulations.
The Association is entering into this Agreement on the assumption that certain existing tax laws,
rules, and regulations will continue in effect in their current form. If that assumption
materially changes and the change has a material detrimental effect on this Agreement, then the
Association reserves the right to terminate or modify this Agreement accordingly, subject to the
written consent of the Executive, which shall not be unreasonably withheld. This Section 7.13
shall become null and void effective immediately if a Change in Control occurs.



ARTICLE 8

ADMINISTRATION OF AGREEMENT




     8.1 Plan Administrator Duties. This Agreement shall be administered by a Plan Administrator
consisting of the Board of Directors of the Association or such committee or person(s) as the Board
of Directors of the Association shall appoint. The Plan Administrator shall have the sole and
absolute discretion and authority to interpret and enforce all appropriate rules and regulations
for the administration of this Agreement and the rights of the Executive under this Agreement, to
decide or resolve any and all questions or disputes arising under this Agreement, including
benefits payable under this Agreement and all other interpretations of this Agreement, as may arise
in connection with the Agreement.



     8.2 Agents. In the administration of this Agreement, the Plan Administrator may employ agents
and delegate to them such administrative duties as it sees fit (including acting through a duly
appointed representative) and may from time to time consult with counsel, who may be counsel to the
Association.



     8.3 Binding Effect of Decisions. The decision or action of the Plan Administrator with
respect to any question arising out of or in connection with the administration, interpretation,
and application of the Agreement and the rules and regulations promulgated hereunder shall be final
and conclusive and binding upon all persons having any interest in the Agreement. No Executive or
Beneficiary shall be deemed to have any right, vested or



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nonvested, regarding the continued use of any previously adopted assumptions, including but
not limited to the discount rate and calculation method described in Section 1.1.




     8.4 Indemnity of Plan Administrator. The Plan Administrator shall not be liable to any person
for any action taken or omitted in connection with the interpretation and administration of this
Agreement, unless such action or omission is attributable to the willful misconduct of the Plan
Administrator or any of its members. The Association shall indemnify and hold harmless the members
of the Plan Administrator against any and all claims, losses, damages, expenses, or liabilities
arising from any action or failure to act with respect to this Agreement, except in the case of
willful misconduct by the Plan Administrator or any of its members.



     8.5 Association Information. To enable the Plan Administrator to perform its functions, the
Association shall supply full and timely information to the Plan Administrator on all matters
relating to the date and circumstances of the retirement, Disability, death, or Separation from
Service of the Executive and such other pertinent information as the Plan Administrator may
reasonably require.



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     IN WITNESS WHEREOF, the Executive and a duly authorized Officer of the Association have signed
this Agreement as of the date first written above.



	 	 	 	 	 	 	 	 	 

	THE EXECUTIVE:	 	 	 	THE ASSOCIATION:	 	 
	 	 	 	 	Fraternity Federal Savings and Loan Association	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ Thomas K. Sterner

	 	 	 	By:	 	/s/ Nancy J. Rexrode	 	 
	 

	 	 	 	 	 	 	 	 
	Thomas K. Sterner
	 	 	 	 	 	 	 	 
	 

	 	 	 	Its:	 	Secretary	 	 
	 

	 	 	 	 	 	 	 	 





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SCHEDULE A




Fraternity Federal





Defined Benefit Approach



Tom Sterner



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Annual	 	 	 	 	 	 	 	 	 	Deferred	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Earnings	 	Vested	 	Account	 	Tax Asset	 	After Tax
	Year	 	Age	 	Contribution	 	Yield	 	Charge	 	Payment	 	Balance	 	Account	 	Cost
	 
	2009
	 	 	50	 	 	 	23,702	 	 	 	656	 	 	 	24,357	 	 	 	0	 	 	 	24,357	 	 	 	9,256	 	 	 	15,101	 
	2010
	 	 	51	 	 	 	25,164	 	 	 	2,198	 	 	 	27,362	 	 	 	0	 	 	 	51,719	 	 	 	10,397	 	 	 	16,964	 
	2011
	 	 	52	 	 	 	26,716	 	 	 	3,929	 	 	 	30,644	 	 	 	0	 	 	 	82,363	 	 	 	11,645	 	 	 	19,000	 
	2012
	 	 	53	 	 	 	28,363	 	 	 	5,864	 	 	 	34,228	 	 	 	0	 	 	 	116,591	 	 	 	13,007	 	 	 	21,221	 
	2013
	 	 	54	 	 	 	30,113	 	 	 	8,024	 	 	 	38,137	 	 	 	0	 	 	 	154,728	 	 	 	14,492	 	 	 	23,645	 
	2014
	 	 	55	 	 	 	31,970	 	 	 	10,428	 	 	 	42,398	 	 	 	0	 	 	 	197,126	 	 	 	16,111	 	 	 	26,286	 
	2015
	 	 	56	 	 	 	33,942	 	 	 	13,097	 	 	 	47,039	 	 	 	0	 	 	 	244,164	 	 	 	17,875	 	 	 	29,164	 
	2016
	 	 	57	 	 	 	36,035	 	 	 	16,056	 	 	 	52,092	 	 	 	0	 	 	 	296,256	 	 	 	19,795	 	 	 	32,297	 
	2017
	 	 	58	 	 	 	38,258	 	 	 	19,331	 	 	 	57,588	 	 	 	0	 	 	 	353,844	 	 	 	21,884	 	 	 	35,705	 
	2018
	 	 	59	 	 	 	40,618	 	 	 	22,948	 	 	 	63,565	 	 	 	0	 	 	 	417,410	 	 	 	24,155	 	 	 	39,411	 
	2019
	 	 	60	 	 	 	43,123	 	 	 	26,938	 	 	 	70,060	 	 	 	0	 	 	 	487,470	 	 	 	26,623	 	 	 	43,437	 
	2020
	 	 	61	 	 	 	45,782	 	 	 	31,332	 	 	 	77,115	 	 	 	0	 	 	 	564,585	 	 	 	29,304	 	 	 	47,811	 
	2021
	 	 	62	 	 	 	48,606	 	 	 	36,167	 	 	 	84,773	 	 	 	0	 	 	 	649,358	 	 	 	32,214	 	 	 	52,559	 
	2022
	 	 	63	 	 	 	51,604	 	 	 	41,478	 	 	 	93,082	 	 	 	0	 	 	 	742,440	 	 	 	35,371	 	 	 	57,711	 
	2023
	 	 	64	 	 	 	54,787	 	 	 	47,307	 	 	 	102,094	 	 	 	0	 	 	 	844,535	 	 	 	38,796	 	 	 	63,299	 
	2024
	 	 	65	 	 	 	23,814	 	 	 	52,387	 	 	 	76,200	 	 	 	52,567	 	 	 	868,168	 	 	 	28,956	 	 	 	47,244	 
	2025
	 	 	66	 	 	 	0	 	 	 	51,027	 	 	 	51,027	 	 	 	90,115	 	 	 	829,080	 	 	 	19,390	 	 	 	31,637	 
	2026
	 	 	67	 	 	 	0	 	 	 	48,616	 	 	 	48,616	 	 	 	90,115	 	 	 	787,581	 	 	 	18,474	 	 	 	30,142	 
	2027
	 	 	68	 	 	 	0	 	 	 	46,056	 	 	 	46,056	 	 	 	90,115	 	 	 	743,522	 	 	 	17,501	 	 	 	28,555	 
	2028
	 	 	69	 	 	 	0	 	 	 	43,339	 	 	 	43,339	 	 	 	90,115	 	 	 	696,746	 	 	 	16,469	 	 	 	26,870	 
	2029
	 	 	70	 	 	 	0	 	 	 	40,454	 	 	 	40,454	 	 	 	90,115	 	 	 	647,084	 	 	 	15,372	 	 	 	25,081	 
	2030
	 	 	71	 	 	 	0	 	 	 	37,391	 	 	 	37,391	 	 	 	90,115	 	 	 	594,360	 	 	 	14,209	 	 	 	23,182	 
	2031
	 	 	72	 	 	 	0	 	 	 	34,139	 	 	 	34,139	 	 	 	90,115	 	 	 	538,384	 	 	 	12,973	 	 	 	21,166	 
	2032
	 	 	73	 	 	 	0	 	 	 	30,686	 	 	 	30,686	 	 	 	90,115	 	 	 	478,956	 	 	 	11,661	 	 	 	19,026	 
	2033
	 	 	74	 	 	 	0	 	 	 	27,021	 	 	 	27,021	 	 	 	90,115	 	 	 	415,862	 	 	 	10,268	 	 	 	16,753	 
	2034
	 	 	75	 	 	 	0	 	 	 	23,130	 	 	 	23,130	 	 	 	90,115	 	 	 	348,876	 	 	 	8,789	 	 	 	14,340	 
	2035
	 	 	76	 	 	 	0	 	 	 	18,998	 	 	 	18,998	 	 	 	90,115	 	 	 	277,759	 	 	 	7,219	 	 	 	11,779	 
	2036
	 	 	77	 	 	 	0	 	 	 	14,612	 	 	 	14,612	 	 	 	90,115	 	 	 	202,256	 	 	 	5,552	 	 	 	9,059	 
	2037
	 	 	78	 	 	 	0	 	 	 	9,955	 	 	 	9,955	 	 	 	90,115	 	 	 	122,096	 	 	 	3,783	 	 	 	6,172	 
	2038
	 	 	79	 	 	 	0	 	 	 	5,011	 	 	 	5,011	 	 	 	90,115	 	 	 	36,991	 	 	 	1,904	 	 	 	3,107	 
	2039
	 	 	80	 	 	 	0	 	 	 	557	 	 	 	557	 	 	 	37,548	 	 	 	0	 	 	 	212	 	 	 	345	 
	2040
	 	 	81	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 
	 
	 
	 	 	 	 	 	 	582,595	 	 	 	769,130	 	 	 	1,351,725	 	 	 	1,351,725	 	 	 	 	 	 	 	513,656	 	 	 	838,070	 
	 	 	 	 	 	 	 
















 






BENEFICIARY DESIGNATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN




     I, Thomas K. Sterner, designate the following as beneficiary of any death benefits under this
Supplemental Executive Retirement Plan.




     Primary:  





 








     Contingent:
 





 




     Note: To name a trust as beneficiary, please provide the name of the trustee(s) and the exact
name and date of the trust agreement.



     I understand that I may change these beneficiary designations by filing a new written
designation with the Association. I further understand that the designations will be automatically
revoked if the beneficiary predeceases me, or if I have named my spouse as beneficiary and our
marriage is subsequently dissolved.



	 	 	 	 	 

	     Signature:
	 	 	 	 
	 

	 	 

	 	 
	 

	 	Thomas K. Sterner	 	 
	 
	 	 	 	 
	     Date:

	 	 	, 2009
	 

	 	 	 	 





     Accepted by the Association this _______ day of ________________, 2009.



	 	 	 	 	 

	     By:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	     Print Name:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	     Title: