COOPERATIVE BANK FOR SAVINGS
DIRECTOR 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 O. XXXXXXX XXXXXX, JR. (the "Director").
INTRODUCTION
To encourage the Director to remain a member of the Company's Board of
Directors, the Company is willing to provide retirement benefits to the
Director. The Company will pay the benefits from its general assets.
AGREEMENT
The Director and the Company agree as follows:
Article 1
Definitions
Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:
1.1 "Change of 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 followed within twelve (12) months by the Director's Termination of
Service for reasons other than death, Disability or retirement. The term "person
means an individual other than the Director, or a corporation, partnership,
trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not specifically listed
herein.
1.2 "Code" means the Internal Revenue Code of 1986, as amended.
1.3 "Disability" means, if the Director is covered by a Company sponsored
disability policy, total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy, Disability
means the Director suffering a sickness, accident or injury, which, in the
judgment of a physician who is satisfactory to the Company, prevents the
Director from performing substantially all of the Director's normal duties for
the Company. As a condition to receiving any Disability benefits, the Company
may require the
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Director to submit to such physical or mental evaluations and tests as the
Company's Board of Directors deems appropriate and reasonable.
1.4 "Early Termination" means the Termination of Service before Normal
Retirement Age for reasons other than death, Disability, Termination for Cause
or following a Change of Control.
1.5 "Early Termination Date" means the month, day and year in which Early
Termination occurs.
1.6 "Effective Date" means October 1, 2001.
1.7 "Normal Retirement Age" means the Director's 72nd birthday. Termination
of Service is mandatory upon the Director attaining 72 years of age.
1.8 "Plan Year" means a twelve-month period commencing on October 1 and
ending on September 30 of each year. The initial Plan Year shall commence on the
Effective Date of this Agreement.
1.9 "Termination for Cause" See Section 5.2
1.10 "Termination of Service" means that the Director ceases to be a member
of the Company's Board of Directors for any reason, voluntarily or
involuntarily, other than by reason of a leave of absence approved by the
Company.
ARTICLE 2
LIFETIME BENEFITS
2.1 Normal Retirement Benefit. Upon Termination of Service on or after
Normal Retirement Age for reasons other than death, the Company shall pay to the
Director the benefit described in this Section 2.1 in lieu of any other benefit
under this Agreement.
2.1.1 Amount of Benefit. The annual benefit under this Section 2.1
is $19,200 (Nineteen Thousand Two Hundred Dollars). The Company's Board of
Directors, at its sole discretion, may increase the annual benefit under
this Section 2.1.1; however, any increase shall require the recalculation
of Schedule A.
2.1.2 Payment of Benefit. The Company shall pay the annual benefit to
the Director in 12 equal monthly installments payable each month commencing
with the month following the Director's Normal Retirement Age. The annual
benefit shall be paid to the Director for 10 years.
2.1.3 Benefit Increases. Commencing on the first anniversary of the
first benefit payment, and continuing on each subsequent anniversary, the
Company's Board of Directors, at its sole discretion, may increase the
benefit.
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2.2 Early Termination Benefit. Upon Early Termination, the Company shall
pay to the Director the benefit described in this Section 2.2 in lieu of any
other benefit under this Agreement.
2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the
Early Termination Lump Sum set forth in Schedule A for the Plan Year ending
immediately prior to the Early Termination Date, determined by vesting the
Director in 100 percent of the Accrual Balance. Any increase in the annual
benefit under Section 2.1.1 shall require the recalculation of the Early
Termination benefit on Schedule A.
2.2.2 Payment of Benefit. The Company shall pay the benefit amount to
the Director in a lump sum within 60 days following Termination of Service.
2.3 Disability Benefit. If the Director's Termination of Service prior to
Normal Retirement Age is due to Disability, the Company shall pay to the
Director the benefit described in this Section 2.3 in lieu of any other benefit
under this Agreement.
2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the
Disability Lump Sum set forth in Schedule A for the Plan Year ending
immediately prior to the date on which the Termination of Service occurs,
determined by vesting the Director in 100 percent of the Accrual Balance.
Any increase in the annual benefit under Section 2.1.1 would require the
recalculation of the Disability benefit on Schedule A.
2.3.2 Payment of Benefit. The Company shall pay the benefit amount to
the Director in a lump sum within 60 days following Termination of Service.
2.4 Change of Control Benefit. Upon a Change of Control, the Company shall
pay to the Director the benefit described in this Section 2.4 in lieu of any
other benefit under this Agreement.
2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the
Change of Control Lump Sum set forth in Schedule A for the Plan Year ending
immediately prior to the date in which Termination of Service occurs,
determined by vesting the Director in the present value of the stream of
payments of the Normal Retirement Benefit described in Section 2.1.1. Any
increase in the annual benefit under Section 2.1.1 would require the
recalculation of the Change of Control benefit on Schedule A.
2.4.2 Payment of Benefit. The Company shall pay the benefit amount to
the Director in a lump sum within 60 days following Termination of Service.
ARTICLE 3
DEATH BENEFITS
3.1 Death During Active Service. If the Director dies while in the active
service of the Company, the Company shall pay to the Director's beneficiary the
benefit described in this Section 3.1. This benefit shall be paid in lieu of the
Lifetime Benefits under Article 2.
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3.1.1 Amount of Benefit. The benefit under this Section 3.1 is the
Death Benefit Lump Sum set forth in Schedule A for the Plan Year in which
the Director's death occurs, determined by vesting the Director in 100
percent of the Accrual Balance in said Schedule A. Any increase in the
annual benefit under Section 2.1.1 would require the recalculation of the
Death benefit on Schedule A.
3.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director's beneficiary in a lump sum within 60 days following the
Director's death.
3.2 Death During Payment of a Lifetime Benefit. If the Director dies after
any Lifetime Benefit payments have commenced under this Agreement but before
receiving all such payments, the Company shall pay the remaining benefits to the
Director's beneficiary at the same time and in the same amounts they would have
been paid to the Director had the Director survived.
3.3 Death After Termination of Employment But Before Payment of a Lifetime
Benefit Commences. If the Director is entitled to a Lifetime Benefit under this
Agreement, but dies prior to the commencement of said benefit payments, the
Company shall pay the same benefit payments to the Director's beneficiary that
the Director was entitled to prior to death except that the benefit payments
shall commence on the first day of the month following the date of the
Director's death.
ARTICLE 4
BENEFICIARIES
4.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation. However, designations
will only be effective if signed by the Director and received by the Company
during the Director's lifetime. The Director's beneficiary designation shall be
deemed automatically revoked if the beneficiary predeceases the Director or if
the Director names a spouse as beneficiary and the marriage is subsequently
dissolved. If the Director dies without a valid beneficiary designation, all
payments shall be made to the Director's estate.
4.2 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.
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ARTICLE 5
GENERAL LIMITATIONS
5.1 Internal Revenue Service Section 280G Gross Up. To the extent not
prohibited by law, if, as a result of a Change in Control, the Director becomes
entitled to acceleration of benefits under this Agreement or under any other
benefit, compensation or incentive plan or arrangement with the Company
(collectively, the "Total Benefits"), and if any part of the Total Benefits is
subject to the Excise Tax under Section 280G and Section 4999 of the Internal
Revenue Code (the "Excise Tax"), the Company shall pay to the Director the
following additional amounts, consisting of (a) a payment equal to the Excise
Tax payable by the Director on the Total Benefits under Section 4999 of the
Internal Revenue Code (the "Excise Tax Payment"), and (b) a payment equal to the
amount necessary to provide the Excise Tax Payment, net of all income, payroll
and excise taxes. Payment of the additional amounts described in clauses (a) and
(b) shall be made in addition to the Total Benefits.
5.2 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 Director's service 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 committed in connection with the Director's service
and resulting in an adverse effect on the Company.
5.3 Suicide or Misstatement. The Company shall not pay any benefit under
this Agreement if the Director commits suicide within three years after the date
of this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on an
employment application or resume provided to the Company, or on any application
for any benefits provided by the Company to the Director.
ARTICLE 6
CLAIMS AND REVIEW PROCEDURES
6.1 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
noneligibility 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
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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.
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 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 7
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
ARTICLE 8
MISCELLANEOUS
8.1 Binding Effect. This Agreement shall bind the Director and the Company
and their beneficiaries, survivors, executors, administrators and transferees.
8.2 No Guarantee of Service. This Agreement is not a contract for services.
It does not give the Director the right to remain in the service of the Company,
nor does it interfere with the shareholder's right to discharge the Director. It
also does not require the Director to remain in the service of the Company nor
interfere with the Director's right to terminate services at any time.
8.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
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
under this Agreement. Upon the occurrence of such
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event, the term "Company" as used in this Agreement shall be deemed to refer to
the successor or survivor company.
8.5 Tax Withholding. The Company shall withhold any taxes that are required
to be withheld from the benefits provided under this Agreement.
8.6 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.
8.7 Unfunded Arrangement. The Director and beneficiary are general
unsecured creditors of the Company for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Company to pay such
benefits. The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment by creditors. Any insurance on the Director's life is a general
asset of the Company to which the Director and beneficiary have no preferred or
secured claim.
8.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Director as to the subject matter hereof. No rights
are granted to the Director by virtue of this Agreement other than those
specifically set forth herein.
8.9 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;
(c) Maintaining a record of benefit payments; and
(d) Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
8.10 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.
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IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.
DIRECTOR: COMPANY:
COOPERATIVE BANK FOR SAVINGS
/s/ O. XXXXXXX XXXXXX, JR. BY: /s/XXXXXXXXX XXXXXXXX, III
------------------------------- ---------------------------------
O. XXXXXXX XXXXXX, JR. NAME: XXXXXXXXX XXXXXXXX, III
-------------------------------
TITLE: PRESIDENT
-------------------------------
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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 O. XXXXXXX XXXXXX, JR. (the "Director").
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 Director to remain a member of the Company's Board of
Directors, the Company is willing to divide the death proceeds of a life
insurance policy on the Director's life. The Company will pay life insurance
premiums from its general assets.
AGREEMENT
The Company and the Director 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. JP5195519 and ZUA3866929 issued
by the respective Insurers.
1.3 "Insured" means the Director.
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 Director's 72nd birthday. Termination
of Service is mandatory upon the Director attaining 72 years of age.
1.6 "Termination of Service" means the Director ceases to be a member of
the Company's Board of Directors for any reason, voluntary or involuntary, other
than by reason of a leave of absence approved by the Company or by death.
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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 Director's interest has been paid according to Section 2.2
below.
2.2 Director's Interest. The Director shall have the right to designate the
beneficiary of an amount equal to 100 percent of the Net Death Proceeds of the
Policy. The Director shall also have the right to elect and change settlement
options that may be permitted.
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 Director or the Director'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
Director'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 Director 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 Director in an
amount equal to the current term rate for the Director's age multiplied by the
aggregate death benefit payable to the Director'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.
ARTICLE 4
ASSIGNMENT
The Director may assign without consideration all of the Director's
interests in the Policy and in this Agreement to any person, entity or trust. In
the event the Director transfers all of the
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Director's interest in the Policy, then all of the Director's interest in the
Policy and in the Agreement shall be vested in the Director's transferee, who
shall be substituted as a party hereunder and the Director 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 their respective Policies.
Any payments the Insurers make or action the Insurers take in accordance with
their respective Policies shall fully discharge such 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 PROCEDURES
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 period at the election of the Company, but
notice of this deferral shall be given to the Claimant.
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ARTICLE 7
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
ARTICLE 8
MISCELLANEOUS
8.1 Binding Effect. This Agreement shall bind the Director and the Company
and their beneficiaries, survivors, executors, administrators and transferees,
and any Policy beneficiary.
8.2 No Guarantee of Service. This Agreement is not a contract for services.
It does not give the Director the right to remain in the service of the Company,
nor does it interfere with the shareholders' rights to replace the Director. It
also does not require the Director to remain in the service of the Company nor
interfere with the Director's right to terminate services at any time.
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 Director as to the subject matter hereof. No rights
are granted to the Director by virtue of this Agreement other than those
specifically set forth herein.
8.7 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
(a) Interpreting the provisions of the Agreement;
(b) Establishing and revising the method of accounting for the
Agreement;
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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.
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.
DIRECTOR: COMPANY:
COOPERATIVE BANK FOR SAVINGS
/s/ O. Xxxxxxx Xxxxxx, Jr. BY /s/ Xxxxxxxxx Xxxxxxxx, III
------------------------------------ -------------------------------
O. XXXXXXX XXXXXX, JR.
TITLE /s/ President
----------------------------
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SPLIT DOLLAR POLICY ENDORSEMENT TO
COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT
Policy No. JP5195519 Insured: O. Xxxxxxx Xxxxxx, Jr.
Supplementing and amending the application for insurance to Jefferson-Pilot 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).
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 right 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.
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.
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.
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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 /s/ 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/ O. Xxxxxxx Xxxxxx, Jr.
------------------------------------
O. Xxxxxxx Xxxxxx, Jr.
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SPLIT DOLLAR POLICY ENDORSEMENT TO
COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT
Policy No. ZUA3866929 Insured: O. Xxxxxxx Xxxxxx, Jr.
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).
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 right 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.
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.
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.
8
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 /s/ 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/ O. Xxxxxxx Xxxxxx, Jr.
-----------------------------------------------------
O. Xxxxxxx Xxxxxx, Jr.
9
COOPERATIVE BANK FOR SAVINGS
DIRECTOR RETIREMENT AGREEMENT
THIS AGREEMENT is adopted this 17th day of Jan., 2002, by and between
COOPERATIVE BANK FOR SAVINGS, a State/Stock Savings Bank located in Wilmington,
North Carolina (the "Company") and XXXXXX XXXXXXXX KING, III (the "Director").
INTRODUCTION
To encourage the Director to remain a member of the Company's Board of
Directors, the Company is willing to provide retirement benefits to the
Director. The Company will pay the benefits from its general assets.
AGREEMENT
The Director and the Company agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:
1.1 "Change of 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 followed within twelve (12) months by the Director's Termination of
Service for reasons other than death, Disability or retirement. The term "person
means an individual other than the Director, or a corporation, partnership,
trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not specifically listed
herein.
1.2 "Code" means the Internal Revenue Code of 1986, as amended.
1.3 "Disability" means, if the Director is covered by a Company sponsored
disability policy, total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy, Disability
means the Director suffering a sickness, accident or injury, which, in the
judgment of a physician who is satisfactory to the Company, prevents the
Director from performing substantially all of the Director's normal duties for
the Company. As a condition to receiving any Disability benefits, the Company
may require the
1
Director to submit to such physical or mental evaluations and tests as the
Company's Board of Directors deems appropriate and reasonable.
1.4 "Early Termination" means the Termination of Service before Normal
Retirement Age for reasons other than death, Disability, Termination for Cause
or following a Change of Control.
1.5 "Early Termination Date" means the month, day and year in which Early
Termination occurs.
1.6 "Effective Date" means October 1, 2001.
1.7 "Normal Retirement Age" means the Director's 72nd birthday. Termination
of Service is mandatory upon the Director attaining 72 years of age.
1.8 "Plan Year" means a twelve-month period commencing on October 1 and
ending on September 30 of each year. The initial Plan Year shall commence on the
Effective Date of this Agreement.
1.9 "Termination for Cause" See Section 5.2
1.10 "Termination of Service" means that the Director ceases to be a member
of the Company's Board of Directors for any reason, voluntarily or
involuntarily, other than by reason of a leave of absence approved by the
Company.
ARTICLE 2
LIFETIME BENEFITS
2.1 Normal Retirement Benefit. Upon Termination of Service on or after
Normal Retirement Age for reasons other than death, the Company shall pay to the
Director the benefit described in this Section 2.1 in lieu of any other benefit
under this Agreement.
2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is
$19,200 (Nineteen Thousand Two Hundred Dollars). The Company's Board of
Directors, at its sole discretion, may increase the annual benefit under
this Section 2.1.1; however, any increase shall require the recalculation
of Schedule A.
2.1.2 Payment of Benefit. The Company shall pay the annual benefit to
the Director in 12 equal monthly installments payable each month commencing
with the month following the Director's Normal Retirement Age. The annual
benefit shall be paid to the Director for 10 years.
2.1.3 Benefit Increases. Commencing on the first anniversary of the
first benefit payment, and continuing on each subsequent anniversary, the
Company's Board of Directors, at its sole discretion, may increase the
benefit.
2
2.2 Early Termination Benefit. Upon Early Termination, the Company shall
pay to the Director the benefit described in this Section 2.2 in lieu of any
other benefit under this Agreement.
2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the
Early Termination Lump Sum set forth in Schedule A for the Plan Year ending
immediately prior to the Early Termination Date, determined by vesting the
Director in 100 percent of the Accrual Balance. Any increase in the annual
benefit under Section 2.1.1 shall require the recalculation of the Early
Termination benefit on Schedule A.
2.2.2 Payment of Benefit. The Company shall pay the benefit amount to
the Director in a lump sum within 60 days following Termination of Service.
2.3 Disability Benefit. If the Director's Termination of Service prior to
Normal Retirement Age is due to Disability, the Company shall pay to the
Director the benefit described in this Section 2.3 in lieu of any other benefit
under this Agreement.
2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the
Disability Lump Sum set forth in Schedule A for the Plan Year ending
immediately prior to the date on which the Termination of Service occurs,
determined by vesting the Director in 100 percent of the Accrual Balance.
Any increase in the annual benefit under Section 2.1.1 would require the
recalculation of the Disability benefit on Schedule A.
2.3.2 Payment of Benefit. The Company shall pay the benefit amount to
the Director in a lump sum within 60 days following Termination of Service.
2.4 Change of Control Benefit. Upon a Change of Control, the Company shall
pay to the Director the benefit described in this Section 2.4 in lieu of any
other benefit under this Agreement.
2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the
Change of Control Lump Sum set forth in Schedule A for the Plan Year ending
immediately prior to the date in which Termination of Service occurs,
determined by vesting the Director in the present value of the stream of
payments of the Normal Retirement Benefit described in Section 2.1.1. Any
increase in the annual benefit under Section 2.1.1 would require the
recalculation of the Change of Control benefit on Schedule A.
2.4.2 Payment of Benefit. The Company shall pay the benefit amount to
the Director in a lump sum within 60 days following Termination of Service.
ARTICLE 3
DEATH BENEFITS
3.1 Death During Active Service. If the Director dies while in the active
service of the Company, the Company shall pay to the Director's beneficiary the
benefit described in this Section 3.1. This benefit shall be paid in lieu of the
Lifetime Benefits under Article 2.
3
3.1.1 Amount of Benefit. The benefit under this Section 3.1 is the
Death Benefit Lump Sum set forth in Schedule A for the Plan Year in which
the Director's death occurs, determined by vesting the Director in 100
percent of the Accrual Balance in said Schedule A. Any increase in the
annual benefit under Section 2.1.1 would require the recalculation of the
Death benefit on Schedule A.
3.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director's beneficiary in a lump sum within 60 days following the
Director's death.
3.2 Death During Payment of a Lifetime Benefit. If the Director dies
after any Lifetime Benefit payments have commenced under this Agreement but
before receiving all such payments, the Company shall pay the remaining benefits
to the Director's beneficiary at the same time and in the same amounts they
would have been paid to the Director had the Director survived.
3.3 Death After Termination of Employment But Before Payment of a Lifetime
Benefit Commences. If the Director is entitled to a Lifetime Benefit under this
Agreement, but dies prior to the commencement of said benefit payments, the
Company shall pay the same benefit payments to the Director's beneficiary that
the Director was entitled to prior to death except that the benefit payments
shall commence on the first day of the month following the date of the
Director's death.
ARTICLE 4
BENEFICIARIES
4.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation. However, designations
will only be effective if signed by the Director and received by the Company
during the Director's lifetime. The Director's beneficiary designation shall be
deemed automatically revoked if the beneficiary predeceases the Director or if
the Director names a spouse as beneficiary and the marriage is subsequently
dissolved. If the Director dies without a valid beneficiary designation, all
payments shall be made to the Director's estate.
4.2 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.
4
ARTICLE 5
GENERAL LIMITATIONS
5.1 Internal Revenue Service Section 280G Gross Up. To the extent not
prohibited by law, if, as a result of a Change in Control, the Director becomes
entitled to acceleration of benefits under this Agreement or under any other
benefit, compensation or incentive plan or arrangement with the Company
(collectively, the "Total Benefits"), and if any part of the Total Benefits is
subject to the Excise Tax under Section 280G and Section 4999 of the Internal
Revenue Code (the "Excise Tax"), the Company shall pay to the Director the
following additional amounts, consisting of (a) a payment equal to the Excise
Tax payable by the Director on the Total Benefits under Section 4999 of the
Internal Revenue Code (the "Excise Tax Payment"), and (b) a payment equal to the
amount necessary to provide the Excise Tax Payment, net of all income, payroll
and excise taxes. Payment of the additional amounts described in clauses (a) and
(b) shall be made in addition to the Total Benefits.
5.2 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 Director's service 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 committed in connection with the Director's service
and resulting in an adverse effect on the Company.
5.3 Suicide or Misstatement. The Company shall not pay any benefit under
this Agreement if the Director commits suicide within three years after the date
of this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on an
employment application or resume provided to the Company, or on any application
for any benefits provided by the Company to the Director.
ARTICLE 6
CLAIMS AND REVIEW PROCEDURES
6.1 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
noneligibility 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
5
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.
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 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 7
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
ARTICLE 8
MISCELLANEOUS
8.1 Binding Effect. This Agreement shall bind the Director and the Company
and their beneficiaries, survivors, executors, administrators and transferees.
8.2 No Guarantee of Service. This Agreement is not a contract for services.
It does not give the Director the right to remain in the service of the Company,
nor does it interfere with the shareholder's right to discharge the Director. It
also does not require the Director to remain in the service of the Company nor
interfere with the Director's right to terminate services at any time.
8.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
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
under this Agreement. Upon the occurrence of such
6
event, the term "Company" as used in this Agreement shall be deemed to refer to
the successor or survivor company.
8.5 Tax Withholding. The Company shall withhold any taxes that are required
to be withheld from the benefits provided under this Agreement.
8.6 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.
8.7 Unfunded Arrangement. The Director and beneficiary are general
unsecured creditors of the Company for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Company to pay such
benefits. The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment by creditors. Any insurance on the Director's life is a general
asset of the Company to which the Director and beneficiary have no preferred or
secured claim.
8.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Director as to the subject matter hereof. No rights
are granted to the Director by virtue of this Agreement other than those
specifically set forth herein.
8.9 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;
(c) Maintaining a record of benefit payments; and
(d) Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
8.10 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.
7
IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.
DIRECTOR: COMPANY:
COOPERATIVE BANK FOR SAVINGS
/s/ XXXXXX XXXXXXXX XXXX, III BY:/s/ XXXXXXXXX XXXXXXXX, III
------------------------------- -----------------------------------
NAME: XXXXXXXXX XXXXXXXX, III
---------------------------------
TITLE: /s/ PRESIDENT
---------------------------------
8
COOPERATIVE BANK FOR SAVINGS
SPLIT DOLLAR AGREEMENT
THIS AGREEMENT is adopted this 17th day of Jan., 2002, by and between
COOPERATIVE BANK FOR SAVINGS, a State/Stock Savings Bank located in Wilmington,
North Carolina (the "Company"), and X. XXXXXXXX KING, III (the "Director"). 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 Director to remain a member of the Company's Board of
Directors, the Company is willing to divide the death proceeds of a life
insurance policy on the Director's life. The Company will pay life insurance
premiums from its general assets.
AGREEMENT
The Company and the Director 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. JP5195515 and ZUA386787 issued
by the respective Insurers.
1.3 "Insured" means the Director.
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 Director's 72nd birthday. Termination
of Service is mandatory upon the Director attaining 72 years of age.
1.6 "Termination of Service" means the Director ceases to be a member of
the Company's Board of Directors for any reason, voluntary or involuntary, other
than by reason of a leave of absence approved by the Company or by death.
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 Director's interest has been paid according to Section 2.2
below.
2.2 Director's Interest. The Director shall have the right to designate the
beneficiary of an amount equal to 100 percent of the Net Death Proceeds of the
Policy. The Director shall also have the right to elect and change settlement
options that may be permitted.
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 Director or the Director'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
Director'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 Director 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 Director in an
amount equal to the current term rate for the Director's age multiplied by the
aggregate death benefit payable to the Director'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.
ARTICLE 4
ASSIGNMENT
The Director may assign without consideration all of the Director's
interests in the Policy and in this Agreement to any person, entity or trust. In
the event the Director transfers all of the
2
Director's interest in the Policy, then all of the Director's interest in the
Policy and in the Agreement shall be vested in the Director's transferee, who
shall be substituted as a party hereunder and the Director 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 their respective Policies.
Any payments the Insurers make or action the Insurers take in accordance with
their respective Policies shall fully discharge such 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 PROCEDURES
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 period at the election of the Company, but
notice of this deferral shall be given to the Claimant.
3
ARTICLE 7
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
ARTICLE 8
MISCELLANEOUS
8.1 Binding Effect. This Agreement shall bind the Director and the Company
and their beneficiaries, survivors, executors, administrators and transferees,
and any Policy beneficiary.
8.2 No Guarantee of Service. This Agreement is not a contract for services.
It does not give the Director the right to remain in the service of the Company,
nor does it interfere with the shareholders' rights to replace the Director. It
also does not require the Director to remain in the service of the Company nor
interfere with the Director's right to terminate services at any time.
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 Director as to the subject matter hereof. No rights
are granted to the Director by virtue of this Agreement other than those
specifically set forth herein.
8.7 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
(a) Interpreting the provisions of the Agreement;
(b) Establishing and revising the method of accounting for the
Agreement;
4
(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.
DIRECTOR: COMPANY:
COOPERATIVE BANK FOR SAVINGS
/s/ Xxxxxx Xxxxxxxx Xxxx, III BY /s/ Xxxxxxxxx Xxxxxxxx, III
------------------------------------ --------------------------------------
X. XXXXXXXX XXXX, III
TITLE /s/ President
-----------------------------------
5
SPLIT DOLLAR POLICY ENDORSEMENT TO
COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT
Policy No. JP5195515 Insured: X. Xxxxxxxx King, III
Supplementing and amending the application for insurance to Jefferson-Pilot Life
Insurance Company ("Insurer") on September 20, 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).
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 right 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.
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.
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.
6
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 /s/ 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. Xxxxxxxx King, III
------------------------------------
X. Xxxxxxxx Xxxx, III
7
SPLIT DOLLAR POLICY ENDORSEMENT TO
COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT
Policy No. ZUA386787 Insured: X. Xxxxxxxx King, III
Supplementing and amending the application for insurance to West Coast Life
Insurance Company ("Insurer") on September 20, 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).
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 right 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.
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.
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.
8
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. Xxxxxxxx King, III
------------------------------------
X. Xxxxxxxx Xxxx, III
9
COOPERATIVE BANK FOR SAVINGS
DIRECTOR 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 XXXXXXX XXXXX XXXXXX, XX. (the "Director").
INTRODUCTION
To encourage the Director to remain a member of the Company's Board of
Directors, the Company is willing to provide retirement benefits to the
Director. The Company will pay the benefits from its general assets.
AGREEMENT
The Director and the Company agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:
1.1 "Change of 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 followed within twelve (12) months by the Director's Termination of
Service for reasons other than death, Disability or retirement. The term "person
means an individual other than the Director, or a corporation, partnership,
trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not specifically listed
herein.
1.2 "Code" means the Internal Revenue Code of 1986, as amended.
1.3 "Disability" means, if the Director is covered by a Company sponsored
disability policy, total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy, Disability
means the Director suffering a sickness, accident or injury, which, in the
judgment of a physician who is satisfactory to the Company, prevents the
Director from performing substantially all of the Director's normal duties for
the Company. As a condition to receiving any Disability benefits, the Company
may require the
1
Director to submit to such physical or mental evaluations and tests as the
Company's Board of Directors deems appropriate and reasonable.
1.4 "Early Termination" means the Termination of Service before Normal
Retirement Age for reasons other than death, Disability, Termination for Cause
or following a Change of Control.
1.5 "Early Termination Date" means the month, day and year in which Early
Termination occurs.
1.6 "Effective Date" means October 1, 2001.
1.7 "Normal Retirement Age" means the Director's 72nd birthday. Termination
of Service is mandatory upon the Director attaining 72 years of age.
1.8 "Plan Year" means a twelve-month period commencing on October 1 and
ending on September 30 of each year. The initial Plan Year shall commence on the
Effective Date of this Agreement.
1.9 "Termination for Cause" See Section 5.2
1.10 "Termination of Service" means that the Director ceases to be a member
of the Company's Board of Directors for any reason, voluntarily or
involuntarily, other than by reason of a leave of absence approved by the
Company.
ARTICLE 2
LIFETIME BENEFITS
2.1 Normal Retirement Benefit. Upon Termination of Service on or after
Normal Retirement Age for reasons other than death, the Company shall pay to the
Director the benefit described in this Section 2.1 in lieu of any other benefit
under this Agreement.
2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is
$19,200 (Nineteen Thousand Two Hundred Dollars). The Company's Board of
Directors, at its sole discretion, may increase the annual benefit under
this Section 2.1.1; however, any increase shall require the recalculation
of Schedule A.
2.1.2 Payment of Benefit. The Company shall pay the annual benefit to
the Director in 12 equal monthly installments payable each month commencing
with the month following the Director's Normal Retirement Age. The annual
benefit shall be paid to the Director for 10 years.
2.1.3 Benefit Increases. Commencing on the first anniversary of the
first benefit payment, and continuing on each subsequent anniversary, the
Company's Board of Directors, at its sole discretion, may increase the
benefit.
2
2.2 Early Termination Benefit. Upon Early Termination, the Company shall
pay to the Director the benefit described in this Section 2.2 in lieu of any
other benefit under this Agreement.
2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the
Early Termination Lump Sum set forth in Schedule A for the Plan Year ending
immediately prior to the Early Termination Date, determined by vesting the
Director in 100 percent of the Accrual Balance. Any increase in the annual
benefit under Section 2.1.1 shall require the recalculation of the Early
Termination benefit on Schedule A.
2.2.2 Payment of Benefit. The Company shall pay the benefit amount to
the Director in a lump sum within 60 days following Termination of Service.
2.3 Disability Benefit. If the Director's Termination of Service prior to
Normal Retirement Age is due to Disability, the Company shall pay to the
Director the benefit described in this Section 2.3 in lieu of any other benefit
under this Agreement.
2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the
Disability Lump Sum set forth in Schedule A for the Plan Year ending
immediately prior to the date on which the Termination of Service occurs,
determined by vesting the Director in 100 percent of the Accrual Balance.
Any increase in the annual benefit under Section 2.1.1 would require the
recalculation of the Disability benefit on Schedule A.
2.3.2 Payment of Benefit. The Company shall pay the benefit amount to
the Director in a lump sum within 60 days following Termination of Service.
2.4 Change of Control Benefit. Upon a Change of Control, the Company shall
pay to the Director the benefit described in this Section 2.4 in lieu of any
other benefit under this Agreement.
2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the
Change of Control Lump Sum set forth in Schedule A for the Plan Year ending
immediately prior to the date in which Termination of Service occurs,
determined by vesting the Director in the present value of the stream of
payments of the Normal Retirement Benefit described in Section 2.1.1. Any
increase in the annual benefit under Section 2.1.1 would require the
recalculation of the Change of Control benefit on Schedule A.
2.4.2 Payment of Benefit. The Company shall pay the benefit amount to
the Director in a lump sum within 60 days following Termination of Service.
ARTICLE 3
DEATH BENEFITS
3.1 Death During Active Service. If the Director dies while in the active
service of the Company, the Company shall pay to the Director's beneficiary the
benefit described in this Section 3.1. This benefit shall be paid in lieu of the
Lifetime Benefits under Article 2.
3
3.1.1 Amount of Benefit. The benefit under this Section 3.1 is the
Death Benefit Lump Sum set forth in Schedule A for the Plan Year in which
the Director's death occurs, determined by vesting the Director in 100
percent of the Accrual Balance in said Schedule A. Any increase in the
annual benefit under Section 2.1.1 would require the recalculation of the
Death benefit on Schedule A.
3.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director's beneficiary in a lump sum within 60 days following the
Director's death.
3.2 Death During Payment of a Lifetime Benefit. If the Director dies after
any Lifetime Benefit payments have commenced under this Agreement but before
receiving all such payments, the Company shall pay the remaining benefits to the
Director's beneficiary at the same time and in the same amounts they would have
been paid to the Director had the Director survived.
3.3 Death After Termination of Employment But Before Payment of a Lifetime
Benefit Commences. If the Director is entitled to a Lifetime Benefit under this
Agreement, but dies prior to the commencement of said benefit payments, the
Company shall pay the same benefit payments to the Director's beneficiary that
the Director was entitled to prior to death except that the benefit payments
shall commence on the first day of the month following the date of the
Director's death.
ARTICLE 4
BENEFICIARIES
4.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation. However, designations
will only be effective if signed by the Director and received by the Company
during the Director's lifetime. The Director's beneficiary designation shall be
deemed automatically revoked if the beneficiary predeceases the Director or if
the Director names a spouse as beneficiary and the marriage is subsequently
dissolved. If the Director dies without a valid beneficiary designation, all
payments shall be made to the Director's estate.
4.2 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.
4
ARTICLE 5
GENERAL LIMITATIONS
5.1 Internal Revenue Service Section 280G Gross Up. To the extent not
prohibited by law, if, as a result of a Change in Control, the Director becomes
entitled to acceleration of benefits under this Agreement or under any other
benefit, compensation or incentive plan or arrangement with the Company
(collectively, the "Total Benefits"), and if any part of the Total Benefits is
subject to the Excise Tax under Section 280G and Section 4999 of the Internal
Revenue Code (the "Excise Tax"), the Company shall pay to the Director the
following additional amounts, consisting of (a) a payment equal to the Excise
Tax payable by the Director on the Total Benefits under Section 4999 of the
Internal Revenue Code (the "Excise Tax Payment"), and (b) a payment equal to the
amount necessary to provide the Excise Tax Payment, net of all income, payroll
and excise taxes. Payment of the additional amounts described in clauses (a) and
(b) shall be made in addition to the Total Benefits.
5.2 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 Director's service 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 committed in connection with the Director's service
and resulting in an adverse effect on the Company.
5.3 Suicide or Misstatement. The Company shall not pay any benefit under
this Agreement if the Director commits suicide within three years after the date
of this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on an
employment application or resume provided to the Company, or on any application
for any benefits provided by the Company to the Director.
ARTICLE 6
CLAIMS AND REVIEW PROCEDURES
6.1 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
noneligibility 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
5
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.
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 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 7
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
ARTICLE 8
MISCELLANEOUS
8.1 Binding Effect. This Agreement shall bind the Director and the Company
and their beneficiaries, survivors, executors, administrators and transferees.
8.2 No Guarantee of Service. This Agreement is not a contract for services.
It does not give the Director the right to remain in the service of the Company,
nor does it interfere with the shareholder's right to discharge the Director. It
also does not require the Director to remain in the service of the Company nor
interfere with the Director's right to terminate services at any time.
8.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
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
under this Agreement. Upon the occurrence of such
6
event, the term "Company" as used in this Agreement shall be deemed to refer to
the successor or survivor company.
8.5 Tax Withholding. The Company shall withhold any taxes that are required
to be withheld from the benefits provided under this Agreement.
8.6 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.
8.7 Unfunded Arrangement. The Director and beneficiary are general
unsecured creditors of the Company for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Company to pay such
benefits. The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment by creditors. Any insurance on the Director's life is a general
asset of the Company to which the Director and beneficiary have no preferred or
secured claim.
8.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Director as to the subject matter hereof. No rights
are granted to the Director by virtue of this Agreement other than those
specifically set forth herein.
8.9 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;
(c) Maintaining a record of benefit payments; and
(d) Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
8.10 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.
7
IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.
DIRECTOR: COMPANY:
COOPERATIVE BANK FOR SAVINGS
/s/ XXXXXXX XXXXX XXXXXX, XX. BY: /s/ XXXXXXXXX XXXXXXXX, III
------------------------------- --------------------------------
XXXXXXX XXXXX XXXXXX, XX. NAME: XXXXXXXXX XXXXXXXX, III
--------------------------------
TITLE: PRESIDENT
--------------------------------
8
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 XXXXXXX XXXXX XXXXXX, XX. (the "Director").
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 Director to remain a member of the Company's Board of
Directors, the Company is willing to divide the death proceeds of a life
insurance policy on the Director's life. The Company will pay life insurance
premiums from its general assets.
AGREEMENT
The Company and the Director 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. JP5195509 and ZUA386790 issued
by the respective Insurers.
1.3 "Insured" means the Director.
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 Director's 72nd birthday. Termination
of Service is mandatory upon the Director attaining 72 years of age.
1.6 "Termination of Service" means the Director ceases to be a member of
the Company's Board of Directors for any reason, voluntary or involuntary, other
than by reason of a leave of absence approved by the Company or by death.
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 Director's interest has been paid according to Section 2.2
below.
2.2 Director's Interest. The Director shall have the right to designate the
beneficiary of an amount equal to 100 percent of the Net Death Proceeds of the
Policy. The Director shall also have the right to elect and change settlement
options that may be permitted.
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 Director or the Director'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
Director'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 Director 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 Director in an
amount equal to the current term rate for the Director's age multiplied by the
aggregate death benefit payable to the Director'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.
ARTICLE 4
ASSIGNMENT
The Director may assign without consideration all of the Director's
interests in the Policy and in this Agreement to any person, entity or trust. In
the event the Director transfers all of the
2
Director's interest in the Policy, then all of the Director's interest in the
Policy and in the Agreement shall be vested in the Director's transferee, who
shall be substituted as a party hereunder and the Director 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 their respective Policies.
Any payments the Insurers make or action the Insurers take in accordance with
their respective Policies shall fully discharge such 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 PROCEDURES
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 period at the election of the Company, but
notice of this deferral shall be given to the Claimant.
3
ARTICLE 7
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
ARTICLE 8
MISCELLANEOUS
8.1 Binding Effect. This Agreement shall bind the Director and the Company
and their beneficiaries, survivors, executors, administrators and transferees,
and any Policy beneficiary.
8.2 No Guarantee of Service. This Agreement is not a contract for services.
It does not give the Director the right to remain in the service of the Company,
nor does it interfere with the shareholders' rights to replace the Director. It
also does not require the Director to remain in the service of the Company nor
interfere with the Director's right to terminate services at any time.
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 Director as to the subject matter hereof. No rights
are granted to the Director by virtue of this Agreement other than those
specifically set forth herein.
8.7 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
(a) Interpreting the provisions of the Agreement;
(b) Establishing and revising the method of accounting for the
Agreement;
4
(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.
DIRECTOR: COMPANY:
COOPERATIVE BANK FOR SAVINGS
/s/ Xxxxxxx Xxxxx Xxxxxx, Xx. BY /s/ Xxxxxxxxx Xxxxxxxx, III
----------------------------------- ------------------------------------
XXXXXXX XXXXX XXXXXX, XX.
TITLE /s/ President
----------------------------------
5
SPLIT DOLLAR POLICY ENDORSEMENT TO
COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT
Policy No. JP5195509 Insured: Xxxxxxx Xxxxx Xxxxxx, Xx.
Supplementing and amending the application for insurance to Jefferson-Pilot Life
Insurance Company ("Insurer") on September 21, 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).
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 right 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.
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.
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.
6
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/ Xxxxxxx Xxxxx Xxxxxx, Xx.
-------------------------------------
Xxxxxxx Xxxxx Xxxxxx, Xx.
7
SPLIT DOLLAR POLICY ENDORSEMENT TO
COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT
Policy No. ZUA386790 Insured: Xxxxxxx Xxxxx Xxxxxx, Xx.
Supplementing and amending the application for insurance to West Coast Life
Insurance Company ("Insurer") on September 21, 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).
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 right 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.
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.
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.
8
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/ Xxxxxxx Xxxxx Xxxxxx, Xx.
----------------------------------------------
Xxxxxxx Xxxxx Xxxxxx, Xx.
9
COOPERATIVE BANK FOR SAVINGS
DIRECTOR 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 XXXX X. XXXXXX (the "Director").
INTRODUCTION
To encourage the Director to remain a member of the Company's Board of
Directors, the Company is willing to provide retirement benefits to the
Director. The Company will pay the benefits from its general assets.
AGREEMENT
The Director and the Company agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:
1.1 "Change of 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 followed within twelve (12) months by the Director's Termination of
Service for reasons other than death, Disability or retirement. The term "person
means an individual other than the Director, or a corporation, partnership,
trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not specifically listed
herein.
1.2 "Code" means the Internal Revenue Code of 1986, as amended.
1.3 "Disability" means, if the Director is covered by a Company sponsored
disability policy, total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy, Disability
means the Director suffering a sickness, accident or injury, which, in the
judgment of a physician who is satisfactory to the Company, prevents the
Director from performing substantially all of the Director's normal duties for
the Company. As a condition to receiving any Disability benefits, the Company
may require the
1
Director to submit to such physical or mental evaluations and tests as the
Company's Board of Directors deems appropriate and reasonable.
1.4 "Early Termination" means the Termination of Service before Normal
Retirement Age for reasons other than death, Disability, Termination for Cause
or following a Change of Control.
1.5 "Early Termination Date" means the month, day and year in which Early
Termination occurs.
1.6 "Effective Date" means October 1, 2001.
1.7 "Normal Retirement Age" means the Director's 72nd birthday. Termination
of Service is mandatory upon the Director attaining 72 years of age.
1.8 "Plan Year" means a twelve-month period commencing on October 1 and
ending on September 30 of each year. The initial Plan Year shall commence on the
Effective Date of this Agreement.
1.9 "Termination for Cause" See Section 5.2
1.10 "Termination of Service" means that the Director ceases to be a member
of the Company's Board of Directors for any reason, voluntarily or
involuntarily, other than by reason of a leave of absence approved by the
Company.
ARTICLE 2
LIFETIME BENEFITS
2.1 Normal Retirement Benefit. Upon Termination of Service on or after
Normal Retirement Age for reasons other than death, the Company shall pay to the
Director the benefit described in this Section 2.1 in lieu of any other benefit
under this Agreement.
2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is
$19,200 (Nineteen Thousand Two Hundred Dollars). The Company's Board of
Directors, at its sole discretion, may increase the annual benefit under
this Section 2.1.1; however, any increase shall require the recalculation
of Schedule A.
2.1.2 Payment of Benefit. The Company shall pay the annual benefit to
the Director in 12 equal monthly installments payable each month commencing
with the month following the Director's Normal Retirement Age. The annual
benefit shall be paid to the Director for 10 years.
2.1.3 Benefit Increases. Commencing on the first anniversary of the
first benefit payment, and continuing on each subsequent anniversary, the
Company's Board of Directors, at its sole discretion, may increase the
benefit.
2
2.2 Early Termination Benefit. Upon Early Termination, the Company shall
pay to the Director the benefit described in this Section 2.2 in lieu of any
other benefit under this Agreement.
2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the
Early Termination Lump Sum set forth in Schedule A for the Plan Year ending
immediately prior to the Early Termination Date, determined by vesting the
Director in 100 percent of the Accrual Balance. Any increase in the annual
benefit under Section 2.1.1 shall require the recalculation of the Early
Termination benefit on Schedule A.
2.2.2 Payment of Benefit. The Company shall pay the benefit amount to
the Director in a lump sum within 60 days following Termination of Service.
2.3 Disability Benefit. If the Director's Termination of Service prior to
Normal Retirement Age is due to Disability, the Company shall pay to the
Director the benefit described in this Section 2.3 in lieu of any other benefit
under this Agreement.
2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the
Disability Lump Sum set forth in Schedule A for the Plan Year ending
immediately prior to the date on which the Termination of Service occurs,
determined by vesting the Director in 100 percent of the Accrual Balance.
Any increase in the annual benefit under Section 2.1.1 would require the
recalculation of the Disability benefit on Schedule A.
2.3.2 Payment of Benefit. The Company shall pay the benefit amount to
the Director in a lump sum within 60 days following Termination of Service.
2.4 Change of Control Benefit. Upon a Change of Control, the Company shall
pay to the Director the benefit described in this Section 2.4 in lieu of any
other benefit under this Agreement.
2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the
Change of Control Lump Sum set forth in Schedule A for the Plan Year ending
immediately prior to the date in which Termination of Service occurs,
determined by vesting the Director in the present value of the stream of
payments of the Normal Retirement Benefit described in Section 2.1.1. Any
increase in the annual benefit under Section 2.1.1 would require the
recalculation of the Change of Control benefit on Schedule A.
2.4.2 Payment of Benefit. The Company shall pay the benefit amount to
the Director in a lump sum within 60 days following Termination of Service.
ARTICLE 3
DEATH BENEFITS
3.1 Death During Active Service. If the Director dies while in the active
service of the Company, the Company shall pay to the Director's beneficiary the
benefit described in this Section 3.1. This benefit shall be paid in lieu of the
Lifetime Benefits under Article 2.
3
3.1.1 Amount of Benefit. The benefit under this Section 3.1 is the
Death Benefit Lump Sum set forth in Schedule A for the Plan Year in which
the Director's death occurs, determined by vesting the Director in 100
percent of the Accrual Balance in said Schedule A. Any increase in the
annual benefit under Section 2.1.1 would require the recalculation of the
Death benefit on Schedule A.
3.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director's beneficiary in a lump sum within 60 days following the
Director's death.
3.2 Death During Payment of a Lifetime Benefit. If the Director dies after
any Lifetime Benefit payments have commenced under this Agreement but before
receiving all such payments, the Company shall pay the remaining benefits to the
Director's beneficiary at the same time and in the same amounts they would have
been paid to the Director had the Director survived.
3.3 Death After Termination of Employment But Before Payment of a Lifetime
Benefit Commences. If the Director is entitled to a Lifetime Benefit under this
Agreement, but dies prior to the commencement of said benefit payments, the
Company shall pay the same benefit payments to the Director's beneficiary that
the Director was entitled to prior to death except that the benefit payments
shall commence on the first day of the month following the date of the
Director's death.
ARTICLE 4
BENEFICIARIES
4.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation. However, designations
will only be effective if signed by the Director and received by the Company
during the Director's lifetime. The Director's beneficiary designation shall be
deemed automatically revoked if the beneficiary predeceases the Director or if
the Director names a spouse as beneficiary and the marriage is subsequently
dissolved. If the Director dies without a valid beneficiary designation, all
payments shall be made to the Director's estate.
4.2 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.
4
ARTICLE 5
GENERAL LIMITATIONS
5.1 Internal Revenue Service Section 280G Gross Up. To the extent not
prohibited by law, if, as a result of a Change in Control, the Director becomes
entitled to acceleration of benefits under this Agreement or under any other
benefit, compensation or incentive plan or arrangement with the Company
(collectively, the "Total Benefits"), and if any part of the Total Benefits is
subject to the Excise Tax under Section 280G and Section 4999 of the Internal
Revenue Code (the "Excise Tax"), the Company shall pay to the Director the
following additional amounts, consisting of (a) a payment equal to the Excise
Tax payable by the Director on the Total Benefits under Section 4999 of the
Internal Revenue Code (the "Excise Tax Payment"), and (b) a payment equal to the
amount necessary to provide the Excise Tax Payment, net of all income, payroll
and excise taxes. Payment of the additional amounts described in clauses (a) and
(b) shall be made in addition to the Total Benefits.
5.2 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 Director's service 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 committed in connection with the Director's service
and resulting in an adverse effect on the Company.
5.3 Suicide or Misstatement. The Company shall not pay any benefit under
this Agreement if the Director commits suicide within three years after the date
of this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on an
employment application or resume provided to the Company, or on any application
for any benefits provided by the Company to the Director.
ARTICLE 6
CLAIMS AND REVIEW PROCEDURES
6.1 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
noneligibility 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
5
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.
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 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 7
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
ARTICLE 8
MISCELLANEOUS
8.1 Binding Effect. This Agreement shall bind the Director and the Company
and their beneficiaries, survivors, executors, administrators and transferees.
8.2 No Guarantee of Service. This Agreement is not a contract for services.
It does not give the Director the right to remain in the service of the Company,
nor does it interfere with the shareholder's right to discharge the Director. It
also does not require the Director to remain in the service of the Company nor
interfere with the Director's right to terminate services at any time.
8.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
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
under this Agreement. Upon the occurrence of such
6
event, the term "Company" as used in this Agreement shall be deemed to refer to
the successor or survivor company.
8.5 Tax Withholding. The Company shall withhold any taxes that are required
to be withheld from the benefits provided under this Agreement.
8.6 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.
8.7 Unfunded Arrangement. The Director and beneficiary are general
unsecured creditors of the Company for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Company to pay such
benefits. The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment by creditors. Any insurance on the Director's life is a general
asset of the Company to which the Director and beneficiary have no preferred or
secured claim.
8.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Director as to the subject matter hereof. No rights
are granted to the Director by virtue of this Agreement other than those
specifically set forth herein.
8.9 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;
(c) Maintaining a record of benefit payments; and
(d) Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
8.10 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.
7
IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.
DIRECTOR: COMPANY:
COOPERATIVE BANK FOR SAVINGS
/s/ XXXX X. XXXXXX BY: /s/ XXXXXXXXX XXXXXXXX, III
--------------------------- -------------------------------------
XXXX X. XXXXXX NAME: XXXXXXXXX XXXXXXXX, XX
------------------------------------
TITLE: PRESIDENT
------------------------------------
8
COOPERATIVE BANK FOR SAVINGS
DIRECTOR 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 XXXXXXX XXXXX XXXXX (the "Director").
INTRODUCTION
To encourage the Director to remain a member of the Company's Board of
Directors, the Company is willing to provide retirement benefits to the
Director. The Company will pay the benefits from its general assets.
AGREEMENT
The Director and the Company agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:
1.1 "Change of 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 followed within twelve (12) months by the Director's Termination of
Service for reasons other than death, Disability or retirement. The term "person
means an individual other than the Director, or a corporation, partnership,
trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not specifically listed
herein.
1.2 "Code" means the Internal Revenue Code of 1986, as amended.
1.3 "Disability" means, if the Director is covered by a Company sponsored
disability policy, total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy, Disability
means the Director suffering a sickness, accident or injury, which, in the
judgment of a physician who is satisfactory to the Company, prevents the
Director from performing substantially all of the Director's normal duties for
the Company. As a condition to receiving any Disability benefits, the Company
may require the
1
Director to submit to such physical or mental evaluations and tests as the
Company's Board of Directors deems appropriate and reasonable.
1.4 "Early Termination" means the Termination of Service before Normal
Retirement Age for reasons other than death, Disability, Termination for Cause
or following a Change of Control.
1.5 "Early Termination Date" means the month, day and year in which Early
Termination occurs.
1.6 "Effective Date" means October 1, 2001.
1.7 "Normal Retirement Age" means the Director's 72nd birthday. Termination
of Service is mandatory upon the Director attaining 72 years of age.
1.8 "Plan Year" means a twelve-month period commencing on October 1 and
ending on September 30 of each year. The initial Plan Year shall commence on the
Effective Date of this Agreement.
1.9 "Termination for Cause" See Section 5.2
1.10 "Termination of Service" means that the Director ceases to be a member
of the Company's Board of Directors for any reason, voluntarily or
involuntarily, other than by reason of a leave of absence approved by the
Company.
ARTICLE 2
LIFETIME BENEFITS
2.1 Normal Retirement Benefit. Upon Termination of Service on or after
Normal Retirement Age for reasons other than death, the Company shall pay to the
Director the benefit described in this Section 2.1 in lieu of any other benefit
under this Agreement.
2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is
$19,200 (Nineteen Thousand Two Hundred Dollars). The Company's Board of
Directors, at its sole discretion, may increase the annual benefit under
this Section 2.1.1; however, any increase shall require the recalculation
of Schedule A.
2.1.2 Payment of Benefit. The Company shall pay the annual benefit to
the Director in 12 equal monthly installments payable each month commencing
with the month following the Director's Normal Retirement Age. The annual
benefit shall be paid to the Director for 10 years.
2.1.3 Benefit Increases. Commencing on the first anniversary of the
first benefit payment, and continuing on each subsequent anniversary, the
Company's Board of Directors, at its sole discretion, may increase the
benefit.
2
2.2 Early Termination Benefit. Upon Early Termination, the Company shall
pay to the Director the benefit described in this Section 2.2 in lieu of any
other benefit under this Agreement.
2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the
Early Termination Lump Sum set forth in Schedule A for the Plan Year ending
immediately prior to the Early Termination Date, determined by vesting the
Director in 100 percent of the Accrual Balance. Any increase in the annual
benefit under Section 2.1.1 shall require the recalculation of the Early
Termination benefit on Schedule A.
2.2.2 Payment of Benefit. The Company shall pay the benefit amount to
the Director in a lump sum within 60 days following Termination of Service.
2.3 Disability Benefit. If the Director's Termination of Service prior to
Normal Retirement Age is due to Disability, the Company shall pay to the
Director the benefit described in this Section 2.3 in lieu of any other benefit
under this Agreement.
2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the
Disability Lump Sum set forth in Schedule A for the Plan Year ending
immediately prior to the date on which the Termination of Service occurs,
determined by vesting the Director in 100 percent of the Accrual Balance.
Any increase in the annual benefit under Section 2.1.1 would require the
recalculation of the Disability benefit on Schedule A.
2.3.2 Payment of Benefit. The Company shall pay the benefit amount to
the Director in a lump sum within 60 days following Termination of Service.
2.4 Change of Control Benefit. Upon a Change of Control, the Company shall
pay to the Director the benefit described in this Section 2.4 in lieu of any
other benefit under this Agreement.
2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the
Change of Control Lump Sum set forth in Schedule A for the Plan Year ending
immediately prior to the date in which Termination of Service occurs,
determined by vesting the Director in the present value of the stream of
payments of the Normal Retirement Benefit described in Section 2.1.1. Any
increase in the annual benefit under Section 2.1.1 would require the
recalculation of the Change of Control benefit on Schedule A.
2.4.2 Payment of Benefit. The Company shall pay the benefit amount to
the Director in a lump sum within 60 days following Termination of Service.
ARTICLE 3
DEATH BENEFITS
3.1 Death During Active Service. If the Director dies while in the active
service of the Company, the Company shall pay to the Director's beneficiary the
benefit described in this Section 3.1. This benefit shall be paid in lieu of the
Lifetime Benefits under Article 2.
3
3.1.1 Amount of Benefit. The benefit under this Section 3.1 is the
Death Benefit Lump Sum set forth in Schedule A for the Plan Year in which
the Director's death occurs, determined by vesting the Director in 100
percent of the Accrual Balance in said Schedule A. Any increase in the
annual benefit under Section 2.1.1 would require the recalculation of the
Death benefit on Schedule A.
3.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director's beneficiary in a lump sum within 60 days following the
Director's death.
3.2 Death During Payment of a Lifetime Benefit. If the Director dies after
any Lifetime Benefit payments have commenced under this Agreement but before
receiving all such payments, the Company shall pay the remaining benefits to the
Director's beneficiary at the same time and in the same amounts they would have
been paid to the Director had the Director survived.
3.3 Death After Termination of Employment But Before Payment of a Lifetime
Benefit Commences. If the Director is entitled to a Lifetime Benefit under this
Agreement, but dies prior to the commencement of said benefit payments, the
Company shall pay the same benefit payments to the Director's beneficiary that
the Director was entitled to prior to death except that the benefit payments
shall commence on the first day of the month following the date of the
Director's death.
ARTICLE 4
BENEFICIARIES
4.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation. However, designations
will only be effective if signed by the Director and received by the Company
during the Director's lifetime. The Director's beneficiary designation shall be
deemed automatically revoked if the beneficiary predeceases the Director or if
the Director names a spouse as beneficiary and the marriage is subsequently
dissolved. If the Director dies without a valid beneficiary designation, all
payments shall be made to the Director's estate.
4.2 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.
4
ARTICLE 5
GENERAL LIMITATIONS
5.1 Internal Revenue Service Section 280G Gross Up. To the extent not
prohibited by law, if, as a result of a Change in Control, the Director becomes
entitled to acceleration of benefits under this Agreement or under any other
benefit, compensation or incentive plan or arrangement with the Company
(collectively, the "Total Benefits"), and if any part of the Total Benefits is
subject to the Excise Tax under Section 280G and Section 4999 of the Internal
Revenue Code (the "Excise Tax"), the Company shall pay to the Director the
following additional amounts, consisting of (a) a payment equal to the Excise
Tax payable by the Director on the Total Benefits under Section 4999 of the
Internal Revenue Code (the "Excise Tax Payment"), and (b) a payment equal to the
amount necessary to provide the Excise Tax Payment, net of all income, payroll
and excise taxes. Payment of the additional amounts described in clauses (a) and
(b) shall be made in addition to the Total Benefits.
5.2 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 Director's service 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 committed in connection with the Director's service
and resulting in an adverse effect on the Company.
5.3 Suicide or Misstatement. The Company shall not pay any benefit under
this Agreement if the Director commits suicide within three years after the date
of this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on an
employment application or resume provided to the Company, or on any application
for any benefits provided by the Company to the Director.
ARTICLE 6
CLAIMS AND REVIEW PROCEDURES
6.1 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
noneligibility 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
5
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.
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 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 7
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
ARTICLE 8
MISCELLANEOUS
8.1 Binding Effect. This Agreement shall bind the Director and the Company
and their beneficiaries, survivors, executors, administrators and transferees.
8.2 No Guarantee of Service. This Agreement is not a contract for services.
It does not give the Director the right to remain in the service of the Company,
nor does it interfere with the shareholder's right to discharge the Director. It
also does not require the Director to remain in the service of the Company nor
interfere with the Director's right to terminate services at any time.
8.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
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
under this Agreement. Upon the occurrence of such
6
event, the term "Company" as used in this Agreement shall be deemed to refer to
the successor or survivor company.
8.5 Tax Withholding. The Company shall withhold any taxes that are required
to be withheld from the benefits provided under this Agreement.
8.6 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.
8.7 Unfunded Arrangement. The Director and beneficiary are general
unsecured creditors of the Company for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Company to pay such
benefits. The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment by creditors. Any insurance on the Director's life is a general
asset of the Company to which the Director and beneficiary have no preferred or
secured claim.
8.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Director as to the subject matter hereof. No rights
are granted to the Director by virtue of this Agreement other than those
specifically set forth herein.
8.9 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;
(c) Maintaining a record of benefit payments; and
(d) Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
8.10 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.
7
IN WITNESS WHEREOF, the Director and a duly authorized Company officer
have signed this Agreement.
DIRECTOR: COMPANY:
COOPERATIVE BANK FOR SAVINGS
/s/ XXXXXXX XXXXX XXXXX BY:/s/ XXXXXXXXX XXXXXXXX, III
--------------------------- -------------------------------------
XXXXXXX XXXXX XXXXX NAME: XXXXXXXXX XXXXXXXX, III
---------------------------------
TITLE: PRESIDENT
---------------------------------
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 XXXXXXX XXXXX XXXXX (the "Director"). 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 Director to remain a member of the Company's Board of
Directors, the Company is willing to divide the death proceeds of a life
insurance policy on the Director's life. The Company will pay life insurance
premiums from its general assets.
AGREEMENT
The Company and the Director 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. JP5195516 and ZUA3866786 issued
by the respective Insurers.
1.3 "Insured" means the Director.
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 Director's 72nd birthday. Termination
of Service is mandatory upon the Director attaining 72 years of age.
1.6 "Termination of Service" means the Director ceases to be a member of
the Company's Board of Directors for any reason, voluntary or involuntary, other
than by reason of a leave of absence approved by the Company or by death.
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 Director's interest has been paid according to Section 2.2
below.
2.2 Director's Interest. The Director shall have the right to designate the
beneficiary of an amount equal to 100 percent of the Net Death Proceeds of the
Policy. The Director shall also have the right to elect and change settlement
options that may be permitted.
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 Director or the Director'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
Director'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 Director 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 Director in an
amount equal to the current term rate for the Director's age multiplied by the
aggregate death benefit payable to the Director'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.
ARTICLE 4
ASSIGNMENT
The Director may assign without consideration all of the Director's
interests in the Policy and in this Agreement to any person, entity or trust. In
the event the Director transfers all of the
2
Director's interest in the Policy, then all of the Director's interest in the
Policy and in the Agreement shall be vested in the Director's transferee, who
shall be substituted as a party hereunder and the Director 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 their respective Policies.
Any payments the Insurers make or action the Insurers take in accordance with
their respective Policies shall fully discharge such 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 PROCEDURES
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 period at the election of the Company, but
notice of this deferral shall be given to the Claimant.
3
ARTICLE 7
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
ARTICLE 8
MISCELLANEOUS
8.1 Binding Effect. This Agreement shall bind the Director and the Company
and their beneficiaries, survivors, executors, administrators and transferees,
and any Policy beneficiary.
8.2 No Guarantee of Service. This Agreement is not a contract for services.
It does not give the Director the right to remain in the service of the Company,
nor does it interfere with the shareholders' rights to replace the Director. It
also does not require the Director to remain in the service of the Company nor
interfere with the Director's right to terminate services at any time.
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 Director as to the subject matter hereof. No rights
are granted to the Director by virtue of this Agreement other than those
specifically set forth herein.
8.7 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
(a) Interpreting the provisions of the Agreement;
(b) Establishing and revising the method of accounting for the
Agreement;
4
(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.
DIRECTOR: COMPANY:
COOPERATIVE BANK FOR SAVINGS
/s/ Xxxxxxx Xxxxx Xxxxx BY /s/ Xxxxxxxxx Xxxxxxxx, III
------------------------------ -------------------------------------
XXXXXXX XXXXX XXXXX
TITLE President
-------------------------------------
5
SPLIT DOLLAR POLICY ENDORSEMENT TO
COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT
Policy No. JP5195516 Insured: Xxxxxxx Xxxxx Xxxxx
Supplementing and amending the application for insurance to Jefferson-Pilot Life
Insurance Company ("Insurer") on September 20, 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).
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 right 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.
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.
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.
6
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 ____________________, North Carolina, this _______ day of
______________, 2002.
THE INSURED:
/s/ Xxxxxxx Xxxxx Xxxxx
------------------------------
Xxxxxxx Xxxxx Xxxxx
7
SPLIT DOLLAR POLICY ENDORSEMENT TO
COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT
Policy No. ZUA3866786 Insured: Xxxxxxx Xxxxx Xxxxx
Supplementing and amending the application for insurance to West Coast Life
Insurance Company ("Insurer") on September 20, 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).
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 right 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.
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.
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.
8
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/ Xxxxxxx Xxxxx Xxxxx
-------------------------------
Xxxxxxx Xxxxx Xxxxx
9
COOPERATIVE BANK FOR SAVINGS
DIRECTOR 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 XXXXX XXXXXXX (the "Director").
INTRODUCTION
To encourage the Director to remain a member of the Company's Board of
Directors, the Company is willing to provide retirement benefits to the
Director. The Company will pay the benefits from its general assets.
AGREEMENT
The Director and the Company agree as follows:
Article 1
Definitions
Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:
1.1 "Change of 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 followed within twelve (12) months by the Director's Termination of
Service for reasons other than death, Disability or retirement. The term "person
means an individual other than the Director, or a corporation, partnership,
trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not specifically listed
herein.
1.2 "Code" means the Internal Revenue Code of 1986, as amended.
1.3 "Disability" means, if the Director is covered by a Company sponsored
disability policy, total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy, Disability
means the Director suffering a sickness, accident or injury, which, in the
judgment of a physician who is satisfactory to the Company, prevents the
Director from performing substantially all of the Director's normal duties for
the Company. As a condition to receiving any Disability benefits, the Company
may require the
1
Director to submit to such physical or mental evaluations and tests as the
Company's Board of Directors deems appropriate and reasonable.
1.4 "Early Termination" means the Termination of Service before Normal
Retirement Age for reasons other than death, Disability, Termination for Cause
or following a Change of Control.
1.5 "Early Termination Date" means the month, day and year in which Early
Termination occurs.
1.6 "Effective Date" means October 1, 2001.
1.7 "Normal Retirement Age" means the Director's 72nd birthday. Termination
of Service is mandatory upon the Director attaining 72 years of age.
1.8 "Plan Year" means a twelve-month period commencing on October 1 and
ending on September 30 of each year. The initial Plan Year shall commence on the
Effective Date of this Agreement.
1.9 "Termination for Cause" See Section 5.2
1.10 "Termination of Service" means that the Director ceases to be a member
of the Company's Board of Directors for any reason, voluntarily or
involuntarily, other than by reason of a leave of absence approved by the
Company.
ARTICLE 2
LIFETIME BENEFITS
2.1 Normal Retirement Benefit. Upon Termination of Service on or after
Normal Retirement Age for reasons other than death, the Company shall pay to the
Director the benefit described in this Section 2.1 in lieu of any other benefit
under this Agreement.
2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is
$19,200 (Nineteen Thousand Two Hundred Dollars). The Company's Board of
Directors, at its sole discretion, may increase the annual benefit under
this Section 2.1.1; however, any increase shall require the recalculation
of Schedule A.
2.1.2 Payment of Benefit. The Company shall pay the annual benefit to
the Director in 12 equal monthly installments payable each month commencing
with the month following the Director's Normal Retirement Age. The annual
benefit shall be paid to the Director for 10 years.
2.1.3 Benefit Increases. Commencing on the first anniversary of the
first benefit payment, and continuing on each subsequent anniversary, the
Company's Board of Directors, at its sole discretion, may increase the
benefit.
2
2.2 Early Termination Benefit. Upon Early Termination, the Company shall
pay to the Director the benefit described in this Section 2.2 in lieu of any
other benefit under this Agreement.
2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the
Early Termination Lump Sum set forth in Schedule A for the Plan Year ending
immediately prior to the Early Termination Date, determined by vesting the
Director in 100 percent of the Accrual Balance. Any increase in the annual
benefit under Section 2.1.1 shall require the recalculation of the Early
Termination benefit on Schedule A.
2.2.2 Payment of Benefit. The Company shall pay the benefit amount to
the Director in a lump sum within 60 days following Termination of Service.
2.3 Disability Benefit. If the Director's Termination of Service prior to
Normal Retirement Age is due to Disability, the Company shall pay to the
Director the benefit described in this Section 2.3 in lieu of any other benefit
under this Agreement.
2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the
Disability Lump Sum set forth in Schedule A for the Plan Year ending
immediately prior to the date on which the Termination of Service occurs,
determined by vesting the Director in 100 percent of the Accrual Balance.
Any increase in the annual benefit under Section 2.1.1 would require the
recalculation of the Disability benefit on Schedule A.
2.3.2 Payment of Benefit. The Company shall pay the benefit amount to
the Director in a lump sum within 60 days following Termination of Service.
2.4 Change of Control Benefit. Upon a Change of Control, the Company shall
pay to the Director the benefit described in this Section 2.4 in lieu of any
other benefit under this Agreement.
2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the
Change of Control Lump Sum set forth in Schedule A for the Plan Year ending
immediately prior to the date in which Termination of Service occurs,
determined by vesting the Director in the present value of the stream of
payments of the Normal Retirement Benefit described in Section 2.1.1. Any
increase in the annual benefit under Section 2.1.1 would require the
recalculation of the Change of Control benefit on Schedule A.
2.4.2 Payment of Benefit. The Company shall pay the benefit amount to
the Director in a lump sum within 60 days following Termination of Service.
ARTICLE 3
DEATH BENEFITS
3.1 Death During Active Service. If the Director dies while in the active
service of the Company, the Company shall pay to the Director's beneficiary the
benefit described in this Section 3.1. This benefit shall be paid in lieu of the
Lifetime Benefits under Article 2.
3
3.1.1 Amount of Benefit. The benefit under this Section 3.1 is the
Death Benefit Lump Sum set forth in Schedule A for the Plan Year in which
the Director's death occurs, determined by vesting the Director in 100
percent of the Accrual Balance in said Schedule A. Any increase in the
annual benefit under Section 2.1.1 would require the recalculation of the
Death benefit on Schedule A.
3.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director's beneficiary in a lump sum within 60 days following the
Director's death.
3.2 Death During Payment of a Lifetime Benefit. If the Director dies after
any Lifetime Benefit payments have commenced under this Agreement but before
receiving all such payments, the Company shall pay the remaining benefits to the
Director's beneficiary at the same time and in the same amounts they would have
been paid to the Director had the Director survived.
3.3 Death After Termination of Employment But Before Payment of a Lifetime
Benefit Commences. If the Director is entitled to a Lifetime Benefit under this
Agreement, but dies prior to the commencement of said benefit payments, the
Company shall pay the same benefit payments to the Director's beneficiary that
the Director was entitled to prior to death except that the benefit payments
shall commence on the first day of the month following the date of the
Director's death.
ARTICLE 4
BENEFICIARIES
4.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation. However, designations
will only be effective if signed by the Director and received by the Company
during the Director's lifetime. The Director's beneficiary designation shall be
deemed automatically revoked if the beneficiary predeceases the Director or if
the Director names a spouse as beneficiary and the marriage is subsequently
dissolved. If the Director dies without a valid beneficiary designation, all
payments shall be made to the Director's estate.
4.2 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.
4
ARTICLE 5
GENERAL LIMITATIONS
5.1 Internal Revenue Service Section 280G Gross Up. To the extent not
prohibited by law, if, as a result of a Change in Control, the Director becomes
entitled to acceleration of benefits under this Agreement or under any other
benefit, compensation or incentive plan or arrangement with the Company
(collectively, the "Total Benefits"), and if any part of the Total Benefits is
subject to the Excise Tax under Section 280G and Section 4999 of the Internal
Revenue Code (the "Excise Tax"), the Company shall pay to the Director the
following additional amounts, consisting of (a) a payment equal to the Excise
Tax payable by the Director on the Total Benefits under Section 4999 of the
Internal Revenue Code (the "Excise Tax Payment"), and (b) a payment equal to the
amount necessary to provide the Excise Tax Payment, net of all income, payroll
and excise taxes. Payment of the additional amounts described in clauses (a) and
(b) shall be made in addition to the Total Benefits.
5.2 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 Director's service 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 committed in connection with the Director's service
and resulting in an adverse effect on the Company.
5.3 Suicide or Misstatement. The Company shall not pay any benefit under
this Agreement if the Director commits suicide within three years after the date
of this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on an
employment application or resume provided to the Company, or on any application
for any benefits provided by the Company to the Director.
ARTICLE 6
CLAIMS AND REVIEW PROCEDURES
6.1 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
noneligibility 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
5
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.
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 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 7
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
ARTICLE 8
MISCELLANEOUS
8.1 Binding Effect. This Agreement shall bind the Director and the Company
and their beneficiaries, survivors, executors, administrators and transferees.
8.2 No Guarantee of Service. This Agreement is not a contract for services.
It does not give the Director the right to remain in the service of the Company,
nor does it interfere with the shareholder's right to discharge the Director. It
also does not require the Director to remain in the service of the Company nor
interfere with the Director's right to terminate services at any time.
8.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
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
under this Agreement. Upon the occurrence of such
6
event, the term "Company" as used in this Agreement shall be deemed to refer to
the successor or survivor company.
8.5 Tax Withholding. The Company shall withhold any taxes that are required
to be withheld from the benefits provided under this Agreement.
8.6 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.
8.7 Unfunded Arrangement. The Director and beneficiary are general
unsecured creditors of the Company for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Company to pay such
benefits. The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment by creditors. Any insurance on the Director's life is a general
asset of the Company to which the Director and beneficiary have no preferred or
secured claim.
8.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Director as to the subject matter hereof. No rights
are granted to the Director by virtue of this Agreement other than those
specifically set forth herein.
8.9 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;
(c) Maintaining a record of benefit payments; and
(d) Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
8.10 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.
7
IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.
DIRECTOR: COMPANY:
COOPERATIVE BANK FOR SAVINGS
/s/ XXXXX X. XXXXXXX BY: /s/ XXXXXXXXX XXXXXXXX, III
--------------------------- --------------------------------------
XXXXX X. XXXXXXX NAME: XXXXXXXXX XXXXXXXX, III
------------------------------------
TITLE: PRESIDENT
------------------------------------
7
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 XXXXX X. XXXXXXX (the "Director"). 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 Director to remain a member of the Company's Board of
Directors, the Company is willing to divide the death proceeds of a life
insurance policy on the Director's life. The Company will pay life insurance
premiums from its general assets.
AGREEMENT
The Company and the Director 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. JP5195512 and ZUA386788 issued
by the respective Insurers.
1.3 "Insured" means the Director.
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 Director's 72nd birthday. Termination
of Service is mandatory upon the Director attaining 72 years of age.
1.6 "Termination of Service" means the Director ceases to be a member of
the Company's Board of Directors for any reason, voluntary or involuntary, other
than by reason of a leave of absence approved by the Company or by death.
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 Director's interest has been paid according to Section 2.2
below.
2.2 Director's Interest. The Director shall have the right to designate the
beneficiary of an amount equal to 100 percent of the Net Death Proceeds of the
Policy. The Director shall also have the right to elect and change settlement
options that may be permitted.
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 Director or the Director'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
Director'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 Director 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 Director in an
amount equal to the current term rate for the Director's age multiplied by the
aggregate death benefit payable to the Director'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.
ARTICLE 4
ASSIGNMENT
The Director may assign without consideration all of the Director's
interests in the Policy and in this Agreement to any person, entity or trust. In
the event the Director transfers all of the
2
Director's interest in the Policy, then all of the Director's interest in the
Policy and in the Agreement shall be vested in the Director's transferee, who
shall be substituted as a party hereunder and the Director 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 their respective Policies.
Any payments the Insurers make or action the Insurers take in accordance with
their respective Policies shall fully discharge such 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 PROCEDURES
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 period at the election of the Company, but
notice of this deferral shall be given to the Claimant.
3
ARTICLE 7
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
ARTICLE 8
MISCELLANEOUS
8.1 Binding Effect. This Agreement shall bind the Director and the Company
and their beneficiaries, survivors, executors, administrators and transferees,
and any Policy beneficiary.
8.2 No Guarantee of Service. This Agreement is not a contract for services.
It does not give the Director the right to remain in the service of the Company,
nor does it interfere with the shareholders' rights to replace the Director. It
also does not require the Director to remain in the service of the Company nor
interfere with the Director's right to terminate services at any time.
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 Director as to the subject matter hereof. No rights
are granted to the Director by virtue of this Agreement other than those
specifically set forth herein.
8.7 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
(a) Interpreting the provisions of the Agreement;
(b) Establishing and revising the method of accounting for the
Agreement;
4
(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.
DIRECTOR: COMPANY:
COOPERATIVE BANK FOR SAVINGS
/s/ Xxxxx X. Xxxxxxx BY /s/ Xxxxxxxxx Xxxxxxxx, III
------------------------------ -----------------------------------
XXXXX X. XXXXXXX
TITLE /s/ President
-----------------------------------
5
SPLIT DOLLAR POLICY ENDORSEMENT TO
COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT
Policy No. JP5195512 Insured: Xxxxx X. Xxxxxxx
Supplementing and amending the application for insurance to Jefferson-Pilot Life
Insurance Company ("Insurer") on September 30, 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).
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 right 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.
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.
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.
6
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 ________________, North Carolina, this _______ day of ________, 2001.
THE INSURED:
/s/ Xxxxx X. Xxxxxxx
----------------------------
Xxxxx X. Xxxxxxx
7
SPLIT DOLLAR POLICY ENDORSEMENT TO
COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT
Policy No. ZUA386788 Insured: Xxxxx X. Xxxxxxx
Supplementing and amending the application for insurance to West Coast Life
Insurance Company ("Insurer") on September 30, 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).
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 right 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.
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.
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.
8
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/ Xxxxx X. Xxxxxxx
------------------------------------
Xxxxx X. Xxxxxxx
9
COOPERATIVE BANK FOR SAVINGS
DIRECTOR RETIREMENT AGREEMENT
THIS AGREEMENT is adopted this 22nd day of January, 2002, by and between
COOPERATIVE BANK FOR SAVINGS, a State/Stock Savings Bank located in Wilmington,
North Carolina (the "Company") and XXXXXXX X. XXXXXX (the "Director").
INTRODUCTION
To encourage the Director to remain a member of the Company's Board of
Directors, the Company is willing to provide retirement benefits to the
Director. The Company will pay the benefits from its general assets.
AGREEMENT
The Director and the Company agree as follows:
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall have
the meanings specified:
1.1 "Change of 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 followed within twelve (12) months by the Director's Termination of
Service for reasons other than death, Disability or retirement. The term "person
means an individual other than the Director, or a corporation, partnership,
trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not specifically listed
herein.
1.2 "Code" means the Internal Revenue Code of 1986, as amended.
1.3 "Disability" means, if the Director is covered by a Company sponsored
disability policy, total disability as defined in such policy without regard to
any waiting period. If the Director is not covered by such a policy, Disability
means the Director suffering a sickness, accident or injury, which, in the
judgment of a physician who is satisfactory to the Company, prevents the
Director from performing substantially all of the Director's normal duties for
the Company. As a condition to receiving any Disability benefits, the Company
may require the
1
Director to submit to such physical or mental evaluations and tests as the
Company's Board of Directors deems appropriate and reasonable.
1.4 "Early Termination" means the Termination of Service before Normal
Retirement Age for reasons other than death, Disability, Termination for Cause
or following a Change of Control.
1.5 "Early Termination Date" means the month, day and year in which Early
Termination occurs.
1.6 "Effective Date" means October 1, 2001.
1.7 "Normal Retirement Age" means the Director's 72nd birthday. Termination
of Service is mandatory upon the Director attaining 72 years of age.
1.8 "Plan Year" means a twelve-month period commencing on October 1 and
ending on September 30 of each year. The initial Plan Year shall commence on the
Effective Date of this Agreement.
1.9 "Termination for Cause" See Section 5.2
1.10 "Termination of Service" means that the Director ceases to be a member
of the Company's Board of Directors for any reason, voluntarily or
involuntarily, other than by reason of a leave of absence approved by the
Company.
ARTICLE 2
LIFETIME BENEFITS
2.1 Normal Retirement Benefit. Upon Termination of Service on or after
Normal Retirement Age for reasons other than death, the Company shall pay to the
Director the benefit described in this Section 2.1 in lieu of any other benefit
under this Agreement.
2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is
$19,200 (Nineteen Thousand Two Hundred Dollars). The Company's Board of
Directors, at its sole discretion, may increase the annual benefit under
this Section 2.1.1; however, any increase shall require the recalculation
of Schedule A.
2.1.2 Payment of Benefit. The Company shall pay the annual benefit to
the Director in 12 equal monthly installments payable each month commencing
with the month following the Director's Normal Retirement Age. The annual
benefit shall be paid to the Director for 10 years.
2.1.3 Benefit Increases. Commencing on the first anniversary of the
first benefit payment, and continuing on each subsequent anniversary, the
Company's Board of Directors, at its sole discretion, may increase the
benefit.
2
2.2 Early Termination Benefit. Upon Early Termination, the Company shall
pay to the Director the benefit described in this Section 2.2 in lieu of any
other benefit under this Agreement.
2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the
Early Termination Lump Sum set forth in Schedule A for the Plan Year ending
immediately prior to the Early Termination Date, determined by vesting the
Director in 100 percent of the Accrual Balance. Any increase in the annual
benefit under Section 2.1.1 shall require the recalculation of the Early
Termination benefit on Schedule A.
2.2.2 Payment of Benefit. The Company shall pay the benefit amount to
the Director in a lump sum within 60 days following Termination of Service.
2.3 Disability Benefit. If the Director's Termination of Service prior to
Normal Retirement Age is due to Disability, the Company shall pay to the
Director the benefit described in this Section 2.3 in lieu of any other benefit
under this Agreement.
2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the
Disability Lump Sum set forth in Schedule A for the Plan Year ending
immediately prior to the date on which the Termination of Service occurs,
determined by vesting the Director in 100 percent of the Accrual Balance.
Any increase in the annual benefit under Section 2.1.1 would require the
recalculation of the Disability benefit on Schedule A.
2.3.2 Payment of Benefit. The Company shall pay the benefit amount to
the Director in a lump sum within 60 days following Termination of Service.
2.4 Change of Control Benefit. Upon a Change of Control, the Company shall
pay to the Director the benefit described in this Section 2.4 in lieu of any
other benefit under this Agreement.
2.4.1 Amount of Benefit. The benefit under this Section 2.4 is the
Change of Control Lump Sum set forth in Schedule A for the Plan Year ending
immediately prior to the date in which Termination of Service occurs,
determined by vesting the Director in the present value of the stream of
payments of the Normal Retirement Benefit described in Section 2.1.1. Any
increase in the annual benefit under Section 2.1.1 would require the
recalculation of the Change of Control benefit on Schedule A.
2.4.2 Payment of Benefit. The Company shall pay the benefit amount to
the Director in a lump sum within 60 days following Termination of Service.
ARTICLE 3
DEATH BENEFITS
3.1 Death During Active Service. If the Director dies while in the active
service of the Company, the Company shall pay to the Director's beneficiary the
benefit described in this Section 3.1. This benefit shall be paid in lieu of the
Lifetime Benefits under Article 2.
3
3.1.1 Amount of Benefit. The benefit under this Section 3.1 is the
Death Benefit Lump Sum set forth in Schedule A for the Plan Year in which
the Director's death occurs, determined by vesting the Director in 100
percent of the Accrual Balance in said Schedule A. Any increase in the
annual benefit under Section 2.1.1 would require the recalculation of the
Death benefit on Schedule A.
3.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director's beneficiary in a lump sum within 60 days following the
Director's death.
3.2 Death During Payment of a Lifetime Benefit. If the Director dies after
any Lifetime Benefit payments have commenced under this Agreement but before
receiving all such payments, the Company shall pay the remaining benefits to the
Director's beneficiary at the same time and in the same amounts they would have
been paid to the Director had the Director survived.
3.3 Death After Termination of Employment But Before Payment of a Lifetime
Benefit Commences. If the Director is entitled to a Lifetime Benefit under this
Agreement, but dies prior to the commencement of said benefit payments, the
Company shall pay the same benefit payments to the Director's beneficiary that
the Director was entitled to prior to death except that the benefit payments
shall commence on the first day of the month following the date of the
Director's death.
ARTICLE 4
BENEFICIARIES
4.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation. However, designations
will only be effective if signed by the Director and received by the Company
during the Director's lifetime. The Director's beneficiary designation shall be
deemed automatically revoked if the beneficiary predeceases the Director or if
the Director names a spouse as beneficiary and the marriage is subsequently
dissolved. If the Director dies without a valid beneficiary designation, all
payments shall be made to the Director's estate.
4.2 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.
4
ARTICLE 5
GENERAL LIMITATIONS
5.1 Internal Revenue Service Section 280G Gross Up. To the extent not
prohibited by law, if, as a result of a Change in Control, the Director becomes
entitled to acceleration of benefits under this Agreement or under any other
benefit, compensation or incentive plan or arrangement with the Company
(collectively, the "Total Benefits"), and if any part of the Total Benefits is
subject to the Excise Tax under Section 280G and Section 4999 of the Internal
Revenue Code (the "Excise Tax"), the Company shall pay to the Director the
following additional amounts, consisting of (a) a payment equal to the Excise
Tax payable by the Director on the Total Benefits under Section 4999 of the
Internal Revenue Code (the "Excise Tax Payment"), and (b) a payment equal to the
amount necessary to provide the Excise Tax Payment, net of all income, payroll
and excise taxes. Payment of the additional amounts described in clauses (a) and
(b) shall be made in addition to the Total Benefits.
5.2 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 Director's service 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 committed in connection with the Director's service
and resulting in an adverse effect on the Company.
5.3 Suicide or Misstatement. The Company shall not pay any benefit under
this Agreement if the Director commits suicide within three years after the date
of this Agreement. In addition, the Company shall not pay any benefit under this
Agreement if the Director has made any material misstatement of fact on an
employment application or resume provided to the Company, or on any application
for any benefits provided by the Company to the Director.
ARTICLE 6
CLAIMS AND REVIEW PROCEDURES
6.1 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
noneligibility 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
5
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.
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 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 7
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
ARTICLE 8
MISCELLANEOUS
8.1 Binding Effect. This Agreement shall bind the Director and the Company
and their beneficiaries, survivors, executors, administrators and transferees.
8.2 No Guarantee of Service. This Agreement is not a contract for services.
It does not give the Director the right to remain in the service of the Company,
nor does it interfere with the shareholder's right to discharge the Director. It
also does not require the Director to remain in the service of the Company nor
interfere with the Director's right to terminate services at any time.
8.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
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
under this Agreement. Upon the occurrence of such
6
event, the term "Company" as used in this Agreement shall be deemed to refer to
the successor or survivor company.
8.5 Tax Withholding. The Company shall withhold any taxes that are required
to be withheld from the benefits provided under this Agreement.
8.6 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.
8.7 Unfunded Arrangement. The Director and beneficiary are general
unsecured creditors of the Company for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Company to pay such
benefits. The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment by creditors. Any insurance on the Director's life is a general
asset of the Company to which the Director and beneficiary have no preferred or
secured claim.
8.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Director as to the subject matter hereof. No rights
are granted to the Director by virtue of this Agreement other than those
specifically set forth herein.
8.9 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;
(c) Maintaining a record of benefit payments; and
(d) Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
8.10 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.
7
IN WITNESS WHEREOF, the Director and a duly authorized Company officer
have signed this Agreement.
DIRECTOR: COMPANY:
COOPERATIVE BANK FOR SAVINGS
/s/ XXXXXXX X. XXXXXX BY: /s/ XXXXXXXXX XXXXXXXX, III
------------------------------------ -------------------------------
XXXXXXX X. XXXXXX NAME: XXXXXXXXX XXXXXXXX, III
-----------------------------
TITLE: PRESIDENT
-----------------------------
8
COOPERATIVE BANK FOR SAVINGS
SPLIT DOLLAR AGREEMENT
THIS AGREEMENT is adopted this 22nd day of January, 2001, by and between
COOPERATIVE BANK FOR SAVINGS, a State/Stock Savings Bank located in Wilmington,
North Carolina (the "Company"), and XXXXXXX X. XXXXXX (the "Director"). 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 Director to remain a member of the Company's Board of
Directors, the Company is willing to divide the death proceeds of a life
insurance policy on the Director's life. The Company will pay life insurance
premiums from its general assets.
AGREEMENT
The Company and the Director 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. JP5195510 and ZUA386789 issued
by the respective Insurers.
1.3 "Insured" means the Director.
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 Director's 72nd birthday. Termination
of Service is mandatory upon the Director attaining 72 years of age.
1.6 "Termination of Service" means the Director ceases to be a member of
the Company's Board of Directors for any reason, voluntary or involuntary, other
than by reason of a leave of absence approved by the Company or by death.
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 Director's interest has been paid according to Section 2.2
below.
2.2 Director's Interest. The Director shall have the right to designate the
beneficiary of an amount equal to 100 percent of the Net Death Proceeds of the
Policy. The Director shall also have the right to elect and change settlement
options that may be permitted.
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 Director or the Director'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
Director'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 Director 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 Director in an
amount equal to the current term rate for the Director's age multiplied by the
aggregate death benefit payable to the Director'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.
ARTICLE 4
ASSIGNMENT
The Director may assign without consideration all of the Director's
interests in the Policy and in this Agreement to any person, entity or trust. In
the event the Director transfers all of the
2
Director's interest in the Policy, then all of the Director's interest in the
Policy and in the Agreement shall be vested in the Director's transferee, who
shall be substituted as a party hereunder and the Director 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 their respective Policies.
Any payments the Insurers make or action the Insurers take in accordance with
their respective Policies shall fully discharge such 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 PROCEDURES
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 period at the election of the Company, but
notice of this deferral shall be given to the Claimant.
3
ARTICLE 7
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
ARTICLE 8
MISCELLANEOUS
8.1 Binding Effect. This Agreement shall bind the Director and the Company
and their beneficiaries, survivors, executors, administrators and transferees,
and any Policy beneficiary.
8.2 No Guarantee of Service. This Agreement is not a contract for services.
It does not give the Director the right to remain in the service of the Company,
nor does it interfere with the shareholders' rights to replace the Director. It
also does not require the Director to remain in the service of the Company nor
interfere with the Director's right to terminate services at any time.
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 Director as to the subject matter hereof. No rights
are granted to the Director by virtue of this Agreement other than those
specifically set forth herein.
8.7 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
(a) Interpreting the provisions of the Agreement;
(b) Establishing and revising the method of accounting for the
Agreement;
4
(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.
DIRECTOR: COMPANY:
COOPERATIVE BANK FOR SAVINGS
/s/ Xxxxxxx X. Xxxxxx BY /s/ Xxxxxxxxx Xxxxxxxx, III
-------------------------------- --------------------------------
XXXXXXX X. XXXXXX
TITLE President
-------------------------------
5
SPLIT DOLLAR POLICY ENDORSEMENT TO
COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT
Policy No. JP5195510 Insured: Xxxxxxx X. Xxxxxx
Supplementing and amending the application for insurance to Jefferson-Pilot Life
Insurance Company ("Insurer") on September 17, 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).
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 right 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.
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.
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.
6
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 22nd 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 ____________________, North Carolina, this _______ day of
______________, 2002.
THE INSURED:
/s/ Xxxxxxx X. Xxxxxx
---------------------------
Xxxxxxx X. Xxxxxx
7
SPLIT DOLLAR POLICY ENDORSEMENT TO
COOPERATIVE BANK FOR SAVINGS SPLIT DOLLAR AGREEMENT
Policy No. ZUA386789 Insured: Xxxxxxx X. Xxxxxx
Supplementing and amending the application for insurance to West Coast Life
Insurance Company ("Insurer") on September 17, 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).
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 right 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.
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.
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.
8
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 22nd 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 22nd day of January, 2002.
THE INSURED:
/s/ Xxxxxxx X. Xxxxxx
---------------------------------
Xxxxxxx X. Xxxxxx
9
