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EXHIBIT 10.6
▇▇▇▇▇▇ COUNTY BANK
DEFERRED FEE AGREEMENT
THIS AGREEMENT is made this 1st day of June, 1997 by and between ▇▇▇▇▇▇
COUNTY BANK, (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 benefits from its general assets.
AGREEMENT
The Director and the Company agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. Whenever used in this Agreement, the following words and
phrases shall have the meanings specified:
1.1.1 "Change of Control" means:
(i) the direct or indirect acquisition by any person or related group
of persons (other than an acquisition from or by the Company or by a
Company-sponsored employee benefit plan) of beneficial ownership (within
the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Company's
outstanding Stock;
(ii) a change in the composition of the Board over a period of
thirty-six (36) months or less such that a majority of the Board members
(rounded up to the next whole number) ceases, by reason of one or more
contested elections for Board membership or by one or more actions by
written consent of shareholders, to be comprised of individuals who either
(A) have been Board members continuously since the beginning of such
period or (B) have been elected or nominated for election as Board members
during such period by at least a majority of the Board members described
in clause (A) who were still in office at the time such election or
nomination was approved by the Board.
A "Corporate Transaction" shall be deemed to occur upon any of the
following transactions to which the Company is a party:
(iii) approval by the Company's shareholders of a merger or
consolidation in which the Company is not the surviving entity, except for
a transaction the principal purpose of which is to change the state in
which the Company is incorporated;
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(iv) approval by the Company's shareholders of the sale, transfer or
other disposition of all or substantially all of the assets of the Company
(including the capital stock of the Company's subsidiary corporations) in
connection with a complete liquidation or dissolution of the Company; or
(v) approval by the Company's shareholders of any reverse merger in
which the Company is the surviving entity but in which securities
possessing more than fifty percent (50%) of the total combined voting
power of the Company's outstanding securities are transferred to a person
or persons different from those who held such securities immediately prior
to such merger.
1.1.2 "Code" means the Internal Revenue Code of 1986, as amended.
References to a Code section shall be deemed to be to that section as it
now exists and to any successor provision.
1.1.3 "Disability" means the Director's inability to perform
substantially all normal duties of a director, as determined by the
Company's Board of Directors in its sole discretion. As a condition to
any benefits, the Company may require the Director to submit to such
physical or mental evaluations and tests as the Board of Directors deems
appropriate.
1.1.4 "Distribution Date" means the date elected by Director
in Exhibit A.
1.1.5 "Election Form" means the Form attached as Exhibit A.
1.1.6 "Fees" means the total directors fees payable to the Director.
1.1.7 "Termination of Service" means the Director's ceasing to
be a member of the Company's Board of Directors for any reason whatsoever.
1.1.8 "Projected Benefit" means the amount that would have been
deemed credited to the Director's Deferral Account balance as of the
Distribution Date had deferrals been made in accordance with Exhibit B and
had the interest rate credited been equal to 8.50%, compounded monthly.
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 fifteen (15) days after the date of this Agreement. The Election Form
shall set forth the amount of Fees to be deferred and the form of benefit
payment. The Election Form shall be effective to defer only Fees earned after
the date the Election Form is received by the Company. The Director may defer
Fees for up to sixty (60) months following the date of this Agreement.
2.2 Election Changes
2.2.1 Generally. The Director may modify the amount of Fees
to be deferred by filing a new Election Form with the Company and
obtaining written approval by the Board of Directors of the Company. The
modified deferral shall not be effective until the calendar year following
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the year in which the subsequent Election Form is received by the Company. The
Director may not change the form of benefit payment initially elected under
Section 2.1 without the written approval of the Board of Directors of 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.
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. On each anniversary of the date of this Agreement
and immediately prior to the payment of any benefits, interest on the
account balance since the preceding credit under this Section 3.1.2, equal
to a rate determined by the return on average assets (ROAA) of the Company
for the preceding calendar year as detailed in Exhibit C. This schedule
may be modified from time to time by the Company's Board of Directors, in
its sole discretion.
3.2 Statement of Accounts. The Company shall provide to the Director,
within one hundred twenty (120) days after each anniversary of this Agreement
(or after each calendar year at the Company's discretion), 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
LIFETIME BENEFITS
4.1 Normal Benefit. Upon the Director's elected Distribution Date, the
Company shall pay to the Director the benefit described in this Section 4.1.
4.1.1 Amount of Benefit. The benefit under this Section 4.1 is the
Deferral Account balance at the Director's Distribution Date.
4.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director in the form elected by the Director on the Election Form. The
Company shall continue to credit interest under Section 3.1.2 on the
remaining account balance during any applicable installment period.
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4.2 Early Termination Benefit. If the Director terminates service as a
director before his Distribution Date, and for reasons other than death or
Disability, the Company shall pay to the Director the benefit described in this
Section 4.2.
4.2.1 Amount of Benefit. The benefit under this Section 4.2 is the
Deferral Account at the Director's Termination of Service.
4.2.2 Payment of Benefit. The Company shall pay the benefit to the
Director in the form elected by the Director on the Election Form. The
Company shall continue to credit interest at the annual rate of 6.5% on
the account balance during any applicable accumulation or installment
periods.
4.3 Disability Benefit. If the Director terminates service as a director
for Disability prior to his Distribution Date, the Company shall pay to the
Director the benefit described in this Section 4.3.
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 the form elected by the Director on the Election Form. The
Company shall continue to credit interest at the annual rate under
Section 3.1.2 on the account balance during any applicable accumulation
or installment periods.
4.4 Change of Control Benefit. Upon a Change of Control while the
Director is in the active service of the Company, 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 is the
Deferral Account balance at the date of the Director's Termination of
Service.
4.4.2 Payment of Benefit. The Company shall pay the benefit to the
Director in the form elected by the Director on the Election Form. The
Company shall continue to credit interest at either the rate under 3.1.2
or at the annual rate of 8.5% on the remaining account balance during any
applicable installment period. The Director shall have a one time option
to elect which rate shall be used, such option to be made within one
hundred twenty (120) days of the Change of Control.
4.4.3 Rabbi Trust. Upon a Change of Control, the Company shall
establish a rabbi trust and contribute an amount equal to the present
value of the Director's Projected Benefit.
4.5 Hardship Distribution. Upon the Company'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.
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ARTICLE 5
DEATH BENEFITS
5.1 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 5.1.
5.1.1 Amount of Benefit. The benefit under Section 5.1 is the
prorata portion of the Projected Benefit based on the actual amount
deferred at the date of death as compared to the projected deferrals, on a
cumulative basis, but not to exceed 100 percent of the Projected Benefit.
Projected deferrals and the Projected Benefit are as detailed in Exhibit
B.
5.1.2 Payment of Benefit. The Company shall pay the benefit to the
beneficiary in the form elected by the Director on the Election Form. The
Company shall continue to credit interest under Section 3.1.2 on the
remaining account balance during any applicable installment period.
5.2 Death During Benefit Period. If the Director dies after 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.
ARTICLE 6
BENEFICIARIES
6.1 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 accepted 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 surviving
spouse, if any, and if none, to the Director's surviving children and the
descendants of any deceased child by right of representation, and if no
children or descendants survive, to the Director's estate.
6.2 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 incompetency,
minority or guardianship as it may deem appropriate prior to distribution of
the benefit. Such distribution shall completely discharge the Company from all
liability with respect to such benefit.
ARTICLE 7
GENERAL LIMITATIONS
Notwithstanding any provision of this Agreement to the contrary, the
Company shall not
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pay any benefit under this Agreement that is in excess of the Director's
Deferral Account balance if the Director commits suicide within two years after
the date of this Agreement, or if the Director has made any material
misstatement of fact on any application for life insurance purchased by the
Company.
ARTICLE 8
CLAIMS AND REVIEW PROCEDURES
8.1 Claims Procedure. The Company shall notify the Director's beneficiary
in writing, within ninety (90) days of his or her written application for
benefits, of his or her eligibility or noneligibility for benefits under the
Agreement. If the Company determines that the beneficiary 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 the 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, and (4) an explanation of the Agreement's
claims review procedure and other appropriate information as to the steps to be
taken if the beneficiary wishes to have the claim reviewed. If the Company
determines that there are special circumstances requiring additional time to
make a decision, the Company shall notify the beneficiary 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 ninety-day period.
8.2 Review Procedure. If the beneficiary is determined by the Company not
to be eligible for benefits, or if the beneficiary believes that he or she is
entitled to greater or different benefits, the beneficiary shall have the
opportunity to have such claim reviewed by the Company by filing a petition for
review with the Company within sixty (60) days after receipt of the notice
issued by the Company. Said petition shall state the specific reasons which
the beneficiary believes entitle him or her to benefits or to greater or
different benefits. Within sixty (60) days after receipt by the Company of the
petition, the Company shall afford the beneficiary (and counsel, if any) an
opportunity to present his or her position to the Company orally or in writing,
and the beneficiary (or counsel) shall have the right to review the pertinent
documents. The Company shall notify the beneficiary of its decision in writing
within the sixty-day period, stating specifically the basis of its decision,
written in a manner calculated to be understood by the beneficiary and the
specific provisions of the Agreement on which the decision is based. If,
because of the need for a hearing, the sixty-day period is not sufficient, the
decision may be deferred for up to another sixty-day period at the election of
the Company, but notice of this deferral shall be given to the beneficiary.
ARTICLE 9
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
ARTICLE 10
MISCELLANEOUS
10.1 Binding Effect. This Agreement shall bind the Director and the
Company, and their beneficiaries, survivors, executors, administrators and
transferees.
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10.2 No Guaranty of Service. This Agreement is not a contract for
services. It does not give the Director the right to remain a director of the
Company, nor does it interfere with the shareholders' rights to replace the
Director. It also does not require the Director to remain a director nor
interfere with the Director's right to terminate services at any time.
10.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
10.4 Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
10.5 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of Georgia, except to the extent preempted by the laws of
the United States of America.
10.6 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.
IN WITNESS WHEREOF, the Director and a duly authorized Company officer
have signed this Agreement.
DIRECTOR: COMPANY:
▇▇▇▇▇▇ COUNTY BANK
_______________________ BY __________________________
NAME
TITLE ______________________
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EXHIBIT A
TO
DEFERRED FEE AGREEMENT
ELECTION FORM
DEFERRAL ELECTION
I elect to defer Fees under my Deferred Fee Agreement with the Company, as
follows:
I elect to defer $_______ per month, commencing June 15, 1997 and
continuing for_____ months (not to exceed 60 months).
I understand that I may change the amount, frequency and duration of my
deferrals by filing a new election form with the Company; provide, however,
that any subsequent election will not be effective until the calendar year
following the year in which the new election is received by the Company.
DISTRIBUTION ELECTION
I elect to have my Deferral Account distributed as follows:
Age
Agreement Distribution Payout
Occurrence Reference Commences Period
---------- --------- ------------ ------
Normal Benefit 4.1.2
------------ ------ months
Early Termination Benefit 4.2.2
------------ ------ months
Disability Benefit 4.3.2
------------ ------ months
Change of Control Benefit 4.4.2
------------ ------ months
I understand that I may not change my distribution elections, but that I may
petition the Company for a hardship distribution in accordance with Section 4.5
of the Agreement.
Director:
____________________ ________________________
Date Name
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EXHIBIT B
TO
DEFERRED FEE AGREEMENT
PROJECTED DEFERRALS
Director: _________________
Projected Deferrals Actual Deferrals
YEAR (Cumulative Basis) (Cumulative Basis)
----- ------------------- ------------------
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This schedule is used to determine the death benefit pursuant to
Subsection 5.1.1 of the Agreement. Based on the projected deferrals listed
above, an anticipated retirement age of _____, and a benefit period of _____
years, the projected benefit is $____________.
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EXHIBIT C
TO
DEFERRED FEE AGREEMENT
MATRIX OF
INTEREST RATE CREDITING RATE LINKED TO ROAA
ROAA <.70 .70 .80 .90 1.00 1.10 1.20+
INTEREST 6.5% 7.0% 7.5% 8.0% 8.5% 9.0% 9.5%
This Matrix determines the interest rate credited pursuant to Subsection 3.1.2
of the Agreement.
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BENEFICIARY DESIGNATION
I designate the following as beneficiary of benefits under the Deferred Fee
Agreement payable following my death:
Primary: ____________________________________________________________
Contingent: _________________________________________________________
NOTE: TO NAME A TRUST AS BENEFICIARY, PLEASE PROVIDE THE NAME OF THE TRUSTEE
AND THE EXACT DATE OF THE TRUST AGREEMENT.
I understand that I may change these beneficiary designations by filing a new
written designation with the Company. I further understand that the
designations will be automatically revoked if the beneficiary predeceases me,
or, if I have named my spouse as beneficiary, in the event of the dissolution
of our marriage.
Signature ______________________________
Name
Date ____________________________
Accepted by the Company this _____ day of _____________, 199__.
By ______________________________
Title ______________________
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ADDENDUM TO
▇▇▇▇▇▇ COUNTY BANK
DEFERRED FEE AGREEMENT
On June 1, 1997 ▇▇▇▇▇▇ County Bank entered into deferred fee agreements with
the individuals set forth below. Each agreement follows the form filed as
Exhibit 10.3 to the Company's quarterly report on Form 10-QSB for the period
ended June 30, 1997. The specifics of the amount of deferral, length of
deferral, payout period, and retirement age are detailed below.
▇▇▇▇ ▇▇▇▇▇ elected to defer all of his director's fee ($600 per month)
commencing June 15, 1997 and continuing for a period of 60 months. ▇▇. ▇▇▇▇▇
expects to retire at age 62 and elected a payout period of 60 months.
▇▇▇▇▇ ▇. ▇▇▇▇▇ elected to defer all of his director's fee ($600 per month)
commencing June 15, 1997 and continuing for a period of 60 months. ▇▇. ▇▇▇▇▇
expects to retire at age 57 and elected a payout period of 1 month.
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇ elected to defer all of his director's fee ($600 per month)
commencing June 15, 1997 and continuing for a period of 60 months. ▇▇. ▇▇▇▇▇▇
expects to retire at age 65 and elected a payout period of 120 months.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ elected to defer 50 percent of his director's fee ($300 per
month) commencing June 15, 1997 and continuing for a period of 60 months. ▇▇.
▇▇▇▇▇▇ expects to retire at age 60 and elected a payout period of 120 months.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ elected to defer all of his director's fee ($600 per month)
commencing June 15, 1997 and continuing for a period of 60 months. ▇▇. ▇▇▇▇▇▇
expects to retire at age 60 and elected a payout period of 1 month.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the Recording Secretary for the Board, was also eligible for
the deferred fee agreement. ▇▇. ▇▇▇▇▇▇▇ elected to defer all of his board fee
($300 per month) commencing June 15, 1997 and continuing for a period of 60
months. ▇▇. ▇▇▇▇▇▇▇ expects to retire at age 55 and elected a payout period of
120 months.
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