Exhibit 10.5
LOWCOUNTRY NATIONAL
BANK
DIRECTOR DEFERRED FEE
AGREEMENT
THIS AGREEMENT is made
this day
of
,
2005, by and between LOWCOUNTRY NATIONAL BANK, a
nationally-chartered commercial bank, located in Beaufort, South
Carolina (the “Company”),
and (the
“Director”).
INTRODUCTION
To encourage the Director to remain
a member of the Company’s Board of Directors, the Company is
willing to provide to the Director a deferred fee opportunity. The
Company will pay the Director’s benefits from the
Company’s general assets.
AGREEMENT
The Director and the Company agree
as follows:
Article 1
Definitions
Whenever used in this Agreement, the
following words and phrases shall have the meanings
specified:
1.1
“Change of
Control” means the
transfer of shares of the Company’s voting common stock such
that one entity or one person acquires (or is deemed to acquire
when applying Section 318 of the Code) more than 50 percent of
the Company’s outstanding voting common stock
1.2
“Code”
means the Internal Revenue Code of
1986, as amended.
1.3
“Deferral
Account” means the
Company’s accounting of the Director’s accumulated
Deferrals plus accrued interest.
1.4
“Deferrals” means the amount of the Director’s Fees,
which the Director elects to defer according to this
Agreement.
1.5
“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 Director to submit
to such physical or mental evaluations and tests as the
Company’s Board of Directors deems appropriate and
reasonable.
1.6
“Effective
Date” means
January 1, 2004.
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1.7
“Election
Form” means the
Form attached as Exhibit 1.
1.8
“Fees”
means the total fees payable to the
Director during a Plan Year.
1.9
“Normal Retirement
Age” means the
Director’s 70th birthday.
1.10
“Normal Retirement
Date” means the
later of the Normal Retirement Age or Termination of
Service.
1.11
“Plan
Year” means the
calendar year.
1.12
“Return on
Equity’’ means the Company’s after tax net income
for the quarter divided by the Company’s equity at the
beginning of the quarter, as determined by the Company’s
independent auditor based on financial statements for the pertinent
year.
1.13
“Termination of
Service” means that
the Director ceases to be a member of the Company’s Board of
Directors for any reason, voluntary or involuntary, other than by
reason of a leave of absence approved by the Company.
1.14
“Projected Deferral Account
Balance” means the
balance that would have accumulated in the Director’s
Deferral Account at Normal Retirement Age if it is assumed that the
Director: (1) continued to defer Fees at the same rate that the
Director had been deferring Fees on the date of the
Director’s Termination of Service; and (2) the Director
reached Normal Retirement Age.
Article 2
Deferral Election
2.1
Initial Election.
The Director shall make an initial
deferral election under this Agreement by filing with the Company a
signed Election Form within 30 days after the Effective Date of
this Agreement. The Election Form shall set forth the amount of
Fees to be deferred and shall be effective to defer only Fees
earned after the date the Election Form is received by the
Company.
2.2
Election Changes
2.2.1
Generally.
Upon the Company’s approval, the
Director may modify the amount of Fees to be deferred annually by
filing a new Election Form with the Company prior to the beginning
of the Plan Year in which the Fees are to be deferred. The modified
deferral election shall not be effective until the calendar year
following the year in which the subsequent Election Form is
received and approved by the Company.
2.2.2
Hardship. If an unforeseeable financial emergency arising
from the death of a family member, divorce, sickness, injury,
catastrophe or similar event outside the control of the Director
occurs, the Director, by written instructions to the Company, may
reduce future deferrals under this Agreement.
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Article 3
Deferral Account
3.1
Establishing and
Crediting. The Company
shall establish a Deferral Account on its books for the Director
and shall credit to the Deferral Account the following
amounts:
3.1.1
Deferrals.
The Fees deferred by the Director as
of the time the Fees would have otherwise been paid to the
Director.
3.1.2
Interest.
At the end of each Plan Year under
this Agreement and immediately prior to the payment of any
benefits, but only until commencement of the benefit payments under
this Agreement, unless otherwise stated, interest is to be credited
on the account balance at an annual rate, compounded quarterly,
equal to seventy-five percent (75%) of the previous quarter’s
Return on Equity, however, this amount shall not exceed twelve
percent (12%).
3.2
Statement of Accounts.
The Company shall provide to the
Director, within 120 days after the end of each Plan Year, a
statement setting forth the Deferral Account balance.
3.3
Accounting Device
Only. The Deferral
Account is solely a device for measuring amounts to be paid under
this Agreement. The Deferral Account is not a trust fund of any
kind. The Director is a general unsecured creditor of the Company
for the payment of benefits. The benefits represent the mere
Company promise to pay such benefits. The Director’s rights
are not subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment, or
garnishment by the Director’s creditors.
Article 4
Benefits During Lifetime
4.1
Normal Retirement
Benefit. Upon the Normal
Retirement Date, the Company shall pay to the Director the benefit
described in this Section 4.1 in lieu of any other benefit
under this Agreement.
4.1.1
Amount of Benefit.
The benefit under this
Section 4.1 is the Deferral Account balance at the
Director’s Normal Retirement Date.
4.1.2
Payment of Benefit.
The Company shall pay the benefit to
the Director in a lump sum within 60 days following the
Director’s Normal Retirement Date.
4.2
Early Retirement
Benefit. Upon Termination
of Service prior to the Normal Retirement Age for reasons other
than death, Change of Control or Disability, the Company shall pay
to the Director the benefit described in this Section 4.2 in
lieu of any other benefit under this Agreement
4.2.1
Amount of Benefit.
The benefit under this
Section 4.2 is the Deferral Account balance at the
Director’s Termination of Service.
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4.2.2
Payment, of Benefit.
The Company shall pay the benefit to
the Director in a lump sum within 60 days following Termination of
Service.
4.3
Disability Benefit.
If the Director terminates service
as a Director due to Disability prior to Normal Retirement Age, the
Company shall pay to the Director the benefit described in this
Section 4.3 in lieu of any other benefit under this
Agreement.
4.3.1
Amount of Benefit.
The benefit under this
Section 4.3 is the Deferral Account balance at the
Director’s Termination of Service.
4.3.2
Payment of Benefit.
The Company shall pay the benefit to
the Director in a lump stun within 60 days following Termination of
Service.
4.4
Change of Control
Benefit. Upon a Change of
Control, followed by the Director’s Termination of Service
for reasons other than death, Disability or retirement, the Company
shall pay to the Director the benefit described in this
Section 4.4 in lieu of any other benefit under this
Agreement.
4.4.1
Amount of Benefit.
The benefit under this
Section 4.4 shall be the Projected Deferral Account
Balance.
4.4.2
Payment of Benefit.
The Company shall pay the benefit to
the Director in a lump sum within 60 days following Termination of
Service.
4.5
Hardship Distribution.
Upon the Board of Director’s
determination (following petition by the Director) that the
Director has suffered an unforeseeable financial emergency as
described in Section 2.2.2, the Company shall distribute to
the Director all or a portion of the Deferral Account balance as
determined by the Company, but in no event shall the distribution
be greater than is necessary to relieve the financial
hardship.
Article 5
Death Benefits
5.1
Death During Active
Service. If the Director
dies while in t
