COOPERATIVE BANK FOR SAVINGS
EXECUTIVE INDEXED RETIREMENT AGREEMENT
THIS AGREEMENT is adopted this 17th day of January 2002, by and between
COOPERATIVE BANK FOR SAVINGS, a State/Stock Savings Bank located in Wilmington,
North Carolina (the "Company"), and XXXXXXXXX XXXXXXXX III (the "Executive").
INTRODUCTION
To attract, retain and reward quality Executives and to provide a
potentially higher level of retirement income, the Company is willing to provide
the Executive with this Executive Indexed Retirement Agreement. The Company will
pay the benefits from its general assets.
AGREEMENT
The Executive 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 "Adjustment Rate" shall mean the figure equal to one minus the
Company's highest marginal tax rate for the current calendar year.
1.2 "Change in Control" means a change in the control of the Company or its
holding company, Cooperative Bankshares, Inc. (the "Holding Company"). The term
control shall refer to the ownership, holding or power to vote more than 25
percent of the Company's or the Holding Company's voting stock, the control of
the election of a majority of the Company's or the Holding Company's directors,
or the exercise of a controlling influence over the management or policies of
the Company or the Holding Company by any person or persons acting as a group
within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as
amended. The term "person means an individual other than the Executive, or a
corporation, partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other form of entity not
specifically listed herein.
1.3 "Disability" means, if the Executive is covered by a Company-sponsored
disability policy, total disability as defined in such policy without regard to
any waiting period. If the Executive is not covered by such a policy, Disability
means the Executive suffering a sickness, accident or injury, which, in the
judgment of a physician who is satisfactory to the Company, prevents the
Executive from performing substantially all of the Executive's normal duties for
the Company. As a condition to receiving any Disability benefits, the Company
may require the Executive to submit to such physical or mental evaluations and
tests as the Company's Board of Directors deems appropriate and reasonable.
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1.4 "Normal Retirement Age" means the Executive's 65th birthday.
1.5 "Normal Retirement Date" means the later of the Normal Retirement Age
or Termination of Employment.
1.6 "Plan Year" means each calendar year from January 1 through December
31. In the year of implementation, it shall commence with the adoption date of
this Agreement and end on December 31, 2001.
1.7 Simulated Investments" mean investments specified by the Company for
use in measuring the Retirement Benefit. Subject to Article 2, the Company can
change the Simulated Investments only with the Executive's written agreement.
The Simulated Investments shall be of equal initial amounts.
1.8 Simulated Investment Earnings" means the after-tax rate of return on a
Simulated Investment. If the Simulated Investment is a life insurance policy,
the Simulated Investment Earnings shall track cash surrender value and not
include receipt of the policy's death benefit.
1.9 "Termination of Employment" means the Executive ceases to be employed
by the Company for any reason, voluntarily or involuntarily, other than death.
1.10 "Voluntary Early Termination" means that the Executive, prior to
Normal Retirement Age, has terminated employment with the Company for reasons
other than Termination for Cause, Disability, Change of Control or Involuntary
Early Termination.
1.11 "Involuntary Early Termination" means that the Executive, prior to
Normal Retirement Age, has been notified in writing, that employment with the
Company is terminated for reasons other than an approved leave of absence,
Termination for Cause, Disability, Change of Control or Voluntary Termination.
ARTICLE 2
RETIREMENT ACCOUNT
2.1 Simulated Investments. The Company shall establish two Simulated
Investments in the amount of $2,148,000 as of October 1, 2001 as follows:
2.1.1 Simulated Investment Number One shall track the cash surrender
value of one or more specified life insurance policy(s) as described in
Appendix A.
2.1.2 Simulated Investment Number Two shall track the value of a
simulated investment account comprised of both principal and accumulated
net after-tax interest earnings. Pre-tax interest earnings shall equal 4.44
percent for the first Plan Year and adjusted by the Company's Board of
Directors at their sole and absolute discretion for subsequent Plan Years.
Simulated Investment Number Two assumes the income tax rate to be the
Company's highest marginal tax rate for the current calendar year, and
assumes
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that interest (net of tax) shall be compounded on an annual basis at the
end of each Plan Year.
2.2 Retirement Account. The Company shall establish a Retirement Account on
its books for the Executive. The Retirement Account balance during the
pre-termination period is determined by subtracting the value of Simulated
Investment Number Two from the value of Simulated Investment Number One and
dividing the difference by the Adjustment Rate. The Retirement Account
subsequent to Termination of Employment is reduced by payments of the Primary
Normal Retirement Benefit under Section 3.1.1. The Retirement Account balance
shall never be less than zero.
2.3 Statement of Accounts. The Company shall provide to the Executive,
within 60 days after each Plan Year, a statement setting forth the Retirement
Account balance.
2.4 Accounting Device Only. The Retirement Account and Simulated
Investments are solely devices for measuring amounts to be paid under this
Agreement. They are not a trust fund of any kind. The Executive 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 Executive's rights
are not subject in any manner to anticipation, alienation, transfer, assignment,
pledge, encumbrance, attachment or garnishment by the Executive's creditors.
ARTICLE 3
NORMAL RETIREMENT
3.1 Normal Retirement Benefit. Subject to the general limitations of
Article 8, upon reaching the Normal Retirement Date while in the full-time
employment of the Company, the Executive shall be entitled to both the primary
and secondary benefits described in Sections 3.1.1 and 3.1.2.
3.1.1 Primary Normal Retirement Benefit. Commencing on the
Executive's Normal Retirement Date, the Company shall pay a Primary Normal
Retirement Benefit to the Executive which is equal to the Executive's
Retirement Account balance as of the Plan Year ending immediately preceding
the Executive's Normal Retirement Date. The Primary Normal Retirement
Benefit shall be paid over 24 years in 288 equal monthly installments
(without adjustment for interest earnings during the payment period),
commencing with the month following the Executive's Termination of
Employment.
3.2 Secondary Normal Retirement Benefit. Within 60 days following the
end of the Plan Year following the Executive's Termination of Employment,
and continuing until the Executive's death, the Company shall pay a
Secondary Normal Retirement Benefit to the Executive. The Secondary Normal
Retirement Benefit shall be paid annually in an amount calculated as
follows:
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After-tax earnings for the Plan Year on Simulated Investment Number One
minus the
After-tax earnings for the Plan Year on Simulated Investment Number Two
divided by the
Adjustment Rate.
Earnings on Simulated Investment Number One will be equal to the increase
in the cash surrender value of the life insurance policy(s) described in
Appendix A increased by any loans or withdrawals from the policy during the
Plan Year and reduced by any premium payments during the Plan Year. For
purposes of calculating the after-tax earnings on Simulated Investment
Number One, the income tax rate is assumed to be 0% and earnings are
compounded on an annual basis at the end of each Plan Year. Interest
earnings on Simulated Investment Number Two shall be determined pursuant to
the method set forth in Section 2.1 hereof.
ARTICLE 4
EARLY TERMINATION OF EMPLOYMENT
Voluntary Early Termination. Upon a Voluntary Early Termination, the
Executive will receive no benefit from the Company under this Agreement.
Involuntary Early Termination. Upon an Involuntary Early Termination (other
than as a result of Disability or following a Change in Control), the Company
shall pay to the Executive a benefit equal to the Retirement Account balance as
of the last day of the Plan Year immediately preceding the Executive's
Termination of Employment. The Company shall pay the benefit to the Executive in
a lump sum within 60 days following Termination of Employment.
ARTICLE 5
CHANGE OF CONTROL AND DISABILITY
Upon the Executive's Termination of Employment following Disability or upon
a Change of Control followed within twelve (12) months by the Executive's
Termination of Employment for reasons other than death, Disability or Normal
Retirement, the Company shall pay to the Executive the Primary and Secondary
benefits described in Sections 3.1.1 and 3.1.2.
Internal Revenue Service Section 280G Gross Up. To the extent not
prohibited by law, if, as a result of a Change of Control, the Executive 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 Executive the
following additional amounts, consisting of (a) a payment equal to the Excise
Tax payable by the Executive 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,
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payroll and excise taxes. Payment of the additional amounts described in clauses
(a) and (b) shall be made in addition to the Total Benefits.
ARTICLE 6
DEATH BENEFITS
Upon the Executive's death prior to termination of this Agreement, the
Company shall pay to the Executive's beneficiary a benefit equal to the
Retirement Account balance as of the last day of the Plan Year immediately
preceding the Executive's death. The Company shall pay the benefit to the
Executive's beneficiary in a lump sum within 60 days following the Executive's
death.
ARTICLE 7
BENEFICIARIES
7.1 Beneficiary Designations. The Executive shall designate a beneficiary
by filing a written designation with the Company. The Executive may revoke or
modify the designation at any time by filing a new designation. However,
designations will only be effective if signed by the Executive and received by
the Company during the Executive's lifetime. The Executive's beneficiary
designation shall be deemed automatically revoked if the beneficiary predeceases
the Executive or if the Executive names a spouse as beneficiary and the marriage
is subsequently dissolved. If the Executive dies without a valid beneficiary
designation, all payments shall be made to the Executive's estate.
7.2 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 8
GENERAL LIMITATIONS
8.1 Termination for Cause. Notwithstanding any provision of this Agreement
to the contrary, the Company shall not pay any benefit under this Agreement if
the Company terminates the Executive's Employment for:
(a) Gross negligence or gross neglect of duties;
(b) Commission of a felony or of a gross misdemeanor involving moral
turpitude; or
(c) Fraud, disloyalty, dishonesty or willful violation of any law or
significant Company policy resulting in an adverse effect on the Company.
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8.2 Suicide or Misstatement. The Company shall not pay any benefit under
this Agreement if the Executive 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 Executive has made any material misstatement of fact on an
employment application or resume provided to the Company, or on any application
for any benefits provided by the Company to the Executive.
ARTICLE 9
CLAIMS AND REVIEW PROCEDURES
9.1 Claims Procedure. The Company shall notify any person or entity who
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
ineligibility for benefits under this 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 this 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 this
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.
9.2 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 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 10
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Executive.
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Article 11
Miscellaneous
11.1 Binding Effect. This Agreement shall bind the Executive and the
Company and their beneficiaries, survivors, executors, administrators and
transferees.
11.2 No Guarantee of Employment. This Agreement is not an employment policy
or contract. It does not give the Executive the right to remain an employee of
the Company, nor does it interfere with the Company's right to discharge the
Executive. It also does not require the Executive to remain an employee nor
interfere with the Executive's right to terminate employment at any time.
11.3 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.
11.4 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.
11.5 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
11.6 Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
11.7 Unfunded Arrangement. The Executive is a general unsecured creditor 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 Executive's life or any other asset held in
connection with this Agreement is a general asset of the Company to which the
Executive has no preferred or secured claim.
11.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Executive as to the subject matter hereof. No rights
are granted to the Executive by virtue of this Agreement other than those
specifically set forth herein.
11.9 Administration. The Company shall have the powers which are necessary
to administer this Agreement, including but not limited to:
(a) Interpreting the provisions of this Agreement;
(b) Establishing and revising the method of accounting for the
Agreement;
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(c) Maintaining a record of benefit payments; and
(d) Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
11.10 Actions of the Company. All determinations, interpretations, rules,
and decisions of the Company shall be conclusive and binding upon all persons
having or claiming to have any interest or right under this Agreement.
11.11 Named Fiduciary. The Company shall be the named fiduciary and plan
administrator under this Agreement. The named fiduciary may delegate to others
certain aspects of the management and operation responsibilities of the plan
including the employment of advisors and the delegation of ministerial duties to
qualified individuals.
IN WITNESS WHEREOF, the Executive and a duly authorized Company officer
have signed this Agreement.
EXECUTIVE: COMPANY:
COOPERATIVE BANK FOR SAVINGS
/s/ XXXXXXXXX XXXXXXXX, III BY: /s/ XXXXX X. XXXXXXX
------------------------------------ ------------------------------------
XXXXXXXXX XXXXXXXX III NAME: XXXXX X. XXXXXXX
----------------------------------
TITLE: CHAIR, PERSONNEL COMMITTEE
---------------------------------
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APPENDIX A
SIMULATED POLICY DATA
COOPERATIVE BANK FOR SAVINGS
EXECUTIVE INDEXED RETIREMENT AGREEMENT
XXXXXXXXX XXXXXXXX III
INSURANCE CARRIER: JEFFERSON-PILOT LIFE INSURANCE COMPANY
POLICY TYPE: UNIVERSAL LIFE, NO LOAD
PRODUCT NAME: ESPVI
INSURED'S SEX AND AGE: MALE, AGE 52
CLASSIFICATION: STANDARD, NON-TOBACCO USE
INITIAL FACE AMOUNT: $4,565,918
SINGLE PREMIUM AMOUNT: $1,948,000
ISSUE DATE: OCTOBER 1, 2001
DEATH BENEFIT OPTION LEVEL
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COOPERATIVE BANK FOR SAVINGS
SPLIT DOLLAR AGREEMENT
THIS AGREEMENT is adopted this 17th day of January, 2002, by and between
COOPERATIVE BANK FOR SAVINGS, a State/Stock Savings Bank located in Wilmington,
North Carolina (the "Company"), and XXXXXXXXX XXXXXXXX III (the "Executive").
This Agreement shall append the Split Dollar Endorsement entered into on even
date herewith or as subsequently amended, by and between the aforementioned
parties.
INTRODUCTION
To encourage the Executive to remain an employee of the Company, the
Company is willing to divide the death proceeds of a life insurance policy on
the Executive's life. The Company will pay life insurance premiums from its
general assets.
AGREEMENT
The Company and the Executive agree as follows:
ARTICLE I
GENERAL DEFINITIONS
The following terms shall have the meanings specified:
1.1 "Insurers" means Jefferson-Pilot Life Insurance Company and West Coast
Life Insurance Company.
1.2 "Policies" means insurance policy nos. JP5195504 and ZUA386793 issued
by the respective Insurers.
1.3 "Insured" means the Executive.
1.4 "Net Death Proceeds" means the total death proceeds of the Policy minus
the cash surrender value.
1.5 "Normal Retirement Age" means the Executive's 65th birthday.
1.6 "Voluntary Early Termination" means that the Executive, prior to Normal
etirement Age, has terminated employment with the Company for reasons other
than Termination for Cause, Disability, Change of Control or Involuntary
Termination (Termination for Cause, Disability, Change of Control and
Involuntary Termination are defined in the COOPERATIVE BANK FOR SAVINGS
EXECUTIVE INDEXED RETIREMENT AGREEMENT of even date herewith).
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ARTICLE 2
POLICY OWNERSHIP/INTERESTS
2.1 Company Ownership. The Company is the sole owner of the Policy and
shall have the right to exercise all incidents of ownership except as otherwise
said herein. The Company shall be the beneficiary of the death proceeds
remaining after the Executive's interest has been paid according to Section 2.2
below.
2.2 Executive's Interest. The Executive shall have the right to designate
the beneficiary of an amount equal to 100 percent of the Net Death Proceeds of
the Policy. The Executive shall also have the right to elect and change
settlement options that may be permitted. However, the Executive, the
Executive's transferee or the Executive's beneficiary shall have no rights or
interests in the Policy with respect to that portion of the death proceeds
designated in this section 2.2 upon the Executive's Voluntary Early Termination.
2.3 Option to Purchase. The Company shall not sell, surrender or transfer
ownership of the Policy while this Agreement is in effect without first giving
the Executive or the Executive's transferee the option to purchase the Policy
for a period of 60 days from written notice of such intention. The purchase
price shall be an amount equal to the cash surrender value of the Policy. This
provision shall not impair the right of the Company to terminate this Agreement.
2.4 Comparable Coverage. Upon adoption and subject to the terms of this
Agreement, the Company shall maintain the Policy in full force and effect and in
no event shall the Company amend, terminate, or otherwise abrogate the
Executive's interest in the Policy, unless the Company replaces the Policy with
a comparable insurance policy to cover the benefit provided under this
Agreement, amends the Split Dollar Agreement and executes a new Endorsement for
said comparable insurance policy. The Executive agrees to provide the required
medical information to the Insurers for the implementation of this Agreement and
agrees to participate with the Company if the Company desires to obtain a
comparable insurance policy with another carrier, whether prior to or after
Normal Retirement Age. The Policy or any comparable policy shall be subject to
the claims of the Company's creditors.
ARTICLE 3
PREMIUMS
3.1 Premium Payment. The Company shall pay any premiums due on the Policy.
3.2 Imputed Income. The Company shall impute income to the Executive in an
amount equal to the current term rate for the Executive's age multiplied by the
aggregate death benefit payable to the Executive's beneficiary. The "current
term rate" is the minimum amount required to be imputed under Revenue Rulings
64-328 and 66-110, or any subsequent applicable authority.
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ARTICLE 4
ASSIGNMENT
The Executive may assign without consideration all of the Executive's
interests in the Policy and in this Agreement to any person, entity or trust. In
the event the Executive transfers all of the Executive's interest in the Policy,
then all of the Executive's interest in the Policy and in the Agreement shall be
vested in the Executive's transferee, who shall be substituted as a party
hereunder and the Executive shall have no further interest in the Policy or in
this Agreement.
ARTICLE 5
INSURERS
The Insurers shall be bound only by the terms of the Policy. Any payments
the Insurers make or actions either of the Insurers takes in accordance with the
Policy shall fully discharge such Insurer or Insurers from all claims, suits and
demands of all entities or persons. The Insurers shall not be bound by or be
deemed to have notice of the provisions of this Agreement.
ARTICLE 6
CLAIMS PROCEDURE
6.1 Claims Procedure. The Company shall notify any person or entity that
makes a claim under this Agreement (the "Claimant") in writing, within 90 days
of Claimant's written application for benefits, of his or her eligibility or
ineligibility for benefits under this 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 this 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 this
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 a 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.
6.2 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 sixty-day period, stating specifically the basis of its
decision, written in a manner to be understood by the Claimant and the specific
provisions of this 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-day
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period at the election of the Company, but notice of this deferral shall be
given to the Claimant.
ARTICLE 7
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Executive. However, this Agreement will
automatically terminate upon the Executive's Voluntary Early Termination.
ARTICLE 8
MISCELLANEOUS
8.1 Binding Effect. This Agreement shall bind the Executive and the Company
and their beneficiaries, survivors, executors, administrators and transferees,
and any Policy beneficiary.
8.2 No Guarantee of Employment. This Agreement is not an employment policy
or contract. It does not give the Executive the right to remain an employee of
the Company, nor does it interfere with the Company's right to discharge the
Executive. It also does not require the Executive to remain an employee nor
interfere with the Executive's right to terminate employment at any time.
8.3 Applicable Law. The Agreement and all rights hereunder shall be
governed by and construed according to the laws of the State of North Carolina,
except to the extent preempted by the laws of the United States of America.
8.4 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.
8.5 Notice. Any notice, consent or demand required or permitted to be given
under the provisions of this Split Dollar Agreement by one party to another
shall be in writing, shall be signed by the party giving or making the same, and
may be given either by delivering the same to such other party personally, or by
mailing the same, by United States certified mail, postage prepaid, to such
party, addressed to his or her last known address as shown on the records of the
Company. The date of such mailing shall be deemed the date of such mailed
notice, consent or demand.
8.6 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Executive as to the subject matter hereof. No rights
are granted to the Executive by virtue of this Agreement other than those
specifically set forth herein.
8.7 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
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(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.
8.8 Named Fiduciary. The Company shall be the named fiduciary and plan
administrator under this Agreement. The named fiduciary may delegate to others
certain aspects of the management and operation responsibilities of the plan
including the employment of advisors and the delegation of ministerial duties to
qualified individuals.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
EXECUTIVE: COMPANY:
COOPERATIVE BANK FOR SAVINGS
/s/ Xxxxxxxxx Xxxxxxxx, III BY /s/ Xxxxx X. Xxxxxxx
-------------------------------- -------------------------------------
XXXXXXXXX XXXXXXXX III
TITLE Chair, Personnel Committee
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SPLIT DOLLAR POLICY ENDORSEMENT TO
COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT
Policy No. JP5195505 Insured: Xxxxxxxxx Xxxxxxxx III
Supplementing and amending the application for insurance to Jefferson-Pilot Life
Insurance Company ("Insurer") on September 26, 2001, the applicant requests and
directs that:
BENEFICIARIES
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1. COOPERATIVE BANK FOR SAVINGS, a State/Stock Savings Bank located in
Wilmington, North Carolina (the "Company"), shall be the beneficiary of the
death proceeds remaining after the Insured's interest has been paid according to
paragraph (2) below.
2. The Insured or the Insured's transferee shall designate the beneficiary
of an amount equal to 100 percent of the Net Death Proceeds of the Policy
(defined as the total death proceeds of the Policy minus the cash surrender
value), subject to the provisions of paragraph (5) below.
OWNERSHIP
---------
3. The Owner of the policy shall be the Company. The Owner shall have all
ownership rights in the Policy except as may be specifically granted to the
Insured or the Insured's transferee in paragraph (4) of this endorsement.
4. The Insured or the Insured's transferee shall have the rights to assign
his or her rights and interests in the Policy with respect to that portion of
the death proceeds designated in paragraph (2) of this endorsement, and to
exercise all settlement options with respect to such death proceeds.
5. Notwithstanding the provisions of paragraph (4) above, the Insured or
the Insured's transferee shall have no rights or interests in the Policy with
respect to that portion of the death proceeds designated in paragraph (2) of
this endorsement upon the Insured's Voluntary Early Termination (as defined in
the COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT between Cooperative Bank
for Savings and Xxxxxxxxx Xxxxxxxx III of even date herewith).
MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY
---------------------------------------------------
Upon the death of the Insured, the interest of any collateral assignee of the
Owner of the Policy designated in (3) above shall be limited to the portion of
the proceeds described in paragraph (1) above.
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OWNERS AUTHORITY
----------------
The Insurer is hereby authorized to recognize the Owner's claim to rights
hereunder without investigating the reason for any action taken by the Owner,
including its statement of the amount of premiums it has paid on the Policy. The
signature of the Owner shall be sufficient for the exercise of any rights under
this Endorsement and the receipt of the Owner for any sums received by it shall
be a full discharge and release therefore to the Insurer. The Insurer may rely
on a sworn statement in form satisfactory to it furnished by the Owner, its
successors or assigns, as to their interest, and any payments made pursuant to
such statement shall discharge the Insurer accordingly. The owner accepts and
agrees to this split dollar endorsement.
Any transferee's rights shall be subject to this Endorsement.
The undersigned is signing in a representative capacity and warrants that he or
she has the authority to bind the entity on whose behalf this document is being
executed.
Signed at Wilmington, North Carolina, this 17th day of January, 2002.
COOPERATIVE BANK FOR SAVINGS
By /s/ Xxxxx X. Xxxxxxx
--------------------------------------
Title Chair, Personnel Committee
--------------------------------------
ACCEPTANCE AND BENEFICIARY DESIGNATION
--------------------------------------
The Insured accepts and agrees to the foregoing and, subject to the rights of
the Owner as stated above, designates the following as beneficiary(s) of the
portion of the proceeds described in paragraph (2) above:
Primary Beneficiary:____________________________________________________________
Relationship:__________________________________________________________
Contingent Beneficiary (if the Primary is deceased):____________________________
Relationship:__________________________________________________________
Signed at ____________________, North Carolina, this ______ day of
______________, 2001.
THE INSURED:
/s/ Xxxxxxxxx Xxxxxxxx, III
--------------------------------
Xxxxxxxxx Xxxxxxxx III
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SPLIT DOLLAR POLICY ENDORSEMENT TO
COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT
Policy No. ZUA386793 Insured: Xxxxxxxxx Xxxxxxxx III
Supplementing and amending the application for insurance to West Coast Life
Insurance Company ("Insurer") on September 26, 2001, the applicant requests and
directs that:
BENEFICIARIES
-------------
1. COOPERATIVE BANK FOR SAVINGS, a State/Stock Savings Bank located in
Wilmington, North Carolina (the "Company"), shall be the beneficiary of the
death proceeds remaining after the Insured's interest has been paid according to
paragraph (2) below.
2. The Insured or the Insured's transferee shall designate the beneficiary
of an amount equal to 100 percent of the Net Death Proceeds of the Policy
(defined as the total death proceeds of the Policy minus the cash surrender
value), subject to the provisions of paragraph (5) below.
OWNERSHIP
---------
3. The Owner of the policy shall be the Company. The Owner shall have all
ownership rights in the Policy except as may be specifically granted to the
Insured or the Insured's transferee in paragraph (4) of this endorsement.
4. The Insured or the Insured's transferee shall have the rights to assign
his or her rights and interests in the Policy with respect to that portion of
the death proceeds designated in paragraph (2) of this endorsement, and to
exercise all settlement options with respect to such death proceeds.
5. Notwithstanding the provisions of paragraph (4) above, the Insured or
the Insured's transferee shall have no rights or interests in the Policy with
respect to that portion of the death proceeds designated in paragraph (2) of
this endorsement upon the Insured's Voluntary Early Termination (as defined in
the COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT between Cooperative Bank
for Savings and Xxxxxxxxx Xxxxxxxx III of even date herewith).
MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY
---------------------------------------------------
Upon the death of the Insured, the interest of any collateral assignee of the
Owner of the Policy designated in (3) above shall be limited to the portion of
the proceeds described in paragraph (1) above.
-8-
OWNERS AUTHORITY
----------------
The Insurer is hereby authorized to recognize the Owner's claim to rights
hereunder without investigating the reason for any action taken by the Owner,
including its statement of the amount of premiums it has paid on the Policy. The
signature of the Owner shall be sufficient for the exercise of any rights under
this Endorsement and the receipt of the Owner for any sums received by it shall
be a full discharge and release therefore to the Insurer. The Insurer may rely
on a sworn statement in form satisfactory to it furnished by the Owner, its
successors or assigns, as to their interest, and any payments made pursuant to
such statement shall discharge the Insurer accordingly. The owner accepts and
agrees to this split dollar endorsement.
Any transferee's rights shall be subject to this Endorsement.
The undersigned is signing in a representative capacity and warrants that he or
she has the authority to bind the entity on whose behalf this document is being
executed.
Signed at Wilmington, North Carolina, this 17th day of January, 2002.
COOPERATIVE BANK FOR SAVINGS
By /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Title Chair, Personnel Committee
-----------------------------------
ACCEPTANCE AND BENEFICIARY DESIGNATION
--------------------------------------
The Insured accepts and agrees to the foregoing and, subject to the rights of
the Owner as stated above, designates the following as beneficiary(s) of the
portion of the proceeds described in paragraph (2) above:
Primary Beneficiary:____________________________________________________________
Relationship:__________________________________________________________
Contingent Beneficiary (if the Primary is deceased):____________________________
Relationship:__________________________________________________________
Signed at Wilmington, North Carolina, this 17th day of January, 2002.
THE INSURED:
/s/ Xxxxxxxxx Xxxxxxxx III
---------------------------------
Xxxxxxxxx Xxxxxxxx III
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COOPERATIVE BANK FOR SAVINGS
EXECUTIVE INDEXED RETIREMENT AGREEMENT
THIS AGREEMENT is adopted this 17th day of January 2002, by and between
COOPERATIVE BANK FOR SAVINGS, a State/Stock Savings Bank located in Wilmington,
North Carolina (the "Company"), and X. X. XXXXXXX (the "Executive").
INTRODUCTION
To attract, retain and reward quality Executives and to provide a
potentially higher level of retirement income, the Company is willing to provide
the Executive with this Executive Indexed Retirement Agreement. The Company will
pay the benefits from its general assets.
AGREEMENT
The Executive 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 "Adjustment Rate" shall mean the figure equal to one minus the
Company's highest marginal tax rate for the current calendar year.
1.2 "Change in Control" means a change in the control of the Company or its
holding company, Cooperative Bankshares, Inc. (the "Holding Company"). The term
control shall refer to the ownership, holding or power to vote more than 25
percent of the Company's or the Holding Company's voting stock, the control of
the election of a majority of the Company's or the Holding Company's directors,
or the exercise of a controlling influence over the management or policies of
the Company or the Holding Company by any person or persons acting as a group
within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as
amended. The term "person means an individual other than the Executive, or a
corporation, partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other form of entity not
specifically listed herein.
1.3 "Disability" means, if the Executive is covered by a Company-sponsored
disability policy, total disability as defined in such policy without regard to
any waiting period. If the Executive is not covered by such a policy, Disability
means the Executive suffering a sickness, accident or injury, which, in the
judgment of a physician who is satisfactory to the Company, prevents the
Executive from performing substantially all of the Executive's normal duties for
the Company. As a condition to receiving any Disability benefits, the Company
may require the Executive to submit to such physical or mental evaluations and
tests as the Company's Board of Directors deems appropriate and reasonable.
-1-
1.4 "Normal Retirement Age" means the Executive's 65th birthday.
1.5 "Normal Retirement Date" means the later of the Normal Retirement Age
or Termination of Employment.
1.6 "Plan Year" means each calendar year from January 1 through December
31. In the year of implementation, it shall commence with the adoption date of
this Agreement and end on December 31, 2001.
1.7 Simulated Investments" mean investments specified by the Company for
use in measuring the Retirement Benefit. Subject to Article 2, the Company can
change the Simulated Investments only with the Executive's written agreement.
The Simulated Investments shall be of equal initial amounts.
1.8 Simulated Investment Earnings" means the after-tax rate of return on a
Simulated Investment. If the Simulated Investment is a life insurance policy,
the Simulated Investment Earnings shall track cash surrender value and not
include receipt of the policy's death benefit.
1.9 "Termination of Employment" means the Executive ceases to be employed
by the Company for any reason, voluntarily or involuntarily, other than death.
1.10 "Voluntary Early Termination" means that the Executive, prior to
Normal Retirement Age, has terminated employment with the Company for reasons
other than Termination for Cause, Disability, Change of Control or Involuntary
Early Termination.
1.11 "Involuntary Early Termination" means that the Executive, prior to
Normal Retirement Age, has been notified in writing, that employment with the
Company is terminated for reasons other than an approved leave of absence,
Termination for Cause, Disability, Change of Control or Voluntary Termination.
ARTICLE 2
RETIREMENT ACCOUNT
2.1 Simulated Investments. The Company shall establish two Simulated
Investments in the amount of $2,148,000 as of October 1, 2001 as follows:
2.1.1 Simulated Investment Number One shall track the cash surrender
value of one or more specified life insurance policy(s) as described in
Appendix A.
2.1.2 Simulated Investment Number Two shall track the value of a
simulated investment account comprised of both principal and accumulated
net after-tax interest earnings. Pre-tax interest earnings shall equal 4.44
percent for the first Plan Year and adjusted by the Company's Board of
Directors at their sole and absolute discretion for subsequent Plan Years.
Simulated Investment Number Two assumes the income tax rate to be the
Company's highest marginal tax rate for the current calendar year, and
assumes
-2-
that interest (net of tax) shall be compounded on an annual basis at the
end of each Plan Year.
2.2 Retirement Account. The Company shall establish a Retirement Account on
its books for the Executive. The Retirement Account balance during the
pre-termination period is determined by subtracting the value of Simulated
Investment Number Two from the value of Simulated Investment Number One and
dividing the difference by the Adjustment Rate. The Retirement Account
subsequent to Termination of Employment is reduced by payments of the Primary
Normal Retirement Benefit under Section 3.1.1. The Retirement Account balance
shall never be less than zero.
2.3 Statement of Accounts. The Company shall provide to the Executive,
within 60 days after each Plan Year, a statement setting forth the Retirement
Account balance.
2.4 Accounting Device Only. The Retirement Account and Simulated
Investments are solely devices for measuring amounts to be paid under this
Agreement. They are not a trust fund of any kind. The Executive 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 Executive's rights
are not subject in any manner to anticipation, alienation, transfer, assignment,
pledge, encumbrance, attachment or garnishment by the Executive's creditors.
ARTICLE 3
NORMAL RETIREMENT
3.1 Normal Retirement Benefit. Subject to the general limitations of
Article 8, upon reaching the Normal Retirement Date while in the full-time
employment of the Company, the Executive shall be entitled to both the primary
and secondary benefits described in Sections 3.1.1 and 3.1.2.
3.1.1 Primary Normal Retirement Benefit. Commencing on the
Executive's Normal Retirement Date, the Company shall pay a Primary Normal
Retirement Benefit to the Executive which is equal to the Executive's
Retirement Account balance as of the Plan Year ending immediately preceding
the Executive's Normal Retirement Date. The Primary Normal Retirement
Benefit shall be paid over 24 years in 288 equal monthly installments
(without adjustment for interest earnings during the payment period),
commencing with the month following the Executive's Termination of
Employment.
3.2 Secondary Normal Retirement Benefit. Within 60 days following the
end of the Plan Year following the Executive's Termination of Employment,
and continuing until the Executive's death, the Company shall pay a
Secondary Normal Retirement Benefit to the Executive. The Secondary Normal
Retirement Benefit shall be paid annually in an amount calculated as
follows:
-3-
After-tax earnings for the Plan Year on Simulated Investment Number One
minus the
After-tax earnings for the Plan Year on Simulated Investment Number Two
divided by the
Adjustment Rate.
Earnings on Simulated Investment Number One will be equal to the increase
in the cash surrender value of the life insurance policy(s) described in
Appendix A increased by any loans or withdrawals from the policy during the
Plan Year and reduced by any premium payments during the Plan Year. For
purposes of calculating the after-tax earnings on Simulated Investment
Number One, the income tax rate is assumed to be 0% and earnings are
compounded on an annual basis at the end of each Plan Year. Interest
earnings on Simulated Investment Number Two shall be determined pursuant to
the method set forth in Section 2.1 hereof.
ARTICLE 4
EARLY TERMINATION OF EMPLOYMENT
Voluntary Early Termination. Upon a Voluntary Early Termination, the
Executive will receive no benefit from the Company under this Agreement.
Involuntary Early Termination. Upon an Involuntary Early Termination (other
than as a result of Disability or following a Change in Control), the Company
shall pay to the Executive a benefit equal to the Retirement Account balance as
of the last day of the Plan Year immediately preceding the Executive's
Termination of Employment. The Company shall pay the benefit to the Executive in
a lump sum within 60 days following Termination of Employment.
ARTICLE 5
CHANGE OF CONTROL AND DISABILITY
Upon the Executive's Termination of Employment following Disability or upon
a Change of Control followed within twelve (12) months by the Executive's
Termination of Employment for reasons other than death, Disability or Normal
Retirement, the Company shall pay to the Executive the Primary and Secondary
benefits described in Sections 3.1.1 and 3.1.2.
Internal Revenue Service Section 280G Gross Up. To the extent not
prohibited by law, if, as a result of a Change of Control, the Executive 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 Executive the
following additional amounts, consisting of (a) a payment equal to the Excise
Tax payable by the Executive 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,
-4-
payroll and excise taxes. Payment of the additional amounts described in clauses
(a) and (b) shall be made in addition to the Total Benefits.
ARTICLE 6
DEATH BENEFITS
Upon the Executive's death prior to termination of this Agreement, the
Company shall pay to the Executive's beneficiary a benefit equal to the
Retirement Account balance as of the last day of the Plan Year immediately
preceding the Executive's death. The Company shall pay the benefit to the
Executive's beneficiary in a lump sum within 60 days following the Executive's
death.
ARTICLE 7
BENEFICIARIES
7.1 Beneficiary Designations. The Executive shall designate a beneficiary
by filing a written designation with the Company. The Executive may revoke or
modify the designation at any time by filing a new designation. However,
designations will only be effective if signed by the Executive and received by
the Company during the Executive's lifetime. The Executive's beneficiary
designation shall be deemed automatically revoked if the beneficiary predeceases
the Executive or if the Executive names a spouse as beneficiary and the marriage
is subsequently dissolved. If the Executive dies without a valid beneficiary
designation, all payments shall be made to the Executive's estate.
7.2 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 8
GENERAL LIMITATIONS
8.1 Termination for Cause. Notwithstanding any provision of this Agreement
to the contrary, the Company shall not pay any benefit under this Agreement if
the Company terminates the Executive's Employment for:
(a) Gross negligence or gross neglect of duties;
(b) Commission of a felony or of a gross misdemeanor involving moral
turpitude; or
(c) Fraud, disloyalty, dishonesty or willful violation of any law or
significant Company policy resulting in an adverse effect on the Company.
-5-
8.2 Suicide or Misstatement. The Company shall not pay any benefit under
this Agreement if the Executive 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 Executive has made any material misstatement of fact on an
employment application or resume provided to the Company, or on any application
for any benefits provided by the Company to the Executive.
ARTICLE 9
CLAIMS AND REVIEW PROCEDURES
9.1 Claims Procedure. The Company shall notify any person or entity who
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
ineligibility for benefits under this 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 this 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 this
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.
9.2 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 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 10
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Executive.
-6-
ARTICLE 11
MISCELLANEOUS
11.1 Binding Effect. This Agreement shall bind the Executive and the
Company and their beneficiaries, survivors, executors, administrators and
transferees.
11.2 No Guarantee of Employment. This Agreement is not an employment policy
or contract. It does not give the Executive the right to remain an employee of
the Company, nor does it interfere with the Company's right to discharge the
Executive. It also does not require the Executive to remain an employee nor
interfere with the Executive's right to terminate employment at any time.
11.3 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.
11.4 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.
11.5 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
11.6 Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
11.7 Unfunded Arrangement. The Executive is a general unsecured creditor 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 Executive's life or any other asset held in
connection with this Agreement is a general asset of the Company to which the
Executive has no preferred or secured claim.
11.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Executive as to the subject matter hereof. No rights
are granted to the Executive by virtue of this Agreement other than those
specifically set forth herein.
11.9 Administration. The Company shall have the powers which are necessary
to administer this Agreement, including but not limited to:
(a) Interpreting the provisions of this Agreement;
(b) Establishing and revising the method of accounting for the
Agreement;
-7-
(c) Maintaining a record of benefit payments; and
(d) Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
11.10 Actions of the Company. All determinations, interpretations,
rules, and decisions of the Company shall be conclusive and binding upon all
persons having or claiming to have any interest or right under this Agreement.
11.11 Named Fiduciary. The Company shall be the named fiduciary and
plan administrator under this Agreement. The named fiduciary may delegate to
others certain aspects of the management and operation responsibilities of the
plan including the employment of advisors and the delegation of ministerial
duties to qualified individuals.
IN WITNESS WHEREOF, the Executive and a duly authorized Company officer
have signed this Agreement.
EXECUTIVE: COMPANY:
COOPERATIVE BANK FOR SAVINGS
/S/ O. C. "BUDDY" XXXXXXX, JR. BY: /S/ XXXXXXXXX XXXXXXXX, III
-------------------------------- -------------------------------------
X. X. XXXXXXX NAME: XXXXXXXXX XXXXXXXX, III
------------------------------------
TITLE: PRESIDENT
------------------------------------
-8-
APPENDIX A
SIMULATED POLICY DATA
COOPERATIVE BANK FOR SAVINGS
EXECUTIVE INDEXED RETIREMENT AGREEMENT
X. X. XXXXXXX
INSURANCE CARRIER: WEST COAST LIFE INSURANCE COMPANY
POLICY TYPE: UNIVERSAL LIFE, NO LOAD
PRODUCT NAME: ESPVI
INSURED'S SEX AND AGE: MALE, AGE 53
CLASSIFICATION: STANDARD, NON-TOBACCO USE
INITIAL FACE AMOUNT: $2,905,000
SINGLE PREMIUM AMOUNT: $1,275,000
ISSUE DATE: OCTOBER 1, 2001
DEATH BENEFIT OPTION LEVEL
-9-
COOPERATIVE BANK FOR SAVINGS
SPLIT DOLLAR AGREEMENT
THIS AGREEMENT is adopted this 17th day of January, 2002, by and between
COOPERATIVE BANK FOR SAVINGS, a State/Stock Savings Bank located in Wilmington,
North Carolina (the "Company"), and X. X. XXXXXXX (the "Executive"). This
Agreement shall append the Split Dollar Endorsement entered into on even date
herewith or as subsequently amended, by and between the aforementioned parties.
INTRODUCTION
To encourage the Executive to remain an employee of the Company, the
Company is willing to divide the death proceeds of a life insurance policy on
the Executive's life. The Company will pay life insurance premiums from its
general assets.
AGREEMENT
The Company and the Executive agree as follows:
ARTICLE I
GENERAL DEFINITIONS
The following terms shall have the meanings specified:
1.1 "Insurer" means West Coast Life Insurance Company.
1.2 "Policy" means insurance policy no. XXX000000 issued by the Insurer.
1.3 "Insured" means the Executive.
1.4 "Net Death Proceeds" means the total death proceeds of the Policy minus
the cash surrender value.
1.5 "Normal Retirement Age" means the Executive's 65th birthday.
1.6 "Voluntary Early Termination" means that the Executive, prior to Normal
Retirement Age, has terminated employment with the Company for reasons other
than Termination for Cause, Disability, Change of Control or Involuntary
Termination (Termination for Cause, Disability, Change of Control and
Involuntary Termination are defined in the COOPERATIVE BANK FOR SAVINGS
EXECUTIVE INDEXED RETIREMENT AGREEMENT of even date herewith).
-1-
ARTICLE 2
POLICY OWNERSHIP/INTERESTS
2.1 Company Ownership. The Company is the sole owner of the Policy and
shall have the right to exercise all incidents of ownership except as otherwise
said herein. The Company shall be the beneficiary of the death proceeds
remaining after the Executive's interest has been paid according to Section 2.2
below.
2.2 Executive's Interest. The Executive shall have the right to designate
the beneficiary of an amount equal to 100 percent of the Net Death Proceeds of
the Policy. The Executive shall also have the right to elect and change
settlement options that may be permitted. However, the Executive, the
Executive's transferee or the Executive's beneficiary shall have no rights or
interests in the Policy with respect to that portion of the death proceeds
designated in this section 2.2 upon the Executive's Voluntary Early Termination.
2.3 Option to Purchase. The Company shall not sell, surrender or transfer
ownership of the Policy while this Agreement is in effect without first giving
the Executive or the Executive's transferee the option to purchase the Policy
for a period of 60 days from written notice of such intention. The purchase
price shall be an amount equal to the cash surrender value of the Policy. This
provision shall not impair the right of the Company to terminate this Agreement.
2.4 Comparable Coverage. Upon adoption and subject to the terms of this
Agreement, the Company shall maintain the Policy in full force and effect and in
no event shall the Company amend, terminate, or otherwise abrogate the
Executive's interest in the Policy, unless the Company replaces the Policy with
a comparable insurance policy to cover the benefit provided under this
Agreement, amends the Split Dollar Agreement and executes a new Endorsement for
said comparable insurance policy. The Executive agrees to provide the required
medical information to the Insurer for the implementation of this Agreement and
agrees to participate with the Company if the Company desires to obtain a
comparable insurance policy with another carrier, whether prior to or after
Normal Retirement Age. The Policy or any comparable policy shall be subject to
the claims of the Company's creditors.
ARTICLE 3
PREMIUMS
3.1 Premium Payment. The Company shall pay any premiums due on the Policy.
3.2 Imputed Income. The Company shall impute income to the Executive in an
amount equal to the current term rate for the Executive's age multiplied by the
aggregate death benefit payable to the Executive's beneficiary. The "current
term rate" is the minimum amount required to be imputed under Revenue Rulings
64-328 and 66-110, or any subsequent applicable authority.
-2-
ARTICLE 4
ASSIGNMENT
The Executive may assign without consideration all of the Executive's
interests in the Policy and in this Agreement to any person, entity or trust. In
the event the Executive transfers all of the Executive's interest in the Policy,
then all of the Executive's interest in the Policy and in the Agreement shall be
vested in the Executive's transferee, who shall be substituted as a party
hereunder and the Executive shall have no further interest in the Policy or in
this Agreement.
ARTICLE 5
INSURER
The Insurer shall be bound only by the terms of the Policy. Any payments
the Insurer makes or actions the Insurer takes in accordance with the Policy
shall fully discharge such Insurer from all claims, suits and demands of all
entities or persons. The Insurer shall not be bound by or be deemed to have
notice of the provisions of this Agreement.
ARTICLE 6
CLAIMS PROCEDURE
6.1 Claims Procedure. The Company shall notify any person or entity that
makes a claim under this Agreement (the "Claimant") in writing, within 90 days
of Claimant's written application for benefits, of his or her eligibility or
ineligibility for benefits under this 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 this 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 this
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 a 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.
6.2 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 sixty-day period, stating specifically the basis of its
decision, written in a manner to be understood by the Claimant and the specific
provisions of this Agreement on which the decision is based. If, because of the
need for a hearing, the 60-day
-3-
period is not sufficient, the decision may be deferred for up to another 60-day
period at the election of the Company, but notice of this deferral shall be
given to the Claimant.
ARTICLE 7
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Executive. However, this Agreement will
automatically terminate upon the Executive's Voluntary Early Termination.
ARTICLE 8
MISCELLANEOUS
8.1 Binding Effect. This Agreement shall bind the Executive and the Company
and their beneficiaries, survivors, executors, administrators and transferees,
and any Policy beneficiary.
8.2 No Guarantee of Employment. This Agreement is not an employment policy
or contract. It does not give the Executive the right to remain an employee of
the Company, nor does it interfere with the Company's right to discharge the
Executive. It also does not require the Executive to remain an employee nor
interfere with the Executive's right to terminate employment at any time.
8.3 Applicable Law. The Agreement and all rights hereunder shall be
governed by and construed according to the laws of the State of North Carolina,
except to the extent preempted by the laws of the United States of America.
8.4 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.
8.5 Notice. Any notice, consent or demand required or permitted to be given
under the provisions of this Split Dollar Agreement by one party to another
shall be in writing, shall be signed by the party giving or making the same, and
may be given either by delivering the same to such other party personally, or by
mailing the same, by United States certified mail, postage prepaid, to such
party, addressed to his or her last known address as shown on the records of the
Company. The date of such mailing shall be deemed the date of such mailed
notice, consent or demand.
8.6 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Executive as to the subject matter hereof. No rights
are granted to the Executive by virtue of this Agreement other than those
specifically set forth herein.
8.7 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
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(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.
8.8 Named Fiduciary. The Company shall be the named fiduciary and plan
administrator under this Agreement. The named fiduciary may delegate to others
certain aspects of the management and operation responsibilities of the plan
including the employment of advisors and the delegation of ministerial duties to
qualified individuals.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
EXECUTIVE: COMPANY:
COOPERATIVE BANK FOR SAVINGS
/s/ X. X. XXXXXXX By /s/ Xxxxxxxxx Xxxxxxxx, III
------------------------------------ --------------------------------------
X. X. XXXXXXX NAME: /s/ XXXXXXXXX XXXXXXXX, III
-----------------------------------
Title President
-----------------------------------
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SPLIT DOLLAR POLICY ENDORSEMENT TO
COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT
Policy No. XXX000000 Insured: X. X. Xxxxxxx
Supplementing and amending the application for insurance to West Coast Life
Insurance Company ("Insurer") on September 28, 2001, the applicant requests and
directs that:
BENEFICIARIES
-------------
1. COOPERATIVE BANK FOR SAVINGS, a State/Stock Savings Bank located in
Wilmington, North Carolina (the "Company"), shall be the beneficiary of the
death proceeds remaining after the Insured's interest has been paid according to
paragraph (2) below.
2. The Insured or the Insured's transferee shall designate the beneficiary
of an amount equal to 100 percent of the Net Death Proceeds of the Policy
(defined as the total death proceeds of the Policy minus the cash surrender
value), subject to the provisions of paragraph (5) below.
OWNERSHIP
---------
3. The Owner of the policy shall be the Company. The Owner shall have all
ownership rights in the Policy except as may be specifically granted to the
Insured or the Insured's transferee in paragraph (4) of this endorsement.
4. The Insured or the Insured's transferee shall have the rights to assign
his or her rights and interests in the Policy with respect to that portion of
the death proceeds designated in paragraph (2) of this endorsement, and to
exercise all settlement options with respect to such death proceeds.
5. Notwithstanding the provisions of paragraph (4) above, the Insured or
the Insured's transferee shall have no rights or interests in the Policy with
respect to that portion of the death proceeds designated in paragraph (2) of
this endorsement upon the Insured's Voluntary Early Termination (as defined in
the COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT between Cooperative Bank
for Savings and X. X. Xxxxxxx of even date herewith).
MODIFICATION OF ASSIGNMENT PROVISIONS OF THE POLICY
---------------------------------------------------
Upon the death of the Insured, the interest of any collateral assignee of the
Owner of the Policy designated in (3) above shall be limited to the portion of
the proceeds described in paragraph (1) above.
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OWNERS AUTHORITY
----------------
The Insurer is hereby authorized to recognize the Owner's claim to rights
hereunder without investigating the reason for any action taken by the Owner,
including its statement of the amount of premiums it has paid on the Policy. The
signature of the Owner shall be sufficient for the exercise of any rights under
this Endorsement and the receipt of the Owner for any sums received by it shall
be a full discharge and release therefore to the Insurer. The Insurer may rely
on a sworn statement in form satisfactory to it furnished by the Owner, its
successors or assigns, as to their interest, and any payments made pursuant to
such statement shall discharge the Insurer accordingly. The owner accepts and
agrees to this split dollar endorsement.
Any transferee's rights shall be subject to this Endorsement.
The undersigned is signing in a representative capacity and warrants that he or
she has the authority to bind the entity on whose behalf this document is being
executed.
Signed at Wilmington, North Carolina, this 17th day of January, 2002.
COOPERATIVE BANK FOR SAVINGS
By /s/ Xxxxxxxxx Xxxxxxxx, III
--------------------------------------------
Title President
--------------------------------------------
ACCEPTANCE AND BENEFICIARY DESIGNATION
--------------------------------------
The Insured accepts and agrees to the foregoing and, subject to the rights of
the Owner as stated above, designates the following as beneficiary(s) of the
portion of the proceeds described in paragraph (2) above:
Primary Beneficiary:____________________________________________________________
Relationship:__________________________________________________________
Contingent Beneficiary (if the Primary is deceased):____________________________
Relationship:__________________________________________________________
Signed at Wilmington, North Carolina, this 17th day of January, 2002.
THE INSURED:
/s/ X.X. Xxxxxxx
-------------------------
X. X. Xxxxxxx
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