DIRECTOR SUPPLEMENTAL RETIREMENT PLAN
DIRECTOR AGREEMENT
THIS AGREEMENT is made and entered into this day of ,
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2002, by and between The East Carolina Bank, a bank organized and existing under
the laws of the State of North Carolina (hereinafter referred to as the "Bank"),
and , a Director of the Bank (hereinafter referred to as the
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"Director").
WHEREAS, the Director is now in the service of the Bank and has for many
years faithfully served the Bank. It is the consensus of the Board of Directors
(hereinafter referred to as the "Board") that the Director's services have been
of exceptional merit, in excess of the compensation paid and an invaluable
contribution to the profits and position of the Bank in its field of activity.
The Board further believes that the Director's experience, knowledge of
corporate affairs, reputation and industry contacts are of such value, and the
Director's continued services so essential to the Bank's future growth and
profits, that it would suffer severe financial loss should the Director
terminate their services;
ACCORDINGLY, the Board has adopted The East Carolina Bank Director
Supplemental Retirement Plan Director Agreement (hereinafter referred to as the
"Director Plan") and it is the desire of the Bank and the Director to enter into
this Agreement under which the Bank will agree to make certain payments to the
Director upon the Director's retirement or to the Director's beneficiary(ies) in
the event of the Director's death pursuant to the Director Plan;
FURTHERMORE, it is the intent of the parties hereto that this Director Plan
be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Director, and be considered a
non-qualified benefit plan for purposes of the Employee Retirement Security Act
of 1974, as amended ("ERISA"). The Director is fully advised of the Bank's
financial status and has had substantial input in the design and operation of
this benefit plan; and
NOW THEREFORE, in consideration of services the Director has performed in
the past and those to be performed in the future, and based upon the mutual
promises and covenants herein contained, the Bank and the Director agree as
follows:
I. DEFINITIONS
A. Effective Date:
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The Effective Date of the Director Plan shall be November 5, 2001.
B. Plan Year:
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Any reference to the "Plan Year" shall mean a calendar year from
January 1st to December 31st. In the year of implementation, the term
"Plan Year" shall mean the period from the Effective Date to December
31st of the year of the Effective Date.
C. Retirement Date:
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Retirement Date shall mean the first day of the calendar month
following the latter of (i) the date in which the Director reaches age
seventy (70) or (ii) the date upon which the Director actually retires
from service with the Bank after reaching age seventy (70).
D. Termination of Service:
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Termination of Service shall mean the Director's voluntary resignation
of service by the Director or the Bank's discharge of the Director
without cause, prior to the Normal Retirement Age (Subparagraph I
[J]).
E. Pre-Retirement Account:
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A Pre-Retirement Account shall be established as a liability reserve
account on the books of the Bank for the benefit of the Director.
Prior to the Director's Retirement Date ([Subparagraph I [C]), such
liability reserve account shall be increased or decreased each Plan
Year, until the aforestated event occurs, by the Index Retirement
Benefit (Subparagraph I [F]). Said Pre-Retirement Account shall be
credited interest at a rate of eight percent (8%) each Plan Year or
until the entire Pre-Retirement Account is entirely paid to the
Director, or the Director's beneficiary, and said Pre-Retirement
Account balance is zero.
F. Index Retirement Benefit:
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In the event the Director receives the retirement benefit set forth in
Subparagraph II (A) herein, the Index Retirement Benefit for each
Director in the Director Plan for each Plan Year shall be equal to the
excess (if any) of the Index (Subparagraph I [G]) for that Plan Year
over the Opportunity Cost (Subparagraph I [H]) for that Plan Year.
G. Index:
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The Index for any Plan Year shall be the aggregate annual after-tax
income from the life insurance contract(s) described hereinafter as
defined by FASB Technical Bulletin 85-4. This Index shall be applied
as if such insurance contract(s) were purchased on the Effective Date
of the Director Plan. When the Director completes twenty (20) or more
total full years of
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service from the date of first service on the Board of the Bank, the
premiums paid, or assumed paid, as set forth hereinbelow shall be one
hundred thousand and no/100 Dollars ($100,000.00) each so that the
total premiums paid, or assumed to be paid, for all policies listed
hereinbelow shall be two hundred thousand and no/100 Dollars
($200,000.00).
Insurance Company: Jefferson Pilot Life Insurance Company
Policy Form: Flexible Premium Adjustable Life
Policy Name: ESP VI
Insured's Age and Sex: 51, Male
Riders: None
Ratings: None
Option: Level
Face Amount: $121,000
Premiums Paid: $50,000
Number of Premium Payments: Single
Assumed Purchase Date: November 5, 2001
Insurance Company: Mass Mutual Life Insurance Company
Policy Form: Flexible Premium Adjustable Life
Policy Name: Strategic Life Exec
Insured's Age and Sex: 52, Male
Riders: None
Ratings: None
Option: Level
Face Amount: $125,500
Premiums Paid: $50,000
Number of Premium Payments: Single
Assumed Purchase Date: November 5, 2001
If such contracts of life insurance are actually purchased by the
Bank, then the actual policies as of the dates they were actually
purchased shall be used in calculations under this Director Plan. If
such contracts of life insurance are not purchased or are subsequently
surrendered or lapsed, then the Bank shall receive annual policy
illustrations that assume the above-described policies were purchased
or had not subsequently surrendered or lapsed. Said illustration shall
be received from the respective insurance companies and will indicate
the increase in policy values for purposes of calculating the amount
of the Index.
In either case, references to the life insurance contracts are merely
for purposes of calculating a benefit. The Bank has no obligation to
purchase such life insurance and, if purchased, the Director and the
Director's beneficiary(ies) shall have no ownership interest in such
policy and shall always have no greater interest in the benefits under
this Director Plan than that of an unsecured creditor of the Bank.
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H. Opportunity Cost:
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The Opportunity Cost for any Plan Year shall be calculated by taking
the sum of the amount of premiums for the life insurance policies
described in the definition of "Index" plus the amount of any
after-tax benefits paid to the Director pursuant to the Director Plan
(Paragraph II hereinafter) plus the amount of all previous years'
after-tax Opportunity Cost, and multiplying that sum by the greater of
either one of the following: (i) the average after tax yield of a
one-year Treasury xxxx, or (ii) the Bank's average annualized
after-tax Cost of Funds Expense as determined by the Bank's third
quarter call report as filed with the appropriate regulatory agency.
I. Change of Control:
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Change of Control shall mean the direct or indirect acquisition by
another person, firm or corporation, by merger, share exchange,
consolidation, purchase or otherwise, of all or substantially all of
the assets or stock of the Bank or its parent company.
J. Normal Retirement Age:
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Normal Retirement Age shall mean the date on which the Director
attains age seventy (70).
II. INDEX BENEFITS
A. Retirement Benefits:
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Subject to Subparagraph II (D) hereinafter, a Director who remains on
the Board until the Normal Retirement Age (Subparagraph I [J]) shall
be entitled to receive the balance in the Pre-Retirement Account in
fifteen (15) equal annual installments commencing thirty (30) days
following the Director's retirement. In addition to these payments and
commencing subsequent thereto, the Index Retirement Benefit (as
defined in Subparagraph I [F]) for each Plan Year subsequent to the
year that the Director begins receiving Index Retirement Benefits
hereunder, and including the remaining portion of the Plan Year
following the year that the Director begins receiving Index Retirement
Benefits hereunder, shall be paid to the Director until the Director's
death.
B. Termination of Service:
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Subject to Subparagraph II (D), should a Director suffer a Termination
of Service the Director shall be entitled to receive the percentage
set forth hereinbelow of the balance in the Pre-Retirement Account
payable to the Director in (15) equal annual installments commencing
thirty (30) days
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following the Director's Normal Retirement Age (Subparagraph I [J]).
In addition to these payments and commencing subsequent thereto, the
percentage set forth hereinbelow of the Index Retirement Benefit for
each Plan Year subsequent to the year in which the Director begins
receiving Index Retirement Benefits hereunder, and including the
remaining portion of the Plan Year in which the Director begins
receiving Index Retirement Benefits hereunder, shall be paid to the
Director until the Director's death.
Subsequent to one (1) 20% for each full year of service
full year on the Board of from the date of first service
Directors of the Bank to a maximum of 100%
C. Death:
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Should the Director die prior to having received the balance of the
Pre-Retirement Account the Director may be entitled to under the terms
of this Director Plan, the entire unpaid balance of the Director's
Pre-Retirement Account at the time of death shall be paid in a lump
sum to the individual or individuals the Director may have designated
in writing and filed with the Bank. In the absence of any effective
designation of beneficiary(ies), the unpaid balance shall be paid as
set forth herein to the duly qualified executor or administrator of
the Director's estate. Said payment due hereunder shall be made the
first day of the second month following the decease of the Director.
If, upon death, the Director shall have received the total balance of
the Director's Pre-Retirement Account, then no further benefit shall
be due hereunder. In no event shall the Director's beneficiary receive
any Index Retirement Benefit payment upon the death of the Director.
D. Discharge for Cause:
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All rights of the Director hereunder shall cease and terminate
immediately in the event of a termination of Director's service with
Bank "with cause." The term "with cause" shall be deemed to mean, but
is not limited to, personal dishonesty, incompetence, willful material
misconduct, breach of fiduciary duty, failure to perform the
obligations of the Director as stated herein, willful violation of any
law, rule, or regulation (other than minor traffic infractions), or,
any material breach of any provision of this agreement.
E. Disability Benefit:
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In the event the Director becomes disabled, as defined herein, prior
to any Termination of Service, and the Director's service with the
Bank is terminated because of such disability, the Director, upon
submission of written documentation and verification of disability
satisfactory to the Bank, shall receive one hundred percent (100%) of
the benefit amount
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provided in Subparagraph II (A) above. Payment of such benefit shall
begin when the Director reaches his or her Normal Retirement Age.
Subject to the Bank's obligations and Director's rights under Title I
of the Americans with Disabilities Act and the Family and Medical
Leave Act, if applicable, and any other applicable federal or state
laws, disability shall be defined as the Director not being able to
perform the duties of the Director's own job and shall be as further
defined in the Bank's long term disability policy in effect at the
time of said disability. If no such policy exists at the time of the
disability, then disability shall be defined as a physical or mental
impairment of Director which renders Director incapable of performing
Director's normal and regular essential service duties and which shall
be medically determined to be of permanent duration as the same is
construed for purposes of disability benefits under the federal Social
Security laws and regulations. If there is a dispute regarding whether
the Director is disabled, such dispute shall be resolved by a
physician selected by the Bank and such resolution shall be binding
upon all parties to this Agreement.
F. Death Benefit:
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Except as set forth above, there is no death benefit provided under
this Agreement.
G. Long Term Care Policy Option:
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The Director shall have the option, prior to receipt of any benefits
under the terms of this Agreement, to elect a long term care policy to
be provided by the Bank. Said option to receive said long term care
policy shall be exercised prior to receipt of any benefit set forth in
this Agreement and said election shall be a one time election only and
shall expire at the Director's age sixty (60).
The value of the long term care policy provided by the Bank shall be
equal to the Index Retirement Benefit (Subparagraph I [F]) for each
Plan Year from the date the policy is provided by the Bank until the
date the long term care policy terminates as set forth hereinbelow.
The long term care policy provided by the Bank shall continue until
the policy is either paid in full or the Director dies, at which time
said policy shall terminate.
If the Director elects said long term care policy, then, on the date
said long term care policy is provided, the balance in the Director's
accrued liability retirement account on said date shall be credited
interest on each anniversary date of said long term care policy at a
rate equal to the yield of a one-year Treasury Xxxx. The balance of
said accrued liability retirement account, with interest, shall be
paid to the Director in a lump sum within thirty (30) days of the
Director's Retirement Date (Subparagraph I [C]).
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Upon the exercise of the option set forth herein, the Director shall
not be entitled to any benefit set forth in Subparagraphs II (A), (B),
(E), or Paragraph IV.
III. RESTRICTIONS UPON FUNDING
The Bank shall have no obligation to set aside, earmark or entrust any fund
or money with which to pay its obligations under this Director Plan. The
Director, their beneficiary(ies), or any successor in interest shall be and
remain simply a general creditor of the Bank in the same manner as any
other creditor having a general claim for matured and unpaid compensation.
The Bank reserves the absolute right, at its sole discretion, to either
fund the obligations undertaken by this Director Plan or to refrain from
funding the same and to determine the extent, nature and method of such
funding. Should the Bank elect to fund this Director Plan, in whole or in
part, through the purchase of life insurance, mutual funds, disability
policies or annuities, the Bank reserves the absolute right, in its sole
discretion, to terminate such funding at any time, in whole or in part. At
no time shall any Director be deemed to have any lien nor right, title or
interest in or to any specific funding investment or to any assets of the
Bank.
If the Bank elects to invest in a life insurance, disability or annuity
policy upon the life of the Director, then the Director shall assist the
Bank by freely submitting to a physical exam and supplying such additional
information necessary to obtain such insurance or annuities.
IV. CHANGE OF CONTROL
Notwithstanding other terms of this Agreement, upon a Change of Control
(Subparagraph I [I]), if the Director subsequently suffers a Termination of
Service (Subparagraph I [D]), then the Director shall receive the benefits
promised in this Director Plan upon attaining Normal Retirement Age, as if
the Director had been continuously serving the Bank until the Director's
Normal Retirement Age. The Director will also remain eligible for all
promised death benefits in this Director Plan. In addition, no sale,
merger, or consolidation of the Bank shall take place unless the new or
surviving entity expressly acknowledges the obligations under this Director
Plan and agrees to abide by its terms.
V. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
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Neither the Director, nor the Director's surviving spouse, nor any
other beneficiary(ies) under this Director Plan shall have any power
or right to transfer, assign, anticipate, hypothecate, mortgage,
commute, modify or otherwise encumber in advance any of the benefits
payable hereunder nor
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shall any of said benefits be subject to seizure for the payment of
any debts, judgments, alimony or separate maintenance owed by the
Director or the Director's beneficiary(ies), nor be transferable by
operation of law in the event of bankruptcy, insolvency or otherwise.
In the event the Director or any beneficiary attempts assignment,
commutation, hypothecation, transfer or disposal of the benefits
hereunder, the Bank's liabilities shall forthwith cease and terminate.
B. Binding Obligation of the Bank and any Successor in Interest:
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The Bank shall not merge or consolidate into or with another bank or
sell substantially all of its assets to another bank, firm or person
until such bank, firm or person expressly agrees, in writing, to
assume and discharge the duties and obligations of the Bank under this
Director Plan. This Director Plan shall be binding upon the parties
hereto, their successors, beneficiaries, heirs and personal
representatives.
C. Amendment or Revocation:
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It is agreed by and between the parties hereto that, during the
lifetime of the Director, this Director Plan may be amended or revoked
at any time or times, in whole or in part, by the mutual written
consent of the Director and the Bank.
D. Gender:
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Whenever in this Director Plan words are used in the masculine or
neuter gender, they shall be read and construed as in the masculine,
feminine or neuter gender, whenever they should so apply.
E. Effect on Other Bank Benefit Plans:
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Nothing contained in this Director Plan shall affect the right of the
Director to participate in or be covered by any qualified or
non-qualified pension, profit-sharing, group, bonus or other
supplemental compensation or fringe benefit plan constituting a part
of the Bank's existing or future compensation structure.
F. Headings:
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Headings and subheadings in this Director Plan are inserted for
reference and convenience only and shall not be deemed a part of this
Director Plan.
G. Applicable Law:
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The validity and interpretation of this Agreement shall be governed by
the laws of the State of North Carolina.
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H. 12 U.S.C. Section 1828(k):
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Any payments made to the Director pursuant to this Director Plan, or
otherwise, are subject to and conditioned upon their compliance with
12 U.S.C. Section 1828(k) or any regulations promulgated thereunder.
I. Partial Invalidity:
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If any term, provision, covenant, or condition of this Director Plan
is determined by an arbitrator or a court, as the case may be, to be
invalid, void, or unenforceable, such determination shall not render
any other term, provision, covenant, or condition invalid, void, or
unenforceable, and the Director Plan shall remain in full force and
effect notwithstanding such partial invalidity.
J. Notices:
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All notices required or permitted to be given pursuant to this
Agreement shall be in writing, unless otherwise specified, and shall
be delivered personally, deposited in the United States mail,
registered or certified and postage prepaid with return receipt
requested, or deposited with a reputable overnight courier which
provides a day and time stamped receipt, addressed to Director, Bank
or Trustee, as applicable, at the address set forth herein or to such
other address as hereafter may be furnished to the other parties in
writing pursuant to this paragraph. All notices so given shall be
deemed effective and received upon the earlier of (i) actual receipt,
(ii) receipt and refusal; or (iii) five (5) days from (1) the postmark
date, if deposited with the United States Postal Service, or (2) the
date of deposit, if deposited with an overnight courier, unless
otherwise provided herein.
Bank: The Xxxx Xxxxxxxx Xxxx
Xxx. 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Trustee: Xxxxxx X. Xxxxxxxx
Eastern Bank & Trust Co.
0 Xxxxx Xxxxx, XX00
Xxxxxx, XX 00000-0000
Director:
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VI. ERISA PROVISION
A. Named Fiduciary and Plan Administrator:
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The "Named Fiduciary and Plan Administrator" of this Director Plan
shall be The East Carolina Bank, until its resignation or removal by
the Board. As Named Fiduciary and Plan Administrator, the Bank shall
be responsible for the management, control and administration of the
Director Plan. The Named Fiduciary may delegate to others certain
aspects of the management and operation responsibilities of the
Director Plan including the employment of advisors and the delegation
of ministerial duties to qualified individuals.
B. Claims Procedure and Arbitration:
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In the event a dispute arises over benefits under this Director Plan
and benefits are not paid to the Director (or to the Director's
beneficiary(ies) in the case of the Director `s death) and such
claimants feel they are entitled to receive such benefits, then a
written claim must be made to the Named Fiduciary and Plan
Administrator named above within sixty (60) days from the date
payments are refused. The Named Fiduciary and Plan Administrator shall
review the written claim and if the claim is denied, in whole or in
part, they shall provide in writing within sixty (60) days of receipt
of such claim the specific reasons for such denial, reference to the
provisions of this Director Plan upon which the denial is based and
any additional material or information necessary to perfect the claim.
Such written notice shall further indicate the additional steps to be
taken by claimants if a further review of the claim denial is desired.
A claim shall be deemed denied if the Named Fiduciary and Plan
Administrator fail to take any action within the aforesaid sixty-day
period.
If claimants desire a second review they shall notify the Named
Fiduciary and Plan Administrator in writing within sixty (60) days of
the first claim denial. Claimants may review this Director Plan or any
documents relating thereto and submit any written issues and comments
it may feel appropriate. In their sole discretion, the Named Fiduciary
and Plan Administrator shall then review the second claim and provide
a written decision within sixty (60) days of receipt of such claim.
This decision shall likewise state the specific reasons for the
decision and shall include reference to specific provisions of the
Plan Agreement upon which the decision is based.
If claimants continue to dispute the benefit denial based upon
completed performance of this Director Plan or the meaning and effect
of the terms and conditions thereof, then claimants may submit the
dispute to an arbitrator for final arbitration. The arbitrator shall
be selected by mutual agreement of the Bank and the claimants. The
arbitrator shall operate
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under any generally recognized set of arbitration rules. The parties
hereto agree that they and their heirs, personal representatives,
successors and assigns shall be bound by the decision of such
arbitrator with respect to any controversy properly submitted to it
for determination.
Where a dispute arises as to the Bank's discharge of the Director "for
cause," such dispute shall likewise be submitted to arbitration as
above described and the parties hereto agree to be bound by the
decision thereunder.
VII. TERMINATION OR MODIFICATION OF AGREEMENT BY REASON OF CHANGES IN THE LAW,
RULES OR REGULATIONS
The Bank is entering into this Agreement upon the assumption that certain
existing tax laws, rules and regulations will continue in effect in their
current form. If any said assumptions should change and said change has a
detrimental effect on this Director Plan as determined by the Bank in its
sole discretion, then the Bank reserves the right to terminate or modify
this Agreement accordingly. Upon a Change of Control (Subparagraph I [I]),
this paragraph shall become null and void effective immediately upon said
Change of Control.
IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully read
this Agreement and executed the original thereof on the first day set forth
hereinabove, and that upon execution, each has received a conforming copy.
THE EAST CAROLINA BANK
Engelhard, North Carolina
By:
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Witness Title
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Witness Director
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BENEFICIARY DESIGNATION FORM
FOR THE DIRECTOR SUPPLEMENTAL
RETIREMENT PLAN AGREEMENT
PRIMARY DESIGNATION:
Name Address Relationship
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SECONDARY (CONTINGENT) DESIGNATION:
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All sums payable under the Director Supplemental Retirement Plan Director
Agreement by reason of my death shall be paid to the Primary Beneficiary, if he
or she survives me, and if no Primary Beneficiary shall survive me, then to the
Secondary (Contingent) Beneficiary.
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Director Date
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