COOPERATIVE BANKSHARES, INC.
DIRECTOR DEFERRED FEE AGREEMENT
THIS AGREEMENT is adopted this 28th day of March, 2002, by and between
COOPERATIVE BANKSHARES, INC., located in Wilmington, North Carolina (the
"Company"), and XXXXXXX XXXXX XXXXXX, XX. (the "Director").
INTRODUCTION
To encourage the Director to remain a member of the Company's Board of
Directors, the Company is willing to provide to the Director a deferred fee
opportunity. The Company will pay the Director's benefits from the Company's
general assets.
AGREEMENT
The Director and the Company agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:
1.1 "Anniversary Date" means December 31 of each year.
1.2 "Change in Control" means the transfer of shares of the Company's
voting common stock such that one entity or one person acquires (or is deemed to
acquire when applying Section 318 of the Code) more than 25 percent of the
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Company's outstanding voting common stock followed within twelve (12) months by
the Director's Termination of Service for reasons other than death, Disability
or retirement.
1.3 "Code" means the Internal Revenue Code of 1986, as amended.
1.4 "Deferral Account" means the Company's accounting of the Director's
accumulated Deferrals plus accrued interest.
1.5 "Deferrals" means the amount of the Director's Fees, which the Director
elects to defer according to this Agreement.
1.6 "Disability" means, if the Director is covered by a Company-sponsored
disability policy, total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy, Disability
means the Director suffering a sickness, accident or injury, which, in the
judgment of a physician who is satisfactory to the Company, prevents the
Director from performing substantially all of the Director's normal duties for
the Company. As a condition to any Disability benefits, the Company may require
the Director to submit to such physical or mental evaluations and tests as the
Company's Board of Directors deems appropriate and reasonable.
1.7 "Effective Date" means October 1, 2001.
1.8 "Election Form" means the Form attached as Exhibit 1.
1.9 "Fees" means the total fees payable to the Director during a Plan Year.
1.10 "Normal Retirement Age" means the Director's 72nd birthday.
Termination of Service is mandatory upon the Director attaining 72 years of age.
1
1.11 "Normal Retirement Date" means the later of the Normal Retirement Age
or Termination of Service.
1.12 "Plan Year" means the calendar year.
1.13 "Termination of Service" means that the Director ceases to be a member
of the Company's Board of Directors for any reason, voluntarily or
involuntarily, other than by reason of a leave of absence approved by the
Company.
ARTICLE 2
DEFERRAL ELECTION
2.1 Initial Election. The Director shall make an initial deferral election
under this Agreement by filing with the Company a signed Election Form within 30
days after the adopted date of this Agreement. The Election Form shall set forth
the amount of Fees to be deferred and shall be effective to defer only Fees
earned after the date the Election Form is received by the Company.
2.2 Election Changes
2.2.1 Generally. Upon the Company's approval, the Director may modify
the amount of Fees to be deferred annually by filing a new Election Form with
the Company prior to the beginning of the Plan Year in which the Fees are to be
deferred. The modified deferral election shall not be effective until the
calendar year following the year in which the subsequent Election Form is
received and approved by the Company.
2.2.2 Hardship. If an unforeseeable financial emergency arising from
the death of a family member, divorce, sickness, injury, catastrophe or similar
event outside the control of the Director occurs, the Director, by written
instructions to the Company, may reduce future deferrals under this Agreement.
ARTICLE 3
DEFERRAL ACCOUNT
3.1 Establishing and Crediting. The Company shall establish a Deferral
Account on its books for the Director and shall credit to the Deferral Account
the following amounts:
3.1.1 Deferrals. The Fees deferred by the Director as of the time the
Fees would have otherwise been paid to the Director.
3.1.2 Interest. On each Anniversary Date of this Agreement and
immediately prior to the payment of any benefits, but only until commencement of
the benefit payments under this Agreement, interest is to be credited on the
account balance at an annual rate equal to 10 percent, compounded monthly.
3.2 Statement of Accounts. The Company shall provide to the Director,
within 120 days after each Anniversary Date, a statement setting forth the
Deferral Account balance.
3.3 Accounting Device Only. The Deferral Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account is not a
trust fund of any kind. The Director is a general unsecured creditor of the
Company for the payment of benefits. The benefits represent the mere Company
promise to pay such benefits. The Director's rights are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by the Director's creditors.
ARTICLE 4
BENEFITS DURING LIFETIME
4.1 Normal Retirement Benefit. Upon the Normal Retirement Date, the Company
shall pay to the Director the benefit described in this Section 4.1 in lieu of
any other benefit under this Agreement.
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4.1.1. Amount of Benefit. The benefit under this Section 4.1 is the
Deferral Account balance at the Director's Normal Retirement Date.
4.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director in 120 monthly installments commencing on the month following the
Director's Normal Retirement Date. The Company shall credit interest pursuant to
Section 3.1.2 on the remaining account balance during any applicable installment
period.
4.2 Early Retirement Benefit. Upon Termination of Service prior to the
Normal Retirement Age for reasons other than death, Change of Control or
Disability, the Company shall pay to the Director the benefit described in this
Section 4.2 in lieu of any other benefit under this Agreement.
4.2.1 Amount of Benefit. The benefit under this Section 4.2 is the
Deferral Account balance at the Director's Termination of Service.
4.2.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within 60 days following the Director's Termination of
Service.
4.3 Disability Benefit. If the Director's Termination of Service prior to
Normal Retirement Age is due to Disability, the Company shall pay to the
Director the benefit described in this Section 4.3 in lieu of any other benefit
under this Agreement.
4.3.1 Amount of Benefit. The benefit under this Section 4.3 is the
Deferral Account balance at the Directors' Termination of Service.
4.3.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within 60 days following the Director's Termination of
Service.
4.4 Change of Control Benefit. Upon a Change of Control, the Company shall
pay to the Director the benefit described in this Section 4.4 in lieu of any
other benefit under this Agreement.
4.4.1 Amount of Benefit. The benefit under this Section 4.4 is the
greater of: (a) the Deferral Account balance at the Director's Termination of
Service; or (b) $77,158.
4.4.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within 60 days following the Director's Termination of
Service.
4.4.3 Internal Revenue Service Section 280G Gross Up. If, as a result
of a Change of Control, the Director becomes entitled to acceleration of
benefits under this Agreement or under any other benefit, compensation or
incentive plan or arrangement with the Company (collectively, the "Total
Benefits"), and if any part of the Total Benefits is subject to the Excise Tax
under Section 280G and Section 4999 of the Internal Revenue Code (the "Excise
Tax"), the Company shall pay to the Director the following additional amounts,
consisting of (a) a payment equal to the Excise Tax payable by the Director on
the Total Benefits under Section 4999 of the Internal Revenue Code (the "Excise
Tax Payment"), and (b) a payment equal to the amount necessary to provide the
Excise Tax Payment net of all income, payroll and excise taxes. Payment of the
additional amounts described in clauses (a) and (b) shall be made in addition to
the Total Benefits.
4.5 Hardship Distribution. Upon the Board of Director's determination
(following petition by the Director) that the Director has suffered an
unforeseeable financial emergency as described in Section 2.2.2, the Company
shall distribute to the Director all or a portion of the Deferral Account
balance as determined by the Company, but in no event shall the distribution be
greater than is necessary to relieve the financial hardship.
3
ARTICLE 5
DEATH BENEFITS
5.1 Death During Active Service. If the Director dies while in the active
service of the Company, the Company shall pay to the Director's beneficiary the
benefit described in this Section 5.1 in lieu of any other benefit under this
Agreement.
5.1.1 Amount of Benefit. The benefit under this Section 5.1 is the
Deferral Account balance at the Director's death.
5.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director's beneficiary in a lump sum within 60 days following the Director's
death.
5.2 Death During Payment of a Benefit. If the Director dies after benefit
payments have commenced under this Agreement but before receiving all such
payments, the Company shall pay the remaining benefits to the Director's
beneficiary at the same time and in the same amounts they would have been paid
to the Director had the Director survived.
5.3 Death After Termination of Service But Before Benefit Payments
Commence. If the Director is entitled to benefit payments under this Agreement,
but dies prior to the commencement of said benefit payments, the Company shall
pay the benefit payments to the Director's beneficiary that the Director was
entitled to prior to death except that the benefit payments shall commence on
the first day of the month following the date of the Director's death.
ARTICLE 6
BENEFICIARIES
6.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation. However, designations
will only be effective if signed by the Director and received by the Company
during the Director's lifetime. The Director's beneficiary designation shall be
deemed automatically revoked if the beneficiary predeceases the Director or if
the Director names a spouse as beneficiary and the marriage is subsequently
dissolved. If the Director dies without a valid beneficiary designation, all
payments shall be made to the Director's estate.
6.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incompetent, or to a person incapable of handling the disposition of
his or her property, the Company may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incompetent
person or incapable person. The Company may require proof of incompetence,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit. Such distribution shall completely discharge the Company from all
liability with respect to such benefit.
ARTICLE 7
GENERAL LIMITATIONS
7.1 Termination for Cause. Notwithstanding any provision of this Agreement
to the contrary, the Company shall not pay any benefit under this Agreement that
is in excess of the Director's Deferrals (i.e., the interest earned on the
Deferral Account) if the Company terminates the Director's service for:
(a) Gross negligence or gross neglect of duties to the Company;
(b) Commission of a felony or of a gross misdemeanor involving
moral turpitude in connection with the Director's service to the
Company; or
4
(c) Fraud, disloyalty, dishonesty or willful violation of any
law or significant Company policy committed in connection with the
Director's service and resulting in an adverse effect on the Company.
7.2 Suicide or Misstatement. The Company shall not pay any benefit under
this Agreement if the Director commits suicide within three years after the date
of this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on a resume
provided to the Company, or on any application for any benefits provided by the
Company to the Director.
ARTICLE 8
CLAIMS AND REVIEW PROCEDURES
8.1 Claims Procedure. The Company shall notify any person or entity that
makes a claim against 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 Company 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, (4) an explanation of the
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 and (5) a
time within which review must be requested. If the Company determines that there
are special circumstances requiring additional time to make a decision, the
Company 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.
8.2 Review Procedure. If the Claimant is determined by the Company 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 Company by filing a petition for review with the
Company within 60 days after receipt of the notice issued by the Company. 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 Company of the petition, the Company shall afford the Claimant
(and counsel, if any) an opportunity to present his or her position to the
Company in writing, and the Claimant (or counsel) shall have the right to review
the pertinent documents. The Company shall notify the Claimant of its decision
in writing within the 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
Company, but notice of this deferral shall be given to the Claimant.
ARTICLE 9
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
ARTICLE 10
MISCELLANEOUS
10.1 Binding Effect. This Agreement shall bind the Director and the
Company, and their beneficiaries, survivors, executors, administrators and
transferees.
10.2 No Guarantee of Service. This Agreement is not a contract for
services. It does not give the Director the right to remain in the service of
the Company, nor does it interfere with the shareholders' rights to replace the
Director. It also does not require the Director to remain in the service of the
Company nor interfere with the Director's right to terminate services at any
time.
10.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
5
10.4 Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
10.5 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of the State of North Carolina, except to the extent
preempted by the laws of the United States of America.
10.6 Unfunded Arrangement. The Director and the Director's beneficiary are
general unsecured creditors of the Company for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Company 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 Director's life is
a general asset of the Company to which the Director and the Director's
beneficiary have no preferred or secured claim.
10.7 Reorganization. The Company shall not merge or consolidate into or
with another company, or reorganize, or sell substantially all of its assets to
another company, firm, or person unless such succeeding or continuing company,
firm, or person agrees to assume and discharge the obligations of the Company
under this Agreement. Upon the occurrence of such event, the term "Company" as
used in this Agreement shall be deemed to refer to the successor or survivor
company.
10.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Director as to the subject matter hereof. No rights
are granted to the Director by virtue of this Agreement other than those
specifically set forth herein.
10.9 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
(a) Interpreting the provisions of the Agreement;
(b) Establishing and revising the method of accounting for the
Agreement;
(c) Maintaining a record of benefit payments, and
(d) Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
10.10 Named Fiduciary. The Company 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 Service of advisors and the delegation of ministerial duties to
qualified individuals.
IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.
DIRECTOR COMPANY
COOPERATIVE BANKSHARES, INC.
/s/ XXXXXXX XXXXX XXXXXX, XX. BY /s/ XXXXXXXXX XXXXXXXX, III
---------------------------------- --------------------------------------
XXXXXXX XXXXX XXXXXX, XX.
TITLE PRESIDENT
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COOPERATIVE BANKSHARES, INC.
DIRECTOR DEFERRED FEE AGREEMENT
THIS AGREEMENT is adopted this _____ day of _____, 2002, by and between
COOPERATIVE BANKSHARES, INC., located in Wilmington, North Carolina (the
"Company"), and XXXXXXX XXXXXX (the "Director").
INTRODUCTION
To encourage the Director to remain a member of the Company's Board of
Directors, the Company is willing to provide to the Director a deferred fee
opportunity. The Company will pay the Director's benefits from the Company's
general assets.
AGREEMENT
The Director and the Company agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:
1.1 "Anniversary Date" means December 31 of each year.
1.2 "Change in Control" means the transfer of shares of the Company's
voting common stock such that one entity or one person acquires (or is deemed to
acquire when applying Section 318 of the Code) more than 25 percent of the
----------
Company's outstanding voting common stock followed within twelve (12) months by
the Director's Termination of Service for reasons other than death, Disability
or retirement.
1.3 "Code" means the Internal Revenue Code of 1986, as amended.
1.4 "Deferral Account" means the Company's accounting of the Director's
accumulated Deferrals plus accrued interest.
1.5 "Deferrals" means the amount of the Director's Fees, which the Director
elects to defer according to this Agreement.
1.6 "Disability" means, if the Director is covered by a Company-sponsored
disability policy, total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy, Disability
means the Director suffering a sickness, accident or injury, which, in the
judgment of a physician who is satisfactory to the Company, prevents the
Director from performing substantially all of the Director's normal duties for
the Company. As a condition to any Disability benefits, the Company may require
the Director to submit to such physical or mental evaluations and tests as the
Company's Board of Directors deems appropriate and reasonable.
1.7 "Effective Date" means October 1, 2001.
1.8 "Election Form" means the Form attached as Exhibit 1.
1.9 "Fees" means the total fees payable to the Director during a Plan Year.
1.10 "Normal Retirement Age" means the Director's 72nd birthday.
Termination of Service is mandatory upon the Director attaining 72 years of age.
1
1.11 "Normal Retirement Date" means the later of the Normal Retirement Age
or Termination of Service.
1.12 "Plan Year" means the calendar year.
1.13 "Termination of Service" means that the Director ceases to be a member
of the Company's Board of Directors for any reason, voluntarily or
involuntarily, other than by reason of a leave of absence approved by the
Company.
ARTICLE 2
DEFERRAL ELECTION
2.1 Initial Election. The Director shall make an initial deferral election
under this Agreement by filing with the Company a signed Election Form within 30
days after the adopted date of this Agreement. The Election Form shall set forth
the amount of Fees to be deferred and shall be effective to defer only Fees
earned after the date the Election Form is received by the Company.
2.2 Election Changes
2.2.1 Generally. Upon the Company's approval, the Director may modify
the amount of Fees to be deferred annually by filing a new Election Form with
the Company prior to the beginning of the Plan Year in which the Fees are to be
deferred. The modified deferral election shall not be effective until the
calendar year following the year in which the subsequent Election Form is
received and approved by the Company.
2.2.2 Hardship. If an unforeseeable financial emergency arising from
the death of a family member, divorce, sickness, injury, catastrophe or similar
event outside the control of the Director occurs, the Director, by written
instructions to the Company, may reduce future deferrals under this Agreement.
ARTICLE 3
DEFERRAL ACCOUNT
3.1 Establishing and Crediting. The Company shall establish a Deferral
Account on its books for the Director and shall credit to the Deferral Account
the following amounts:
3.1.1 Deferrals. The Fees deferred by the Director as of the time the
Fees would have otherwise been paid to the Director.
3.1.2 Interest. On each Anniversary Date of this Agreement and
immediately prior to the payment of any benefits, but only until commencement of
the benefit payments under this Agreement, interest is to be credited on the
account balance at an annual rate equal to 10 percent, compounded monthly.
3.2 Statement of Accounts. The Company shall provide to the Director,
within 120 days after each Anniversary Date, a statement setting forth the
Deferral Account balance.
3.3 Accounting Device Only. The Deferral Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account is not a
trust fund of any kind. The Director is a general unsecured creditor of the
Company for the payment of benefits. The benefits represent the mere Company
promise to pay such benefits. The Director's rights are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by the Director's creditors.
ARTICLE 4
BENEFITS DURING LIFETIME
4.1 Normal Retirement Benefit. Upon the Normal Retirement Date, the Company
shall pay to the Director the benefit described in this Section 4.1 in lieu of
any other benefit under this Agreement.
2
4.1.1. Amount of Benefit. The benefit under this Section 4.1 is the
Deferral Account balance at the Director's Normal Retirement Date.
4.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director in 120 monthly installments commencing on the month following the
Director's Normal Retirement Date. The Company shall credit interest pursuant to
Section 3.1.2 on the remaining account balance during any applicable installment
period.
4.2 Early Retirement Benefit. Upon Termination of Service prior to the
Normal Retirement Age for reasons other than death, Change of Control or
Disability, the Company shall pay to the Director the benefit described in this
Section 4.2 in lieu of any other benefit under this Agreement.
4.2.1 Amount of Benefit. The benefit under this Section 4.2 is the
Deferral Account balance at the Director's Termination of Service.
4.2.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within 60 days following the Director's Termination of
Service.
4.3 Disability Benefit. If the Director's Termination of Service prior to
Normal Retirement Age is due to Disability, the Company shall pay to the
Director the benefit described in this Section 4.3 in lieu of any other benefit
under this Agreement.
4.3.1 Amount of Benefit. The benefit under this Section 4.3 is the
Deferral Account balance at the Directors' Termination of Service.
4.3.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within 60 days following the Director's Termination of
Service.
4.4 Change of Control Benefit. Upon a Change of Control, the Company shall
pay to the Director the benefit described in this Section 4.4 in lieu of any
other benefit under this Agreement.
4.4.1 Amount of Benefit. The benefit under this Section 4.4 is the
greater of: (a) the Deferral Account balance at the Director's Termination of
Service; or (b) $77,158.
4.4.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within 60 days following the Director's Termination of
Service.
4.4.3 Internal Revenue Service Section 280G Gross Up. If, as a result
of a Change of Control, the Director becomes entitled to acceleration of
benefits under this Agreement or under any other benefit, compensation or
incentive plan or arrangement with the Company (collectively, the "Total
Benefits"), and if any part of the Total Benefits is subject to the Excise Tax
under Section 280G and Section 4999 of the Internal Revenue Code (the "Excise
Tax"), the Company shall pay to the Director the following additional amounts,
consisting of (a) a payment equal to the Excise Tax payable by the Director on
the Total Benefits under Section 4999 of the Internal Revenue Code (the "Excise
Tax Payment"), and (b) a payment equal to the amount necessary to provide the
Excise Tax Payment net of all income, payroll and excise taxes. Payment of the
additional amounts described in clauses (a) and (b) shall be made in addition to
the Total Benefits.
4.5 Hardship Distribution. Upon the Board of Director's determination
(following petition by the Director) that the Director has suffered an
unforeseeable financial emergency as described in Section 2.2.2, the Company
shall distribute to the Director all or a portion of the Deferral Account
balance as determined by the Company, but in no event shall the distribution be
greater than is necessary to relieve the financial hardship.
3
ARTICLE 5
DEATH BENEFITS
5.1 Death During Active Service. If the Director dies while in the active
service of the Company, the Company shall pay to the Director's beneficiary the
benefit described in this Section 5.1 in lieu of any other benefit under this
Agreement.
5.1.1 Amount of Benefit. The benefit under this Section 5.1 is the
Deferral Account balance at the Director's death.
5.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director's beneficiary in a lump sum within 60 days following the Director's
death.
5.2 Death During Payment of a Benefit. If the Director dies after benefit
payments have commenced under this Agreement but before receiving all such
payments, the Company shall pay the remaining benefits to the Director's
beneficiary at the same time and in the same amounts they would have been paid
to the Director had the Director survived.
5.3 Death After Termination of Service But Before Benefit Payments
Commence. If the Director is entitled to benefit payments under this Agreement,
but dies prior to the commencement of said benefit payments, the Company shall
pay the benefit payments to the Director's beneficiary that the Director was
entitled to prior to death except that the benefit payments shall commence on
the first day of the month following the date of the Director's death.
ARTICLE 6
BENEFICIARIES
6.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation. However, designations
will only be effective if signed by the Director and received by the Company
during the Director's lifetime. The Director's beneficiary designation shall be
deemed automatically revoked if the beneficiary predeceases the Director or if
the Director names a spouse as beneficiary and the marriage is subsequently
dissolved. If the Director dies without a valid beneficiary designation, all
payments shall be made to the Director's estate.
6.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incompetent, or to a person incapable of handling the disposition of
his or her property, the Company may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incompetent
person or incapable person. The Company may require proof of incompetence,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit. Such distribution shall completely discharge the Company from all
liability with respect to such benefit.
ARTICLE 7
GENERAL LIMITATIONS
7.1 Termination for Cause. Notwithstanding any provision of this Agreement
to the contrary, the Company shall not pay any benefit under this Agreement that
is in excess of the Director's Deferrals (i.e., the interest earned on the
Deferral Account) if the Company terminates the Director's service for:
(a) Gross negligence or gross neglect of duties to the Company;
(b) Commission of a felony or of a gross misdemeanor involving
moral turpitude in connection with the Director's service to the
Company; or
4
(c) Fraud, disloyalty, dishonesty or willful violation of any
law or significant Company policy committed in connection with the
Director's service and resulting in an adverse effect on the Company.
7.2 Suicide or Misstatement. The Company shall not pay any benefit under
this Agreement if the Director commits suicide within three years after the date
of this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on a resume
provided to the Company, or on any application for any benefits provided by the
Company to the Director.
ARTICLE 8
CLAIMS AND REVIEW PROCEDURES
8.1 Claims Procedure. The Company shall notify any person or entity that
makes a claim against 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 Company 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, (4) an explanation of the
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 and (5) a
time within which review must be requested. If the Company determines that there
are special circumstances requiring additional time to make a decision, the
Company 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.
8.2 Review Procedure. If the Claimant is determined by the Company 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 Company by filing a petition for review with the
Company within 60 days after receipt of the notice issued by the Company. 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 Company of the petition, the Company shall afford the Claimant
(and counsel, if any) an opportunity to present his or her position to the
Company in writing, and the Claimant (or counsel) shall have the right to review
the pertinent documents. The Company shall notify the Claimant of its decision
in writing within the 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
Company, but notice of this deferral shall be given to the Claimant.
ARTICLE 9
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
ARTICLE 10
MISCELLANEOUS
10.1 Binding Effect. This Agreement shall bind the Director and the
Company, and their beneficiaries, survivors, executors, administrators and
transferees.
10.2 No Guarantee of Service. This Agreement is not a contract for
services. It does not give the Director the right to remain in the service of
the Company, nor does it interfere with the shareholders' rights to replace the
Director. It also does not require the Director to remain in the service of the
Company nor interfere with the Director's right to terminate services at any
time.
10.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
5
10.4 Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
10.5 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of the State of North Carolina, except to the extent
preempted by the laws of the United States of America.
10.6 Unfunded Arrangement. The Director and the Director's beneficiary are
general unsecured creditors of the Company for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Company 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 Director's life is
a general asset of the Company to which the Director and the Director's
beneficiary have no preferred or secured claim.
10.7 Reorganization. The Company shall not merge or consolidate into or
with another company, or reorganize, or sell substantially all of its assets to
another company, firm, or person unless such succeeding or continuing company,
firm, or person agrees to assume and discharge the obligations of the Company
under this Agreement. Upon the occurrence of such event, the term "Company" as
used in this Agreement shall be deemed to refer to the successor or survivor
company.
10.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Director as to the subject matter hereof. No rights
are granted to the Director by virtue of this Agreement other than those
specifically set forth herein.
10.9 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
(a) Interpreting the provisions of the Agreement;
(b) Establishing and revising the method of accounting for the
Agreement;
(c) Maintaining a record of benefit payments, and
(d) Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
10.10 Named Fiduciary. The Company 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 Service of advisors and the delegation of ministerial duties to
qualified individuals.
IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.
DIRECTOR COMPANY
COOPERATIVE BANKSHARES, INC.
BY
------------------------------------ ---------------------------------
XXXXXXX XXXXXX
TITLE
-------------------------------
6
COOPERATIVE BANKSHARES, INC.
DIRECTOR DEFERRED FEE AGREEMENT
THIS AGREEMENT is adopted this 28th day of March, 2002, by and between
COOPERATIVE BANKSHARES, INC., located in Wilmington, North Carolina (the
"Company"), and XXXXX XXXXXXX (the "Director").
INTRODUCTION
To encourage the Director to remain a member of the Company's Board of
Directors, the Company is willing to provide to the Director a deferred fee
opportunity. The Company will pay the Director's benefits from the Company's
general assets.
AGREEMENT
The Director and the Company agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:
1.1 "Anniversary Date" means December 31 of each year.
1.2 "Change in Control" means the transfer of shares of the Company's
voting common stock such that one entity or one person acquires (or is deemed to
acquire when applying Section 318 of the Code) more than 25 percent of the
-----------
Company's outstanding voting common stock followed within twelve (12) months by
the Director's Termination of Service for reasons other than death, Disability
or retirement.
1.3 "Code" means the Internal Revenue Code of 1986, as amended.
1.4 "Deferral Account" means the Company's accounting of the Director's
accumulated Deferrals plus accrued interest.
1.5 "Deferrals" means the amount of the Director's Fees, which the
Director elects to defer according to this Agreement.
1.6 "Disability" means, if the Director is covered by a Company-sponsored
disability policy, total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy, Disability
means the Director suffering a sickness, accident or injury, which, in the
judgment of a physician who is satisfactory to the Company, prevents the
Director from performing substantially all of the Director's normal duties for
the Company. As a condition to any Disability benefits, the Company may require
the Director to submit to such physical or mental evaluations and tests as the
Company's Board of Directors deems appropriate and reasonable.
1.7 "Effective Date" means October 1, 2001.
1.8 "Election Form" means the Form attached as Exhibit 1.
1.9 "Fees" means the total fees payable to the Director during a Plan Year.
1.10 "Normal Retirement Age" means the Director's 72nd birthday.
Termination of Service is mandatory upon the Director attaining 72 years of age.
1
1.11 "Normal Retirement Date" means the later of the Normal Retirement Age
or Termination of Service.
1.12 "Plan Year" means the calendar year.
1.13 "Termination of Service" means that the Director ceases to be a member
of the Company's Board of Directors for any reason, voluntarily or
involuntarily, other than by reason of a leave of absence approved by the
Company.
ARTICLE 2
DEFERRAL ELECTION
2.1 Initial Election. The Director shall make an initial deferral election
under this Agreement by filing with the Company a signed Election Form within 30
days after the adopted date of this Agreement. The Election Form shall set forth
the amount of Fees to be deferred and shall be effective to defer only Fees
earned after the date the Election Form is received by the Company.
2.2 Election Changes
2.2.1 Generally. Upon the Company's approval, the Director may modify
the amount of Fees to be deferred annually by filing a new Election Form with
the Company prior to the beginning of the Plan Year in which the Fees are to be
deferred. The modified deferral election shall not be effective until the
calendar year following the year in which the subsequent Election Form is
received and approved by the Company.
2.2.2 Hardship. If an unforeseeable financial emergency arising from
the death of a family member, divorce, sickness, injury, catastrophe or similar
event outside the control of the Director occurs, the Director, by written
instructions to the Company, may reduce future deferrals under this Agreement.
ARTICLE 3
DEFERRAL ACCOUNT
3.1 Establishing and Crediting. The Company shall establish a Deferral
Account on its books for the Director and shall credit to the Deferral Account
the following amounts:
3.1.1 Deferrals. The Fees deferred by the Director as of the time the
Fees would have otherwise been paid to the Director.
3.1.2 Interest. On each Anniversary Date of this Agreement and
immediately prior to the payment of any benefits, but only until commencement of
the benefit payments under this Agreement, interest is to be credited on the
account balance at an annual rate equal to 10 percent, compounded monthly.
3.2 Statement of Accounts. The Company shall provide to the Director,
within 120 days after each Anniversary Date, a statement setting forth the
Deferral Account balance.
3.3 Accounting Device Only. The Deferral Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account is not a
trust fund of any kind. The Director is a general unsecured creditor of the
Company for the payment of benefits. The benefits represent the mere Company
promise to pay such benefits. The Director's rights are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by the Director's creditors.
ARTICLE 4
BENEFITS DURING LIFETIME
4.1 Normal Retirement Benefit. Upon the Normal Retirement Date, the Company
shall pay to the Director the benefit described in this Section 4.1 in lieu of
any other benefit under this Agreement.
2
4.1.1. Amount of Benefit. The benefit under this Section 4.1 is the
Deferral Account balance at the Director's Normal Retirement Date.
4.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director in 120 monthly installments commencing on the month following the
Director's Normal Retirement Date. The Company shall credit interest pursuant to
Section 3.1.2 on the remaining account balance during any applicable installment
period.
4.2 Early Retirement Benefit. Upon Termination of Service prior to the
Normal Retirement Age for reasons other than death, Change of Control or
Disability, the Company shall pay to the Director the benefit described in this
Section 4.2 in lieu of any other benefit under this Agreement.
4.2.1 Amount of Benefit. The benefit under this Section 4.2 is the
Deferral Account balance at the Director's Termination of Service.
4.2.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within 60 days following the Director's Termination of
Service.
4.3 Disability Benefit. If the Director's Termination of Service prior to
Normal Retirement Age is due to Disability, the Company shall pay to the
Director the benefit described in this Section 4.3 in lieu of any other benefit
under this Agreement.
4.3.1 Amount of Benefit. The benefit under this Section 4.3 is the
Deferral Account balance at the Directors' Termination of Service.
4.3.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within 60 days following the Director's Termination of
Service.
4.4 Change of Control Benefit. Upon a Change of Control, the Company shall
pay to the Director the benefit described in this Section 4.4 in lieu of any
other benefit under this Agreement.
4.4.1 Amount of Benefit. The benefit under this Section 4.4 is the
greater of: (a) the Deferral Account balance at the Director's Termination of
Service; or (b) $77,158.
4.4.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within 60 days following the Director's Termination of
Service.
4.4.3 Internal Revenue Service Section 280G Gross Up. If, as a result
of a Change of Control, the Director becomes entitled to acceleration of
benefits under this Agreement or under any other benefit, compensation or
incentive plan or arrangement with the Company (collectively, the "Total
Benefits"), and if any part of the Total Benefits is subject to the Excise Tax
under Section 280G and Section 4999 of the Internal Revenue Code (the "Excise
Tax"), the Company shall pay to the Director the following additional amounts,
consisting of (a) a payment equal to the Excise Tax payable by the Director on
the Total Benefits under Section 4999 of the Internal Revenue Code (the "Excise
Tax Payment"), and (b) a payment equal to the amount necessary to provide the
Excise Tax Payment net of all income, payroll and excise taxes. Payment of the
additional amounts described in clauses (a) and (b) shall be made in addition to
the Total Benefits.
4.5 Hardship Distribution. Upon the Board of Director's determination
(following petition by the Director) that the Director has suffered an
unforeseeable financial emergency as described in Section 2.2.2, the Company
shall distribute to the Director all or a portion of the Deferral Account
balance as determined by the Company, but in no event shall the distribution be
greater than is necessary to relieve the financial hardship.
3
ARTICLE 5
DEATH BENEFITS
5.1 Death During Active Service. If the Director dies while in the active
service of the Company, the Company shall pay to the Director's beneficiary the
benefit described in this Section 5.1 in lieu of any other benefit under this
Agreement.
5.1.1 Amount of Benefit. The benefit under this Section 5.1 is the
Deferral Account balance at the Director's death.
5.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director's beneficiary in a lump sum within 60 days following the Director's
death.
5.2 Death During Payment of a Benefit. If the Director dies after benefit
payments have commenced under this Agreement but before receiving all such
payments, the Company shall pay the remaining benefits to the Director's
beneficiary at the same time and in the same amounts they would have been paid
to the Director had the Director survived.
5.3 Death After Termination of Service But Before Benefit Payments
Commence. If the Director is entitled to benefit payments under this Agreement,
but dies prior to the commencement of said benefit payments, the Company shall
pay the benefit payments to the Director's beneficiary that the Director was
entitled to prior to death except that the benefit payments shall commence on
the first day of the month following the date of the Director's death.
ARTICLE 6
BENEFICIARIES
6.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation. However, designations
will only be effective if signed by the Director and received by the Company
during the Director's lifetime. The Director's beneficiary designation shall be
deemed automatically revoked if the beneficiary predeceases the Director or if
the Director names a spouse as beneficiary and the marriage is subsequently
dissolved. If the Director dies without a valid beneficiary designation, all
payments shall be made to the Director's estate.
6.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incompetent, or to a person incapable of handling the disposition of
his or her property, the Company may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incompetent
person or incapable person. The Company may require proof of incompetence,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit. Such distribution shall completely discharge the Company from all
liability with respect to such benefit.
ARTICLE 7
GENERAL LIMITATIONS
7.1 Termination for Cause. Notwithstanding any provision of this Agreement
to the contrary, the Company shall not pay any benefit under this Agreement that
is in excess of the Director's Deferrals (i.e., the interest earned on the
Deferral Account) if the Company terminates the Director's service for:
(a) Gross negligence or gross neglect of duties to the Company;
(b) Commission of a felony or of a gross misdemeanor involving
moral turpitude in connection with the Director's service to the
Company; or
4
(c) Fraud, disloyalty, dishonesty or willful violation of any
law or significant Company policy committed in connection with the
Director's service and resulting in an adverse effect on the Company.
7.2 Suicide or Misstatement. The Company shall not pay any benefit under
this Agreement if the Director commits suicide within three years after the date
of this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on a resume
provided to the Company, or on any application for any benefits provided by the
Company to the Director.
ARTICLE 8
CLAIMS AND REVIEW PROCEDURES
8.1 Claims Procedure. The Company shall notify any person or entity that
makes a claim against 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 Company 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, (4) an explanation of the
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 and (5) a
time within which review must be requested. If the Company determines that there
are special circumstances requiring additional time to make a decision, the
Company 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.
8.2 Review Procedure. If the Claimant is determined by the Company 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 Company by filing a petition for review with the
Company within 60 days after receipt of the notice issued by the Company. 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 Company of the petition, the Company shall afford the Claimant
(and counsel, if any) an opportunity to present his or her position to the
Company in writing, and the Claimant (or counsel) shall have the right to review
the pertinent documents. The Company shall notify the Claimant of its decision
in writing within the 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
Company, but notice of this deferral shall be given to the Claimant.
ARTICLE 9
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
ARTICLE 10
MISCELLANEOUS
10.1 Binding Effect. This Agreement shall bind the Director and the
Company, and their beneficiaries, survivors, executors, administrators and
transferees.
10.2 No Guarantee of Service. This Agreement is not a contract for
services. It does not give the Director the right to remain in the service of
the Company, nor does it interfere with the shareholders' rights to replace the
Director. It also does not require the Director to remain in the service of the
Company nor interfere with the Director's right to terminate services at any
time.
10.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
5
10.4 Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
10.5 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of the State of North Carolina, except to the extent
preempted by the laws of the United States of America.
10.6 Unfunded Arrangement. The Director and the Director's beneficiary are
general unsecured creditors of the Company for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Company 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 Director's life is
a general asset of the Company to which the Director and the Director's
beneficiary have no preferred or secured claim.
10.7 Reorganization. The Company shall not merge or consolidate into or
with another company, or reorganize, or sell substantially all of its assets to
another company, firm, or person unless such succeeding or continuing company,
firm, or person agrees to assume and discharge the obligations of the Company
under this Agreement. Upon the occurrence of such event, the term "Company" as
used in this Agreement shall be deemed to refer to the successor or survivor
company.
10.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Director as to the subject matter hereof. No rights
are granted to the Director by virtue of this Agreement other than those
specifically set forth herein.
10.9 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
(a) Interpreting the provisions of the Agreement;
(b) Establishing and revising the method of accounting for the
Agreement;
(c) Maintaining a record of benefit payments, and
(d) Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
10.10 Named Fiduciary. The Company 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 Service of advisors and the delegation of ministerial duties to
qualified individuals.
IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.
DIRECTOR COMPANY
COOPERATIVE BANKSHARES, INC.
/s/ XXXXX XXXXXXX BY /s/ XXXXXXXXX XXXXXXXX, III
------------------------------------ ------------------------------------
XXXXX XXXXXXX
TITLE PRESIDENT
-----------------------------------
6
COOPERATIVE BANKSHARES, INC.
DIRECTOR DEFERRED FEE AGREEMENT
THIS AGREEMENT is adopted this 28th day of March, 2002, by and between
COOPERATIVE BANKSHARES, INC., located in Wilmington, North Carolina (the
"Company"), and XXXXXX XXXXXXXX KING, III (the "Director").
INTRODUCTION
To encourage the Director to remain a member of the Company's Board of
Directors, the Company is willing to provide to the Director a deferred fee
opportunity. The Company will pay the Director's benefits from the Company's
general assets.
AGREEMENT
The Director and the Company agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:
1.1 "Anniversary Date" means December 31 of each year.
1.2 "Change in Control" means the transfer of shares of the Company's
voting common stock such that one entity or one person acquires (or is deemed to
acquire when applying Section 318 of the Code) more than 25 percent of the
-----------
Company's outstanding voting common stock followed within twelve (12) months by
the Director's Termination of Service for reasons other than death, Disability
or retirement.
1.3 "Code" means the Internal Revenue Code of 1986, as amended.
1.4 "Deferral Account" means the Company's accounting of the Director's
accumulated Deferrals plus accrued interest.
1.5 "Deferrals" means the amount of the Director's Fees, which the Director
elects to defer according to this Agreement.
1.6 "Disability" means, if the Director is covered by a Company-sponsored
disability policy, total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy, Disability
means the Director suffering a sickness, accident or injury, which, in the
judgment of a physician who is satisfactory to the Company, prevents the
Director from performing substantially all of the Director's normal duties for
the Company. As a condition to any Disability benefits, the Company may require
the Director to submit to such physical or mental evaluations and tests as the
Company's Board of Directors deems appropriate and reasonable.
1.7 "Effective Date" means October 1, 2001.
1.8 "Election Form" means the Form attached as Exhibit 1.
1.9 "Fees" means the total fees payable to the Director during a Plan Year.
1.10 "Normal Retirement Age" means the Director's 72nd birthday.
Termination of Service is mandatory upon the Director attaining 72 years of age.
1
1.11 "Normal Retirement Date" means the later of the Normal Retirement Age
or Termination of Service.
1.12 "Plan Year" means the calendar year.
1.13 "Termination of Service" means that the Director ceases to be a member
of the Company's Board of Directors for any reason, voluntarily or
involuntarily, other than by reason of a leave of absence approved by the
Company.
ARTICLE 2
DEFERRAL ELECTION
2.1 Initial Election. The Director shall make an initial deferral election
under this Agreement by filing with the Company a signed Election Form within 30
days after the adopted date of this Agreement. The Election Form shall set forth
the amount of Fees to be deferred and shall be effective to defer only Fees
earned after the date the Election Form is received by the Company.
2.2 Election Changes
2.2.1 Generally. Upon the Company's approval, the Director may modify
the amount of Fees to be deferred annually by filing a new Election Form with
the Company prior to the beginning of the Plan Year in which the Fees are to be
deferred. The modified deferral election shall not be effective until the
calendar year following the year in which the subsequent Election Form is
received and approved by the Company.
2.2.2 Hardship. If an unforeseeable financial emergency arising from
the death of a family member, divorce, sickness, injury, catastrophe or similar
event outside the control of the Director occurs, the Director, by written
instructions to the Company, may reduce future deferrals under this Agreement.
ARTICLE 3
DEFERRAL ACCOUNT
3.1 Establishing and Crediting. The Company shall establish a Deferral
Account on its books for the Director and shall credit to the Deferral Account
the following amounts:
3.1.1 Deferrals. The Fees deferred by the Director as of the time the
Fees would have otherwise been paid to the Director.
3.1.2 Interest. On each Anniversary Date of this Agreement and
immediately prior to the payment of any benefits, but only until commencement of
the benefit payments under this Agreement, interest is to be credited on the
account balance at an annual rate equal to 10 percent, compounded monthly.
3.2 Statement of Accounts. The Company shall provide to the Director,
within 120 days after each Anniversary Date, a statement setting forth the
Deferral Account balance.
3.3 Accounting Device Only. The Deferral Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account is not a
trust fund of any kind. The Director is a general unsecured creditor of the
Company for the payment of benefits. The benefits represent the mere Company
promise to pay such benefits. The Director's rights are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by the Director's creditors.
ARTICLE 4
BENEFITS DURING LIFETIME
4.1 Normal Retirement Benefit. Upon the Normal Retirement Date, the Company
shall pay to the Director the benefit described in this Section 4.1 in lieu of
any other benefit under this Agreement.
2
4.1.1. Amount of Benefit. The benefit under this Section 4.1 is the
Deferral Account balance at the Director's Normal Retirement Date.
4.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director in 120 monthly installments commencing on the month following the
Director's Normal Retirement Date. The Company shall credit interest pursuant to
Section 3.1.2 on the remaining account balance during any applicable installment
period.
4.2 Early Retirement Benefit. Upon Termination of Service prior to the
Normal Retirement Age for reasons other than death, Change of Control or
Disability, the Company shall pay to the Director the benefit described in this
Section 4.2 in lieu of any other benefit under this Agreement.
4.2.1 Amount of Benefit. The benefit under this Section 4.2 is the
Deferral Account balance at the Director's Termination of Service.
4.2.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within 60 days following the Director's Termination of
Service.
4.3 Disability Benefit. If the Director's Termination of Service prior to
Normal Retirement Age is due to Disability, the Company shall pay to the
Director the benefit described in this Section 4.3 in lieu of any other benefit
under this Agreement.
4.3.1 Amount of Benefit. The benefit under this Section 4.3 is the
Deferral Account balance at the Directors' Termination of Service.
4.3.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within 60 days following the Director's Termination of
Service.
4.4 Change of Control Benefit. Upon a Change of Control, the Company shall
pay to the Director the benefit described in this Section 4.4 in lieu of any
other benefit under this Agreement.
4.4.1 Amount of Benefit. The benefit under this Section 4.4 is the
greater of: (a) the Deferral Account balance at the Director's Termination of
Service; or (b) $77,158.
4.4.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within 60 days following the Director's Termination of
Service.
4.4.3 Internal Revenue Service Section 280G Gross Up. If, as a result
of a Change of Control, the Director becomes entitled to acceleration of
benefits under this Agreement or under any other benefit, compensation or
incentive plan or arrangement with the Company (collectively, the "Total
Benefits"), and if any part of the Total Benefits is subject to the Excise Tax
under Section 280G and Section 4999 of the Internal Revenue Code (the "Excise
Tax"), the Company shall pay to the Director the following additional amounts,
consisting of (a) a payment equal to the Excise Tax payable by the Director on
the Total Benefits under Section 4999 of the Internal Revenue Code (the "Excise
Tax Payment"), and (b) a payment equal to the amount necessary to provide the
Excise Tax Payment net of all income, payroll and excise taxes. Payment of the
additional amounts described in clauses (a) and (b) shall be made in addition to
the Total Benefits.
4.5 Hardship Distribution. Upon the Board of Director's determination
(following petition by the Director) that the Director has suffered an
unforeseeable financial emergency as described in Section 2.2.2, the Company
shall distribute to the Director all or a portion of the Deferral Account
balance as determined by the Company, but in no event shall the distribution be
greater than is necessary to relieve the financial hardship.
3
ARTICLE 5
DEATH BENEFITS
5.1 Death During Active Service. If the Director dies while in the active
service of the Company, the Company shall pay to the Director's beneficiary the
benefit described in this Section 5.1 in lieu of any other benefit under this
Agreement.
5.1.1 Amount of Benefit. The benefit under this Section 5.1 is the
Deferral Account balance at the Director's death.
5.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director's beneficiary in a lump sum within 60 days following the Director's
death.
5.2 Death During Payment of a Benefit. If the Director dies after benefit
payments have commenced under this Agreement but before receiving all such
payments, the Company shall pay the remaining benefits to the Director's
beneficiary at the same time and in the same amounts they would have been paid
to the Director had the Director survived.
5.3 Death After Termination of Service But Before Benefit Payments
Commence. If the Director is entitled to benefit payments under this Agreement,
but dies prior to the commencement of said benefit payments, the Company shall
pay the benefit payments to the Director's beneficiary that the Director was
entitled to prior to death except that the benefit payments shall commence on
the first day of the month following the date of the Director's death.
ARTICLE 6
BENEFICIARIES
6.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation. However, designations
will only be effective if signed by the Director and received by the Company
during the Director's lifetime. The Director's beneficiary designation shall be
deemed automatically revoked if the beneficiary predeceases the Director or if
the Director names a spouse as beneficiary and the marriage is subsequently
dissolved. If the Director dies without a valid beneficiary designation, all
payments shall be made to the Director's estate.
6.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incompetent, or to a person incapable of handling the disposition of
his or her property, the Company may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incompetent
person or incapable person. The Company may require proof of incompetence,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit. Such distribution shall completely discharge the Company from all
liability with respect to such benefit.
ARTICLE 7
GENERAL LIMITATIONS
7.1 Termination for Cause. Notwithstanding any provision of this Agreement
to the contrary, the Company shall not pay any benefit under this Agreement that
is in excess of the Director's Deferrals (i.e., the interest earned on the
Deferral Account) if the Company terminates the Director's service for:
(a) Gross negligence or gross neglect of duties to the Company;
(b) Commission of a felony or of a gross misdemeanor involving
moral turpitude in connection with the Director's service to the
Company; or
4
(c) Fraud, disloyalty, dishonesty or willful violation of any
law or significant Company policy committed in connection with the
Director's service and resulting in an adverse effect on the Company.
7.2 Suicide or Misstatement. The Company shall not pay any benefit under
this Agreement if the Director commits suicide within three years after the date
of this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on a resume
provided to the Company, or on any application for any benefits provided by the
Company to the Director.
ARTICLE 8
CLAIMS AND REVIEW PROCEDURES
8.1 Claims Procedure. The Company shall notify any person or entity that
makes a claim against 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 Company 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, (4) an explanation of the
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 and (5) a
time within which review must be requested. If the Company determines that there
are special circumstances requiring additional time to make a decision, the
Company 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.
8.2 Review Procedure. If the Claimant is determined by the Company 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 Company by filing a petition for review with the
Company within 60 days after receipt of the notice issued by the Company. 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 Company of the petition, the Company shall afford the Claimant
(and counsel, if any) an opportunity to present his or her position to the
Company in writing, and the Claimant (or counsel) shall have the right to review
the pertinent documents. The Company shall notify the Claimant of its decision
in writing within the 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
Company, but notice of this deferral shall be given to the Claimant.
ARTICLE 9
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
ARTICLE 10
MISCELLANEOUS
10.1 Binding Effect. This Agreement shall bind the Director and the
Company, and their beneficiaries, survivors, executors, administrators and
transferees.
10.2 No Guarantee of Service. This Agreement is not a contract for
services. It does not give the Director the right to remain in the service of
the Company, nor does it interfere with the shareholders' rights to replace the
Director. It also does not require the Director to remain in the service of the
Company nor interfere with the Director's right to terminate services at any
time.
10.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
5
10.4 Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
10.5 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of the State of North Carolina, except to the extent
preempted by the laws of the United States of America.
10.6 Unfunded Arrangement. The Director and the Director's beneficiary are
general unsecured creditors of the Company for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Company 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 Director's life is
a general asset of the Company to which the Director and the Director's
beneficiary have no preferred or secured claim.
10.7 Reorganization. The Company shall not merge or consolidate into or
with another company, or reorganize, or sell substantially all of its assets to
another company, firm, or person unless such succeeding or continuing company,
firm, or person agrees to assume and discharge the obligations of the Company
under this Agreement. Upon the occurrence of such event, the term "Company" as
used in this Agreement shall be deemed to refer to the successor or survivor
company.
10.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Director as to the subject matter hereof. No rights
are granted to the Director by virtue of this Agreement other than those
specifically set forth herein.
10.9 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
(a) Interpreting the provisions of the Agreement;
(b) Establishing and revising the method of accounting for the
Agreement;
(c) Maintaining a record of benefit payments, and
(d) Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
10.10 Named Fiduciary. The Company 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 Service of advisors and the delegation of ministerial duties to
qualified individuals.
IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.
Director Company
COOPERATIVE BANKSHARES, INC.
/s/ Xxxxxx Xxxxxxxx Xxxx, III By /s/ Xxxxxxxxx Xxxxxxxx, III
------------------------------------ ------------------------------------
Xxxxxx Xxxxxxxx Xxxx, III
Title President
----------------------------------
6
COOPERATIVE BANKSHARES, INC.
DIRECTOR DEFERRED FEE AGREEMENT
THIS AGREEMENT is adopted this 28th day of March, 2002, by and between
COOPERATIVE BANKSHARES, INC., located in Wilmington, North Carolina (the
"Company"), and XXXXXXX XXXXX (the "Director").
INTRODUCTION
To encourage the Director to remain a member of the Company's Board of
Directors, the Company is willing to provide to the Director a deferred fee
opportunity. The Company will pay the Director's benefits from the Company's
general assets.
AGREEMENT
The Director and the Company agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:
1.1 "Anniversary Date" means December 31 of each year.
1.2 "Change in Control" means the transfer of shares of the Company's
voting common stock such that one entity or one person acquires (or is deemed to
acquire when applying Section 318 of the Code) more than 25 percent of the
-----------
Company's outstanding voting common stock followed within twelve (12) months by
the Director's Termination of Service for reasons other than death, Disability
or retirement.
1.3 "Code" means the Internal Revenue Code of 1986, as amended.
1.4 "Deferral Account" means the Company's accounting of the Director's
accumulated Deferrals plus accrued interest.
1.5 "Deferrals" means the amount of the Director's Fees, which the Director
elects to defer according to this Agreement.
1.6 "Disability" means, if the Director is covered by a Company-sponsored
disability policy, total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy, Disability
means the Director suffering a sickness, accident or injury, which, in the
judgment of a physician who is satisfactory to the Company, prevents the
Director from performing substantially all of the Director's normal duties for
the Company. As a condition to any Disability benefits, the Company may require
the Director to submit to such physical or mental evaluations and tests as the
Company's Board of Directors deems appropriate and reasonable.
1.7 "Effective Date" means October 1, 2001.
1.8 "Election Form" means the Form attached as Exhibit 1.
1.9 "Fees" means the total fees payable to the Director during a Plan Year.
1.10 "Normal Retirement Age" means the Director's 72nd birthday.
Termination of Service is mandatory upon the Director attaining 72 years of age.
1
1.11 "Normal Retirement Date" means the later of the Normal Retirement Age
or Termination of Service.
1.12 "Plan Year" means the calendar year.
1.13 "Termination of Service" means that the Director ceases to be a member
of the Company's Board of Directors for any reason, voluntarily or
involuntarily, other than by reason of a leave of absence approved by the
Company.
ARTICLE 2
DEFERRAL ELECTION
2.1 Initial Election. The Director shall make an initial deferral election
under this Agreement by filing with the Company a signed Election Form within 30
days after the adopted date of this Agreement. The Election Form shall set forth
the amount of Fees to be deferred and shall be effective to defer only Fees
earned after the date the Election Form is received by the Company.
2.2 ELECTION CHANGES
2.2.1 Generally. Upon the Company's approval, the Director may modify
the amount of Fees to be deferred annually by filing a new Election Form with
the Company prior to the beginning of the Plan Year in which the Fees are to be
deferred. The modified deferral election shall not be effective until the
calendar year following the year in which the subsequent Election Form is
received and approved by the Company.
2.2.2 Hardship. If an unforeseeable financial emergency arising from
the death of a family member, divorce, sickness, injury, catastrophe or similar
event outside the control of the Director occurs, the Director, by written
instructions to the Company, may reduce future deferrals under this Agreement.
ARTICLE 3
DEFERRAL ACCOUNT
3.1 Establishing and Crediting. The Company shall establish a Deferral
Account on its books for the Director and shall credit to the Deferral Account
the following amounts:
3.1.1 Deferrals. The Fees deferred by the Director as of the time the
Fees would have otherwise been paid to the Director.
3.1.2 Interest. On each Anniversary Date of this Agreement and
immediately prior to the payment of any benefits, but only until commencement of
the benefit payments under this Agreement, interest is to be credited on the
account balance at an annual rate equal to 10 percent, compounded monthly.
3.2 Statement of Accounts. The Company shall provide to the Director,
within 120 days after each Anniversary Date, a statement setting forth the
Deferral Account balance.
3.3 Accounting Device Only. The Deferral Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account is not a
trust fund of any kind. The Director is a general unsecured creditor of the
Company for the payment of benefits. The benefits represent the mere Company
promise to pay such benefits. The Director's rights are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by the Director's creditors.
ARTICLE 4
BENEFITS DURING LIFETIME
4.1 Normal Retirement Benefit. Upon the Normal Retirement Date, the Company
shall pay to the Director the benefit described in this Section 4.1 in lieu of
any other benefit under this Agreement.
2
4.1.1. Amount of Benefit. The benefit under this Section 4.1 is the
Deferral Account balance at the Director's Normal Retirement Date.
4.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director in 120 monthly installments commencing on the month following the
Director's Normal Retirement Date. The Company shall credit interest pursuant to
Section 3.1.2 on the remaining account balance during any applicable installment
period.
4.2 Early Retirement Benefit. Upon Termination of Service prior to the
Normal Retirement Age for reasons other than death, Change of Control or
Disability, the Company shall pay to the Director the benefit described in this
Section 4.2 in lieu of any other benefit under this Agreement.
4.2.1 Amount of Benefit. The benefit under this Section 4.2 is the
Deferral Account balance at the Director's Termination of Service.
4.2.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within 60 days following the Director's Termination of
Service.
4.3 Disability Benefit. If the Director's Termination of Service prior to
Normal Retirement Age is due to Disability, the Company shall pay to the
Director the benefit described in this Section 4.3 in lieu of any other benefit
under this Agreement.
4.3.1 Amount of Benefit. The benefit under this Section 4.3 is the
Deferral Account balance at the Directors' Termination of Service.
4.3.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within 60 days following the Director's Termination of
Service.
4.4 Change of Control Benefit. Upon a Change of Control, the Company shall
pay to the Director the benefit described in this Section 4.4 in lieu of any
other benefit under this Agreement.
4.4.1 Amount of Benefit. The benefit under this Section 4.4 is the
greater of: (a) the Deferral Account balance at the Director's Termination of
Service; or (b) $77,158.
4.4.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within 60 days following the Director's Termination of
Service.
4.4.3 Internal Revenue Service Section 280G Gross Up. If, as a result
of a Change of Control, the Director becomes entitled to acceleration of
benefits under this Agreement or under any other benefit, compensation or
incentive plan or arrangement with the Company (collectively, the "Total
Benefits"), and if any part of the Total Benefits is subject to the Excise Tax
under Section 280G and Section 4999 of the Internal Revenue Code (the "Excise
Tax"), the Company shall pay to the Director the following additional amounts,
consisting of (a) a payment equal to the Excise Tax payable by the Director on
the Total Benefits under Section 4999 of the Internal Revenue Code (the "Excise
Tax Payment"), and (b) a payment equal to the amount necessary to provide the
Excise Tax Payment net of all income, payroll and excise taxes. Payment of the
additional amounts described in clauses (a) and (b) shall be made in addition to
the Total Benefits.
4.5 Hardship Distribution. Upon the Board of Director's determination
(following petition by the Director) that the Director has suffered an
unforeseeable financial emergency as described in Section 2.2.2, the Company
shall distribute to the Director all or a portion of the Deferral Account
balance as determined by the Company, but in no event shall the distribution be
greater than is necessary to relieve the financial hardship.
3
ARTICLE 5
DEATH BENEFITS
5.1 Death During Active Service. If the Director dies while in the active
service of the Company, the Company shall pay to the Director's beneficiary the
benefit described in this Section 5.1 in lieu of any other benefit under this
Agreement.
5.1.1 Amount of Benefit. The benefit under this Section 5.1 is the
Deferral Account balance at the Director's death.
5.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director's beneficiary in a lump sum within 60 days following the Director's
death.
5.2 Death During Payment of a Benefit. If the Director dies after benefit
payments have commenced under this Agreement but before receiving all such
payments, the Company shall pay the remaining benefits to the Director's
beneficiary at the same time and in the same amounts they would have been paid
to the Director had the Director survived.
5.3 Death After Termination of Service But Before Benefit Payments
Commence. If the Director is entitled to benefit payments under this Agreement,
but dies prior to the commencement of said benefit payments, the Company shall
pay the benefit payments to the Director's beneficiary that the Director was
entitled to prior to death except that the benefit payments shall commence on
the first day of the month following the date of the Director's death.
ARTICLE 6
BENEFICIARIES
6.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation. However, designations
will only be effective if signed by the Director and received by the Company
during the Director's lifetime. The Director's beneficiary designation shall be
deemed automatically revoked if the beneficiary predeceases the Director or if
the Director names a spouse as beneficiary and the marriage is subsequently
dissolved. If the Director dies without a valid beneficiary designation, all
payments shall be made to the Director's estate.
6.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incompetent, or to a person incapable of handling the disposition of
his or her property, the Company may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incompetent
person or incapable person. The Company may require proof of incompetence,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit. Such distribution shall completely discharge the Company from all
liability with respect to such benefit.
ARTICLE 7
GENERAL LIMITATIONS
7.1 Termination for Cause. Notwithstanding any provision of this Agreement
to the contrary, the Company shall not pay any benefit under this Agreement that
is in excess of the Director's Deferrals (i.e., the interest earned on the
Deferral Account) if the Company terminates the Director's service for:
(a) Gross negligence or gross neglect of duties to the Company;
(b) Commission of a felony or of a gross misdemeanor involving
moral turpitude in connection with the Director's service to the
Company; or
4
(c) Fraud, disloyalty, dishonesty or willful violation of any
law or significant Company policy committed in connection with the
Director's service and resulting in an adverse effect on the Company.
7.2 Suicide or Misstatement. The Company shall not pay any benefit under
this Agreement if the Director commits suicide within three years after the date
of this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on a resume
provided to the Company, or on any application for any benefits provided by the
Company to the Director.
ARTICLE 8
CLAIMS AND REVIEW PROCEDURES
8.1 Claims Procedure. The Company shall notify any person or entity that
makes a claim against 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 Company 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, (4) an explanation of the
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 and (5) a
time within which review must be requested. If the Company determines that there
are special circumstances requiring additional time to make a decision, the
Company 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.
8.2 Review Procedure. If the Claimant is determined by the Company 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 Company by filing a petition for review with the
Company within 60 days after receipt of the notice issued by the Company. 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 Company of the petition, the Company shall afford the Claimant
(and counsel, if any) an opportunity to present his or her position to the
Company in writing, and the Claimant (or counsel) shall have the right to review
the pertinent documents. The Company shall notify the Claimant of its decision
in writing within the 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
Company, but notice of this deferral shall be given to the Claimant.
ARTICLE 9
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
ARTICLE 10
MISCELLANEOUS
10.1 Binding Effect. This Agreement shall bind the Director and the
Company, and their beneficiaries, survivors, executors, administrators and
transferees.
10.2 No Guarantee of Service. This Agreement is not a contract for
services. It does not give the Director the right to remain in the service of
the Company, nor does it interfere with the shareholders' rights to replace the
Director. It also does not require the Director to remain in the service of the
Company nor interfere with the Director's right to terminate services at any
time.
10.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
5
10.4 Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
10.5 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of the State of North Carolina, except to the extent
preempted by the laws of the United States of America.
10.6 Unfunded Arrangement. The Director and the Director's beneficiary are
general unsecured creditors of the Company for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Company 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 Director's life is
a general asset of the Company to which the Director and the Director's
beneficiary have no preferred or secured claim.
10.7 Reorganization. The Company shall not merge or consolidate into or
with another company, or reorganize, or sell substantially all of its assets to
another company, firm, or person unless such succeeding or continuing company,
firm, or person agrees to assume and discharge the obligations of the Company
under this Agreement. Upon the occurrence of such event, the term "Company" as
used in this Agreement shall be deemed to refer to the successor or survivor
company.
10.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Director as to the subject matter hereof. No rights
are granted to the Director by virtue of this Agreement other than those
specifically set forth herein.
10.9 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
(a) Interpreting the provisions of the Agreement;
(b) Establishing and revising the method of accounting for the
Agreement;
(c) Maintaining a record of benefit payments, and
(d) Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
10.10 Named Fiduciary. The Company 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 Service of advisors and the delegation of ministerial duties to
qualified individuals.
IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.
DIRECTOR COMPANY
COOPERATIVE BANKSHARES, INC.
/s/ XXXXXXX XXXXX BY /s/ XXXXXXXXX XXXXXXXX, III
------------------------------------ --------------------------------------
XXXXXXX XXXXX
TITLE PRESIDENT
-----------------------------------
6
COOPERATIVE BANKSHARES, INC.
DIRECTOR DEFERRED FEE AGREEMENT
THIS AGREEMENT is adopted this 28th day of March, 2002, by and between
COOPERATIVE BANKSHARES, INC., located in Wilmington, North Carolina (the
"Company"), and O. XXXXXXX XXXXXX, JR. (the "Director").
INTRODUCTION
To encourage the Director to remain a member of the Company's Board of
Directors, the Company is willing to provide to the Director a deferred fee
opportunity. The Company will pay the Director's benefits from the Company's
general assets.
AGREEMENT
The Director and the Company agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:
1.1 "Anniversary Date" means December 31 of each year.
1.2 "Change in Control" means the transfer of shares of the Company's
voting common stock such that one entity or one person acquires (or is deemed to
acquire when applying Section 318 of the Code) more than 25 percent of the
----------
Company's outstanding voting common stock followed within twelve (12) months by
the Director's Termination of Service for reasons other than death, Disability
or retirement.
1.3 "Code" means the Internal Revenue Code of 1986, as amended.
1.4 "Deferral Account" means the Company's accounting of the Director's
accumulated Deferrals plus accrued interest.
1.5 "Deferrals" means the amount of the Director's Fees, which the Director
elects to defer according to this Agreement.
1.6 "Disability" means, if the Director is covered by a Company-sponsored
disability policy, total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy, Disability
means the Director suffering a sickness, accident or injury, which, in the
judgment of a physician who is satisfactory to the Company, prevents the
Director from performing substantially all of the Director's normal duties for
the Company. As a condition to any Disability benefits, the Company may require
the Director to submit to such physical or mental evaluations and tests as the
Company's Board of Directors deems appropriate and reasonable.
1.7 "Effective Date" means October 1, 2001.
1.8 "Election Form" means the Form attached as Exhibit 1.
1.9 "Fees" means the total fees payable to the Director during a Plan Year.
1.10 "Normal Retirement Age" means the Director's 72nd birthday.
Termination of Service is mandatory upon the Director attaining 72 years of age.
1
1.11 "Normal Retirement Date" means the later of the Normal Retirement Age
or Termination of Service.
1.12 "Plan Year" means the calendar year.
1.13 "Termination of Service" means that the Director ceases to be a member
of the Company's Board of Directors for any reason, voluntarily or
involuntarily, other than by reason of a leave of absence approved by the
Company.
ARTICLE 2
DEFERRAL ELECTION
2.1 Initial Election. The Director shall make an initial deferral election
under this Agreement by filing with the Company a signed Election Form within 30
days after the adopted date of this Agreement. The Election Form shall set forth
the amount of Fees to be deferred and shall be effective to defer only Fees
earned after the date the Election Form is received by the Company.
2.2 Election Changes
2.2.1 Generally. Upon the Company's approval, the Director may modify
the amount of Fees to be deferred annually by filing a new Election Form with
the Company prior to the beginning of the Plan Year in which the Fees are to be
deferred. The modified deferral election shall not be effective until the
calendar year following the year in which the subsequent Election Form is
received and approved by the Company.
2.2.2 Hardship. If an unforeseeable financial emergency arising from
the death of a family member, divorce, sickness, injury, catastrophe or similar
event outside the control of the Director occurs, the Director, by written
instructions to the Company, may reduce future deferrals under this Agreement.
ARTICLE 3
DEFERRAL ACCOUNT
3.1 Establishing and Crediting. The Company shall establish a Deferral
Account on its books for the Director and shall credit to the Deferral Account
the following amounts:
3.1.1 Deferrals. The Fees deferred by the Director as of the time the
Fees would have otherwise been paid to the Director.
3.1.2 Interest. On each Anniversary Date of this Agreement and
immediately prior to the payment of any benefits, but only until commencement of
the benefit payments under this Agreement, interest is to be credited on the
account balance at an annual rate equal to 10 percent, compounded monthly.
3.2 Statement of Accounts. The Company shall provide to the Director,
within 120 days after each Anniversary Date, a statement setting forth the
Deferral Account balance.
3.3 Accounting Device Only. The Deferral Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account is not a
trust fund of any kind. The Director is a general unsecured creditor of the
Company for the payment of benefits. The benefits represent the mere Company
promise to pay such benefits. The Director's rights are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by the Director's creditors.
ARTICLE 4
BENEFITS DURING LIFETIME
4.1 Normal Retirement Benefit. Upon the Normal Retirement Date, the Company
shall pay to the Director the benefit described in this Section 4.1 in lieu of
any other benefit under this Agreement.
2
4.1.1. Amount of Benefit. The benefit under this Section 4.1 is the
Deferral Account balance at the Director's Normal Retirement Date.
4.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director in 120 monthly installments commencing on the month following the
Director's Normal Retirement Date. The Company shall credit interest pursuant to
Section 3.1.2 on the remaining account balance during any applicable installment
period.
4.2 Early Retirement Benefit. Upon Termination of Service prior to the
Normal Retirement Age for reasons other than death, Change of Control or
Disability, the Company shall pay to the Director the benefit described in this
Section 4.2 in lieu of any other benefit under this Agreement.
4.2.1 Amount of Benefit. The benefit under this Section 4.2 is the
Deferral Account balance at the Director's Termination of Service.
4.2.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within 60 days following the Director's Termination of
Service.
4.3 Disability Benefit. If the Director's Termination of Service prior to
Normal Retirement Age is due to Disability, the Company shall pay to the
Director the benefit described in this Section 4.3 in lieu of any other benefit
under this Agreement.
4.3.1 Amount of Benefit. The benefit under this Section 4.3 is
the Deferral Account balance at the Directors' Termination of Service.
4.3.2 Payment of Benefit. The Company shall pay the benefit to
the Director in a lump sum within 60 days following the Director's Termination
of Service.
4.4 Change of Control Benefit. Upon a Change of Control, the Company shall
pay to the Director the benefit described in this Section 4.4 in lieu of any
other benefit under this Agreement.
4.4.1 Amount of Benefit. The benefit under this Section 4.4 is the
greater of: (a) the Deferral Account balance at the Director's Termination of
Service; or (b) $77,158.
4.4.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within 60 days following the Director's Termination of
Service.
4.4.3 Internal Revenue Service Section 280G Gross Up. If, as a result
of a Change of Control, the Director becomes entitled to acceleration of
benefits under this Agreement or under any other benefit, compensation or
incentive plan or arrangement with the Company (collectively, the "Total
Benefits"), and if any part of the Total Benefits is subject to the Excise Tax
under Section 280G and Section 4999 of the Internal Revenue Code (the "Excise
Tax"), the Company shall pay to the Director the following additional amounts,
consisting of (a) a payment equal to the Excise Tax payable by the Director on
the Total Benefits under Section 4999 of the Internal Revenue Code (the "Excise
Tax Payment"), and (b) a payment equal to the amount necessary to provide the
Excise Tax Payment net of all income, payroll and excise taxes. Payment of the
additional amounts described in clauses (a) and (b) shall be made in addition to
the Total Benefits.
4.5 Hardship Distribution. Upon the Board of Director's determination
(following petition by the Director) that the Director has suffered an
unforeseeable financial emergency as described in Section 2.2.2, the Company
shall distribute to the Director all or a portion of the Deferral Account
balance as determined by the Company, but in no event shall the distribution be
greater than is necessary to relieve the financial hardship.
3
ARTICLE 5
DEATH BENEFITS
5.1 Death During Active Service. If the Director dies while in the active
service of the Company, the Company shall pay to the Director's beneficiary the
benefit described in this Section 5.1 in lieu of any other benefit under this
Agreement.
5.1.1 Amount of Benefit. The benefit under this Section 5.1 is the
Deferral Account balance at the Director's death.
5.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director's beneficiary in a lump sum within 60 days following the Director's
death.
5.2 Death During Payment of a Benefit. If the Director dies after benefit
payments have commenced under this Agreement but before receiving all such
payments, the Company shall pay the remaining benefits to the Director's
beneficiary at the same time and in the same amounts they would have been paid
to the Director had the Director survived.
5.3 Death After Termination of Service But Before Benefit Payments
Commence. If the Director is entitled to benefit payments under this Agreement,
but dies prior to the commencement of said benefit payments, the Company shall
pay the benefit payments to the Director's beneficiary that the Director was
entitled to prior to death except that the benefit payments shall commence on
the first day of the month following the date of the Director's death.
ARTICLE 6
BENEFICIARIES
6.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation. However, designations
will only be effective if signed by the Director and received by the Company
during the Director's lifetime. The Director's beneficiary designation shall be
deemed automatically revoked if the beneficiary predeceases the Director or if
the Director names a spouse as beneficiary and the marriage is subsequently
dissolved. If the Director dies without a valid beneficiary designation, all
payments shall be made to the Director's estate.
6.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incompetent, or to a person incapable of handling the disposition of
his or her property, the Company may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incompetent
person or incapable person. The Company may require proof of incompetence,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit. Such distribution shall completely discharge the Company from all
liability with respect to such benefit.
ARTICLE 7
GENERAL LIMITATIONS
7.1 Termination for Cause. Notwithstanding any provision of this Agreement
to the contrary, the Company shall not pay any benefit under this Agreement that
is in excess of the Director's Deferrals (i.e., the interest earned on the
Deferral Account) if the Company terminates the Director's service for:
(a) Gross negligence or gross neglect of duties to the Company;
(b) Commission of a felony or of a gross misdemeanor involving
moral turpitude in connection with the Director's service to the
Company; or
4
(c) Fraud, disloyalty, dishonesty or willful violation of any
law or significant Company policy committed in connection with the
Director's service and resulting in an adverse effect on the Company.
7.2 Suicide or Misstatement. The Company shall not pay any benefit under
this Agreement if the Director commits suicide within three years after the date
of this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on a resume
provided to the Company, or on any application for any benefits provided by the
Company to the Director.
ARTICLE 8
CLAIMS AND REVIEW PROCEDURES
8.1 Claims Procedure. The Company shall notify any person or entity that
makes a claim against 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 Company 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, (4) an explanation of the
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 and (5) a
time within which review must be requested. If the Company determines that there
are special circumstances requiring additional time to make a decision, the
Company 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.
8.2 Review Procedure. If the Claimant is determined by the Company 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 Company by filing a petition for review with the
Company within 60 days after receipt of the notice issued by the Company. 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 Company of the petition, the Company shall afford the Claimant
(and counsel, if any) an opportunity to present his or her position to the
Company in writing, and the Claimant (or counsel) shall have the right to review
the pertinent documents. The Company shall notify the Claimant of its decision
in writing within the 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
Company, but notice of this deferral shall be given to the Claimant.
ARTICLE 9
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
ARTICLE 10
MISCELLANEOUS
10.1 Binding Effect. This Agreement shall bind the Director and the
Company, and their beneficiaries, survivors, executors, administrators and
transferees.
10.2 No Guarantee of Service. This Agreement is not a contract for
services. It does not give the Director the right to remain in the service of
the Company, nor does it interfere with the shareholders' rights to replace the
Director. It also does not require the Director to remain in the service of the
Company nor interfere with the Director's right to terminate services at any
time.
10.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
5
10.4 Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
10.5 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of the State of North Carolina, except to the extent
preempted by the laws of the United States of America.
10.6 Unfunded Arrangement. The Director and the Director's beneficiary are
general unsecured creditors of the Company for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Company 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 Director's life is
a general asset of the Company to which the Director and the Director's
beneficiary have no preferred or secured claim.
10.7 Reorganization. The Company shall not merge or consolidate into or
with another company, or reorganize, or sell substantially all of its assets to
another company, firm, or person unless such succeeding or continuing company,
firm, or person agrees to assume and discharge the obligations of the Company
under this Agreement. Upon the occurrence of such event, the term "Company" as
used in this Agreement shall be deemed to refer to the successor or survivor
company.
10.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Director as to the subject matter hereof. No rights
are granted to the Director by virtue of this Agreement other than those
specifically set forth herein.
10.9 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
(a) Interpreting the provisions of the Agreement;
(b) Establishing and revising the method of accounting for the
Agreement;
(c) Maintaining a record of benefit payments, and
(d) Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
10.10 Named Fiduciary. The Company 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 Service of advisors and the delegation of ministerial duties to
qualified individuals.
IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.
DIRECTOR COMPANY
COOPERATIVE BANKSHARES, INC.
/s/ O. XXXXXXX XXXXXX, JR. BY /s/ XXXXXXXXX XXXXXXXX, III
------------------------------------ ------------------------------------
O. XXXXXXX XXXXXX, JR.
TITLE PRESIDENT
---------------------------------
6
COOPERATIVE BANKSHARES, INC.
DIRECTOR DEFERRED FEE AGREEMENT
THIS AGREEMENT is adopted this 28th day of March, 2002, by and between
COOPERATIVE BANKSHARES, INC., located in Wilmington, North Carolina (the
"Company"), and XXXX XXXXXX (the "Director").
INTRODUCTION
To encourage the Director to remain a member of the Company's Board of
Directors, the Company is willing to provide to the Director a deferred fee
opportunity. The Company will pay the Director's benefits from the Company's
general assets.
AGREEMENT
The Director and the Company agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:
1.1 "Anniversary Date" means December 31 of each year.
1.2 "Change in Control" means the transfer of shares of the Company's
voting common stock such that one entity or one person acquires (or is deemed to
acquire when applying Section 318 of the Code) more than 25 percent of the
-----------
Company's outstanding voting common stock followed within twelve (12) months by
the Director's Termination of Service for reasons other than death, Disability
or retirement.
1.3 "Code" means the Internal Revenue Code of 1986, as amended.
1.4 "Deferral Account" means the Company's accounting of the Director's
accumulated Deferrals plus accrued interest.
1.5 "Deferrals" means the amount of the Director's Fees, which the Director
elects to defer according to this Agreement.
1.6 "Disability" means, if the Director is covered by a Company-sponsored
disability policy, total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy, Disability
means the Director suffering a sickness, accident or injury, which, in the
judgment of a physician who is satisfactory to the Company, prevents the
Director from performing substantially all of the Director's normal duties for
the Company. As a condition to any Disability benefits, the Company may require
the Director to submit to such physical or mental evaluations and tests as the
Company's Board of Directors deems appropriate and reasonable.
1.7 "Effective Date" means October 1, 2001.
1.8 "Election Form" means the Form attached as Exhibit 1.
1.9 "Fees" means the total fees payable to the Director during a Plan Year.
1.10 "Normal Retirement Age" means the Director's 72nd birthday.
Termination of Service is mandatory upon the Director attaining 72 years of age.
1
1.11 "Normal Retirement Date" means the later of the Normal Retirement Age
or Termination of Service.
1.12 "Plan Year" means the calendar year.
1.13 "Termination of Service" means that the Director ceases to be a member
of the Company's Board of Directors for any reason, voluntarily or
involuntarily, other than by reason of a leave of absence approved by the
Company.
ARTICLE 2
DEFERRAL ELECTION
2.1 Initial Election. The Director shall make an initial deferral election
under this Agreement by filing with the Company a signed Election Form within 30
days after the adopted date of this Agreement. The Election Form shall set forth
the amount of Fees to be deferred and shall be effective to defer only Fees
earned after the date the Election Form is received by the Company.
2.2 Election Changes
2.2.1 Generally. Upon the Company's approval, the Director may modify
the amount of Fees to be deferred annually by filing a new Election Form with
the Company prior to the beginning of the Plan Year in which the Fees are to be
deferred. The modified deferral election shall not be effective until the
calendar year following the year in which the subsequent Election Form is
received and approved by the Company.
2.2.2 Hardship. If an unforeseeable financial emergency arising from
the death of a family member, divorce, sickness, injury, catastrophe or similar
event outside the control of the Director occurs, the Director, by written
instructions to the Company, may reduce future deferrals under this Agreement.
ARTICLE 3
DEFERRAL ACCOUNT
3.1 Establishing and Crediting. The Company shall establish a Deferral
Account on its books for the Director and shall credit to the Deferral Account
the following amounts:
3.1.1 Deferrals. The Fees deferred by the Director as of the time the
Fees would have otherwise been paid to the Director.
3.1.2 Interest. On each Anniversary Date of this Agreement and
immediately prior to the payment of any benefits, but only until commencement of
the benefit payments under this Agreement, interest is to be credited on the
account balance at an annual rate equal to 10 percent, compounded monthly.
3.2 Statement of Accounts. The Company shall provide to the Director,
within 120 days after each Anniversary Date, a statement setting forth the
Deferral Account balance.
3.3 Accounting Device Only. The Deferral Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account is not a
trust fund of any kind. The Director is a general unsecured creditor of the
Company for the payment of benefits. The benefits represent the mere Company
promise to pay such benefits. The Director's rights are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by the Director's creditors.
ARTICLE 4
BENEFITS DURING LIFETIME
4.1 Normal Retirement Benefit. Upon the Normal Retirement Date, the Company
shall pay to the Director the benefit described in this Section 4.1 in lieu of
any other benefit under this Agreement.
2
4.1.1. Amount of Benefit. The benefit under this Section 4.1 is the
Deferral Account balance at the Director's Normal Retirement Date.
4.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director in 120 monthly installments commencing on the month following the
Director's Normal Retirement Date. The Company shall credit interest pursuant to
Section 3.1.2 on the remaining account balance during any applicable installment
period.
4.2 Early Retirement Benefit. Upon Termination of Service prior to the
Normal Retirement Age for reasons other than death, Change of Control or
Disability, the Company shall pay to the Director the benefit described in this
Section 4.2 in lieu of any other benefit under this Agreement.
4.2.1 Amount of Benefit. The benefit under this Section 4.2 is the
Deferral Account balance at the Director's Termination of Service.
4.2.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within 60 days following the Director's Termination of
Service.
4.3 Disability Benefit. If the Director's Termination of Service prior to
Normal Retirement Age is due to Disability, the Company shall pay to the
Director the benefit described in this Section 4.3 in lieu of any other benefit
under this Agreement.
4.3.1 Amount of Benefit. The benefit under this Section 4.3 is the
Deferral Account balance at the Directors' Termination of Service.
4.3.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within 60 days following the Director's Termination of
Service.
4.4 Change of Control Benefit. Upon a Change of Control, the Company shall
pay to the Director the benefit described in this Section 4.4 in lieu of any
other benefit under this Agreement.
4.4.1 Amount of Benefit. The benefit under this Section 4.4 is the
greater of: (a) the Deferral Account balance at the Director's Termination of
Service; or (b) $77,158.
4.4.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within 60 days following the Director's Termination of
Service.
4.4.3 Internal Revenue Service Section 280G Gross Up. If, as a result
of a Change of Control, the Director becomes entitled to acceleration of
benefits under this Agreement or under any other benefit, compensation or
incentive plan or arrangement with the Company (collectively, the "Total
Benefits"), and if any part of the Total Benefits is subject to the Excise Tax
under Section 280G and Section 4999 of the Internal Revenue Code (the "Excise
Tax"), the Company shall pay to the Director the following additional amounts,
consisting of (a) a payment equal to the Excise Tax payable by the Director on
the Total Benefits under Section 4999 of the Internal Revenue Code (the "Excise
Tax Payment"), and (b) a payment equal to the amount necessary to provide the
Excise Tax Payment net of all income, payroll and excise taxes. Payment of the
additional amounts described in clauses (a) and (b) shall be made in addition to
the Total Benefits.
4.5 Hardship Distribution. Upon the Board of Director's determination
(following petition by the Director) that the Director has suffered an
unforeseeable financial emergency as described in Section 2.2.2, the Company
shall distribute to the Director all or a portion of the Deferral Account
balance as determined by the Company, but in no event shall the distribution be
greater than is necessary to relieve the financial hardship.
3
ARTICLE 5
DEATH BENEFITS
5.1 Death During Active Service. If the Director dies while in the active
service of the Company, the Company shall pay to the Director's beneficiary the
benefit described in this Section 5.1 in lieu of any other benefit under this
Agreement.
5.1.1 Amount of Benefit. The benefit under this Section 5.1 is the
Deferral Account balance at the Director's death.
5.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director's beneficiary in a lump sum within 60 days following the Director's
death.
5.2 Death During Payment of a Benefit. If the Director dies after benefit
payments have commenced under this Agreement but before receiving all such
payments, the Company shall pay the remaining benefits to the Director's
beneficiary at the same time and in the same amounts they would have been paid
to the Director had the Director survived.
5.3 Death After Termination of Service But Before Benefit Payments
Commence. If the Director is entitled to benefit payments under this Agreement,
but dies prior to the commencement of said benefit payments, the Company shall
pay the benefit payments to the Director's beneficiary that the Director was
entitled to prior to death except that the benefit payments shall commence on
the first day of the month following the date of the Director's death.
ARTICLE 6
BENEFICIARIES
6.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation. However, designations
will only be effective if signed by the Director and received by the Company
during the Director's lifetime. The Director's beneficiary designation shall be
deemed automatically revoked if the beneficiary predeceases the Director or if
the Director names a spouse as beneficiary and the marriage is subsequently
dissolved. If the Director dies without a valid beneficiary designation, all
payments shall be made to the Director's estate.
6.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incompetent, or to a person incapable of handling the disposition of
his or her property, the Company may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incompetent
person or incapable person. The Company may require proof of incompetence,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit. Such distribution shall completely discharge the Company from all
liability with respect to such benefit.
ARTICLE 7
GENERAL LIMITATIONS
7.1 Termination for Cause. Notwithstanding any provision of this Agreement
to the contrary, the Company shall not pay any benefit under this Agreement that
is in excess of the Director's Deferrals (i.e., the interest earned on the
Deferral Account) if the Company terminates the Director's service for:
(a) Gross negligence or gross neglect of duties to the Company;
(b) Commission of a felony or of a gross misdemeanor involving
moral turpitude in connection with the Director's service to the
Company; or
4
(c) Fraud, disloyalty, dishonesty or willful violation of any
law or significant Company policy committed in connection with the
Director's service and resulting in an adverse effect on the Company.
7.2 Suicide or Misstatement. The Company shall not pay any benefit under
this Agreement if the Director commits suicide within three years after the date
of this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on a resume
provided to the Company, or on any application for any benefits provided by the
Company to the Director.
ARTICLE 8
CLAIMS AND REVIEW PROCEDURES
8.1 Claims Procedure. The Company shall notify any person or entity that
makes a claim against 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 Company 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, (4) an explanation of the
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 and (5) a
time within which review must be requested. If the Company determines that there
are special circumstances requiring additional time to make a decision, the
Company 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.
8.2 Review Procedure. If the Claimant is determined by the Company 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 Company by filing a petition for review with the
Company within 60 days after receipt of the notice issued by the Company. 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 Company of the petition, the Company shall afford the Claimant
(and counsel, if any) an opportunity to present his or her position to the
Company in writing, and the Claimant (or counsel) shall have the right to review
the pertinent documents. The Company shall notify the Claimant of its decision
in writing within the 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
Company, but notice of this deferral shall be given to the Claimant.
ARTICLE 9
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
ARTICLE 10
MISCELLANEOUS
10.1 Binding Effect. This Agreement shall bind the Director and the
Company, and their beneficiaries, survivors, executors, administrators and
transferees.
10.2 No Guarantee of Service. This Agreement is not a contract for
services. It does not give the Director the right to remain in the service of
the Company, nor does it interfere with the shareholders' rights to replace the
Director. It also does not require the Director to remain in the service of the
Company nor interfere with the Director's right to terminate services at any
time.
10.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
5
10.4 Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
10.5 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of the State of North Carolina, except to the extent
preempted by the laws of the United States of America.
10.6 Unfunded Arrangement. The Director and the Director's beneficiary are
general unsecured creditors of the Company for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Company 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 Director's life is
a general asset of the Company to which the Director and the Director's
beneficiary have no preferred or secured claim.
10.7 Reorganization. The Company shall not merge or consolidate into or
with another company, or reorganize, or sell substantially all of its assets to
another company, firm, or person unless such succeeding or continuing company,
firm, or person agrees to assume and discharge the obligations of the Company
under this Agreement. Upon the occurrence of such event, the term "Company" as
used in this Agreement shall be deemed to refer to the successor or survivor
company.
10.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Director as to the subject matter hereof. No rights
are granted to the Director by virtue of this Agreement other than those
specifically set forth herein.
10.9 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
(a) Interpreting the provisions of the Agreement;
(b) Establishing and revising the method of accounting for the
Agreement;
(c) Maintaining a record of benefit payments, and
(d) Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
10.10 Named Fiduciary. The Company 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 Service of advisors and the delegation of ministerial duties to
qualified individuals.
IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.
DIRECTOR COMPANY
COOPERATIVE BANKSHARES, INC.
/s/ XXXX XXXXXX BY /s/ XXXXXXXXX XXXXXXXX, III
-------------------------------------- -----------------------------------
XXXX XXXXXX
TITLE PRESIDENT
---------------------------------
6
