AGREEMENT
THIS AGREEMENT entered into this 14th day of March 2002, by and between
Cooperative Bank for Savings, Inc., SSB, (hereinafter referred to as the "Bank")
and Xxxx X. Xxxxxxx (hereinafter referred to as the "Employee").
WHEREAS, the Employee has heretofore been employed by the Bank as Senior
Vice-President, Chief Financial Officer.
WHEREAS, the Bank deems it to be in its best interest to enter into this
Agreement as additional incentive to the Employee to continue as an executive
employee of the Bank; and
WHEREAS, the parties desire by this writing to set forth their
understandings as to their respective rights and obligations in the event of
termination of Employee's employment under the circumstances set forth in this
Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. PAYMENT IN THE EVENT OF CHANGE IN CONTROL.
(a) In the event of the involuntary termination of Employee's
employment with the Bank in connection with, or within one year after, any
change in control of the Bank, Employee shall be paid an amount equal to one
times the total cash compensation paid to such Employee during the 12 month
period preceding such termination, but in no event in an amount greater than the
product of 2.99 and the Employee's "base amount" as defined in Section
280G(b)(3) of the Internal Revenue Code of 1986, as amended. Said sum shall be
paid in one lump sum within thirty (30) days of such termination. The term
"control" shall refer to the ownership, holding or power to vote more than 25%
of the Bank's voting stock, the control of the election of a majority of the
Bank's directors, or the exercise of a controlling influence over the management
or policies of the Bank by any person or by persons acting as a group within the
meaning of Section 13(d) of the Securities Exchange Act of 1934; provided,
however, that the term "control" shall not include a transaction in which the
Bank forms a holding company without change in the respective beneficial
ownership interests of its stockholders other than pursuant to the exercise of
any dissenter and apppraisal rights. The term "person" means an individual or a
corporation, partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other form of entity not
specifically listed herein.
(b) In the event of a change in control of the Bank, and the
occurrence of certain conditions to which the Employee has not consented to in
advance in writing as hereinafter specified, or within thirty days thereafter,
Employee may voluntarily terminate his employment and payments shall be made to
the Employee in accordance with Paragraph 1(a) above. Said conditions shall be
as follows: (i) if Employee would be required to move his
1
personal residence or perform his principal executive functions
outside the metropolitan area of Wilmington, North Carolina; (ii) if
in the organizational structure of the Bank the Employee would be
required to report to a person or persons other than the President;
(iii) if the Bank should fail to maintain employee benefit plans at
levels at least equal to those prevailing immediately prior to the
date of the change of control; (iv) if the Employee would be assigned
duties and responsibilities other than those normally associated with
his position as Senior Vice-President, Chief Financial Officer; or (v)
if the Employee's responsibilities or authority have in anyway been
diminished.
2. TERM. This Agreement shall remain in effect for so long as the Employee
remains in the employ of the Bank, and the Employee's rights hereunder shall
continue following the termination of his employment with the Bank under any of
the circumstances described in Paragraphs 1(a) or (b) hereof.
3. REIMBURSEMENT OF EXPENSES. In the event any dispute shall arise between
the Employee and the Bank as to the terms or interpretation of this Agreement,
whether instituted by formal legal proceedings or otherwise, including any
action taken by the Employee to enforce the terms hereof or in defending against
any action taken by the Bank, the Bank shall reimburse the Employee for all
costs and expenses, including reasonable attorneys' fees, arising from such
dispute, proceedings or actions, if the ultimate outcome is substantially in
favor of the Employee. Such reimbursement shall be paid within 10 days of
Employee furnishing to the Bank written evidence, which may be in the form,
among other things, of a canceled check or receipt, of any costs or expenses
incurred by the Employee. Any such request for reimbursement by the Employee
shall be made no more frequently than at 30 day intervals.
4. REGULATORY REQUIREMENTS.
(a) The Board of Directors may terminate the Employee's employment at
any time, but any termination by the Board of Directors other than termination
for "Just Cause", shall not prejudice the Employee's right to compensation or
other benefits under the Agreement. The Employee shall have no right to receive
compensation or other benefits for any period after termination for "Just
Cause". Termination for "Just Cause" shall include termination because of the
Employee's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of the contract.
(b) If the Employee is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (8)(1) of the Federal Deposit Insurance Act ("FDIA") (12
U.S.C,. 1818(e)(3) and (g)(1)), the Bank's obligations under the contract shall
be suspended as of the date of service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Bank may in its
discretion (i) pay the Employee all or part of the compensation withheld while
its contract obligations were suspended and (ii) reinstate in whole or in part)
any of its obligations which were suspended.
2
(c) If the Employee is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(4) or (g)(1)), all the
obligations of the Bank under the Agreement shall terminate as of the effective
date of the order, but vested rights of the contracting parties shall not be
affected.
(d) If the Bank is in default (as defined in Section 3(x)(1) of the
FDIA), all obligations under this Agreement shall terminate as of the date of
default, but this subparagraph shall not affect any vested rights of the
contracting parties.
5. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall be binding upon any corporate or other
successor of the Bank which shall acquire, directly or indirectly by merger,
consolidation, purchase or otherwise, all or substantially all of the assets of
the Bank.
(b) The Employee shall be precluded from assigning or delegating his
rights or duties hereunder without first obtaining the written consent of the
Bank.
6. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided.
7. APPLICABLE LAW. This Agreement shall be governed in all respects whether
as to validity, construction, capacity, performance or otherwise, by the laws of
the State of North Carolina, except to the extent that Federal law shall be
deemed applicable.
8. SEVERABILITY. The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions thereof.
9. NO GUARANTEE OF EMPLOYMENT.
Nothing contained herein, either expressed or implied, shall confer on the
Employee any guarantee or promise of continued employment with the Bank in any
capacity whatsoever, either prior to or following any change in control of Bank,
or otherwise.
3
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first hereinabove written.
COOPERATIVE BANK FOR SAVINGS, INC., SSB
By:/s/ Xxxxxxxxx Xxxxxxxx, III
-------------------------------------
ATTEST:
/s/ Xxxxx X. Xxxxxxx
---------------------------
WITNESS:
/s/ Dare X. Xxxxxx /s/ Xxxx X. Xxxxxxx
--------------------------- ---------------------------------------
Employee
4
